THERE ARE TWO IMPORTANT CAUSES OF THIS PROBLEMATIC SITUATION. ONE IS THAT
BECAUSE OF HIGH DEMAND FOR ENGINEERING GRADUATES, COMPANIES HAVE BID UP THE
PRICE OF STARTING SALARIES. THE SECOND CAUSE IS THAT STIPENDS FOR GRADUATE
ENGINEERING STUDENTS HAVE NOT KEPT PACE WITH INFLATION, OFTEN REMAINING AS
LOW AS FIVE THOUSAND DOLLARS PER YEAR. THE INCREMENT IN SALARY ONE GAINS BY
REMAINING IN SCHOOL FOR A DOCTORATE IS INADEQUATE COMPENSATION FOR THE COST OF
REMAINING IN SCHOOL. IT IS EXTREMELY HARD FOR A YOUNG ENGINEER ESPECIALLY
FOR ONE WHO HAS ALREADY BORROWED MONEY FOR COLLEGE -- TO FOREGO FOUR TO SIX
YEARS OF THOSE EXTREMELY GENEROUS SALARIES THE COMPANIES ARE OFFERING. IF HE
MAKES THAT CHOICE, HIS PEERS ARE GAINING VALUABLE YEARS OF EXPERIENCE AND SALARY
INCREASES WHILE HE STILL REMAINS IN SCHOOL.

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FIVE YEARS AFTER RECEIVING A B.S., AN ENGINEER EARNS AN AVERAGE OF $23,800.
IF HE HAS ALSO RECEIVED AN M.S., HE WILL EARN $25,300. IF HE HAS FINISHED HIS
PH.D. ALREADY AND IS IN THE JOB MARKET, HE WILL EARN $29,100. AFTER ANOTHER
FOUR TO SIX YEARS, THEY WILL EARN AN AVERAGE, RESPECTIVELY OF $27,750, $29,750
AND $32,400. (THIS INFORMATION DERIVES FROM A REPORT ENTITLED "PROFESSIONAL
INCOME OF ENGINEERS 1980" COMPILED BY THE ENGINEERING MANPOWER COMMISSION OF
THE AMERICAN ASSOCIATION OF ENGINEERING SOCIETIES, NOVEMBER 1980.) A ROUGH
CALCULATION SHOWS THAT IT TAKES NEARLY NINETEEN YEARS FOR A PH.D. IN ENGINEERING
TO RECOVER THE ADDED COST (IN FOREGONE INCOME) OF HIS EDUCATION IN INCREASED
SALARY. IF HE RECEIVES A $10,000 ANNUAL STIPEND AS A GRADUATE STUDENT, HE CAN
RECOVER THE COST IN NINE YEARS. BUT MOST UNIVERSITIES CANNOT AFFORD TO AWARD
THEIR ENGINEERING GRADUATE STUDENTS NEARLY THAT MUCH OF A STIPEND.

IN ADDITION, IF THE CURRENT SITUATION PERSISTS, THERE WILL BE FEW AMERICANS
QUALIFIED TO TEACH ENGINEERING. WE WILL PAY DEARLY FOR THE EXTRA ENGINEERS
BEING HIRED NOW AT THE BACHELORS DEGREE LEVEL WITH A SEVERE SHORTAGE OF ENGINEERS
IN THE FUTURE. IF WE DEFER TO MARKET FORCES, PERHAPS THE SITUATION WILL CORRECT

ITSELF. BUT IF WE INTERCEDE CARELESSLY, WE STAND TO EXACERBATE THE ALREADY
THREATENING SITUATION AND IT WILL BECOME CRITICAL.

THE RECENT TAX PACKAGE INCLUDES VIGOROUS INCENTIVES FOR INCREASING PRIVATE
SECTOR SPENDING ON RESEARCH AND DEVELOPMENT, AND WILL ENCOURAGE A HIGHER LEVEL
OF COOPERATION BETWEEN UNIVERSITIES AND INDUSTRY. DURING RECENT YEARS, INDUSTRY
HAS PROVIDED LESS THAN FIVE PERCENT OF THE FUNDS FOR THE NATION'S COLLEGES OF
ENGINEERING. IF THIS WERE TO INCREASE DRAMATICALLY ENOUGH TO OUTWEIGH THE
DECREASES IN FEDERAL FUNDING, PERHAPS STIPENDS FOR GRADUATE STUDENTS COULD BE
INCREASED AND ONE PROBLEM WOULD ABATE. SUBSTANTIAL INCREASES IN THE LEVEL OF
INDUSTRY FUNDED RESEARCH AT UNIVERSITIES COULD ENHANCE THE ATTRACTIVENESS OF A
UNIVERSITY CAREER IN ENGINEERING. HOWEVER, INCREASING THE DEMAND FOR ENGINEERS
IN THE PRIVATE SECTOR BY ALLOWING TAX WRITE-OFFS FOR WAGES OF R&D WORKERS MAY
RUIN THE UNIVERSITIES' ALREADY WEAKENED ABILITY TO COMPETE FOR BOTH B.S. STUDENTS
FOR GRADUATE SCHOOL AND FOR PH.D.'S TO BECOME FACULTY.

IT IS VERY DIFFICULT TO PROJECT WHICH OF THESE EFFECTS WILL DOMINATE, BUT THE
EFFECTS OF A SPECIFIC PORTION OF THE LEGISLATION ARE MORE PREDICTABLE. THE
PROVISIONS INCLUDE A TAX CREDIT EQUAL TO 25% OF THE INCREMENT IN WAGE EXPENDITURE
FOR RESEARCH AND DEVELOPMENT. COMING AT A TIME WHEN THE DEMAND FOR ENGINEERS
ALREADY FAR EXCEEDS THE SUPPLY, THIS FEATURE WILL ENCOURAGE THE PRIVATE SECTOR
TO BID UP THE SALARIES EVEN HIGHER. EVEN FEWER PEOPLE WILL CONTINUE ON FOR
GRADUATE DEGREES, AND OF THOSE, FAR FEWER WILL BE WILLING TO REMAIN IN ACADEMIA.
IN THE NOT TOO DISTANT FUTURE, THE UNIVERSITIES WILL BE UTTERLY INCAPABLE OF
TRAINING AN ADEQUATE NUMBER OF ENGINEERS. INDUSTRY WILL SUFFER, AND SO WILL THE
REST OF US.

GIVEN THIS PROBLEM, I ENCOURAGE MY COLLEAGUES TO MONITOR THE EFFECTS OF THESE PROVISIONS CAREFULLY OVER THE NEXT YEAR OR SO AND HAVE A BASIS FOR DECIDING WHETHER TO AMEND THESE PROVISIONS IN THE 98TH CONGRESS.

Mr. HARKIN. Mr. Gore?

Mr. GORE. No questions.

Mr. HARKIN. How is the quality of engineering education in the United States compared with that of Japan or West Germany or the Soviet Union?

Dr. BRANSCOMB. I think we have a more diverse educational establishment than most other countries. I don't think there is any question that the best of our educational establishment is far superior to that of any other nation at the university and postgraduate level.

The Japanese educational system is different in character. It is my impression that it is much less effective at generating imaginative, innovative people given to new concepts and ideas than is our own. Japan does focus very strongly, however, on production issues. They are committed to large numbers of students and have the advantage of an extremely rigorous secondary education.

That comment could also apply, multiplied by a factor of two, for the Soviet Union. They have very rigorous preparation prior to reaching the university level. They do not train people with the kinds of imagination and creative skills that our institutions do. I believe that those institutions in the United States that are properly staffed and equipped still do the preeminent educational job in this world.

Mr. HARKIN. Earlier this morning, when the hearing started, I was here briefly. There were two gentlemen that were with the Iowa State University. I didn't know it at the time, but one of the gentlemen is an instructor in the EE department, which, as you know, is one of the foremost engineering schools in the State. This man was telling me on the way out that he was interested in the hearing. I asked him what he thought about this problem of engineers. He said that what they had seen at Iowa State, one of the problems they have seen was this: Engineers, the ones who really were at the top of the class, when they graduate, they are picked up by private companies in the United States who offer them not only very nice salaries, but also offer them sort of an inhouse graduate program.

I didn't pursue it. There was an in-house graduate program, either they send them to school someplace else later on, or something of that nature. I was unclear on that. The effect of that was two-fold. One, he thought that the quality of graduate students they were getting was dropping.

And second, the quality of the instructors that they eventually got was going down. While they still have a good undergraduate program, the graduate program is suffering.

Do you have any thoughts on that?

Dr. BRANSCOMB. Yes. There are two kinds of activities in industry that fit the general description. Only one of them could have this effect. The competition for the most able young people is sufficiently severe that quite a number of companies are trying to locate the talent when they are undergraduates and prepare them to be recruited later.

There is, for example, a well-known program at Bell Telephone Laboratories in which Bell recruits people at the bacculareate level. Then, immediately, they send them to graduate school at the

company's expense to get a masters degree. Bell, in fact, emphasizes the educational levels required for modern technology by having a rule that no one in the laboratories at Bell Labs can be employed without a masters degree or a doctorate. But, they will help you obtain a graduate degree when they recruit at the bacculareate level.

In addition, there are other companies that allow employees, after years of work, to take time off at the company's expense to pursue a degree. My company has a systems research institute at New York City. We hire faculty from the university as part-time teachers. I don't think that activity has the effect you described, because it is exclusively for our permanent employees.

Mr. HARKIN. I have no further questions. We will end our discussion for the moment-we won't end it, but we thank you for coming today.

Dr. BRANSCOMB. I would like to thank you for the opportunity to appear.

Mr. HARKIN. Dr. Frosch, thank you for coming back again.

That will bring to a close this portion of the hearing on engineering manpower concerns for science and technology. The committee will now have a brief recess.

[Brief recess.]

Mr. HARKIN. We are honored to have our colleague from the other body, the Honorable Senator Harrison Schmitt, to testify regarding engineering manpower concerns.

STATEMENT OF HON. HARRISON SCHMITT, MEMBER, U.S.

SENATE

Mr. HARKIN. Senator Schmitt, we welcome you to the committee. It has been my personal and professional pleasure to work with you in the past. We certainly look forward to your testimony. We have a copy of your written testimony. We will include it in the record at this point.

Please proceed.

Senator SCHMITT. Thank you, Mr. Chairman and members of the committee. It is good to be with you again and so often. One of the exciting aspects of this year has been an opportunity to work very closely with this committee and its subcommittees in the refinement and design of not only science and technology policy, but also its implementation.

As the words of a song go, I have looked at science from many sides now, to paraphrase a little bit, not only as a trained scientist, geologist, but also as an applied scientist and engineer in the space program, and now, looking at the policy and political sides of science and engineering. I hope that some of my thoughts will be of use to the committee.

Mr. Chairman, this country is embarking on a major revitalization of our economy and strengthening of our national security. Success will depend greatly on our national innovative abilities and our skills in successfully commercializing these inventions.

Until recently, we have too often taken for granted the advantages we have enjoyed in science and technology and have allowed national policies and attitudes to develop which have tended to

undermine our capacity to innovate and compete successfully in the marketplace.

Mr. Chairman, since you have so generously included my full testimony in the record, I will move through certain parts of it and expand on them as seem to be fit.

Certainly, our tax, monetary and regulatory policies have discouraged the pursuit of innovative ideas in recent decades. That, I think, is something that we are all working to refine and to eliminate unnecessary tax and regulatory activity, where that can be done.

My Subcommittee on Science, Technology and Space has been looking in its areas of jurisdiction at some of the other problems that seem to have discouraged young men and women from moving into science and technological fields that are appropriate concerns of the Nation as a whole.

We have conducted oversight hearings on the National Science Foundation authorization. I have had field hearings in New Mexico, which is a major center of science and engineering activity now, in addition to being a growing area of business activity. The subcommittee and its staff have begun to concentrate on this fundamental issue of engineering and scientific manpower which I commend you for addressing also.

It is obvious that many of the problems have their roots in the difficulties of our elementary and secondary school systems which, in turn, may very well have their roots in the preschool teaching of our children. The very dominant influence of television in that preschool environment has not yet realized its beneficial potential.

But today, I think it is important to focus on what can we do in the near and intermediate term to solve the technical manpower problem while at the same time, we address the more fundamental generic difficulties that exist within our education system as a whole.

Everyone, I believe, is aware of how much more aggressive our international competitors are and have been for some time in the education of their young people, particularly in science and engineering. Japan, the Soviet Union, many other nations are doing far more in this area and recognize the importance in international economic competition of having a reservoir of young men and women who can serve their national economic interests in engineering and scientific careers.

In contrast, we have seen a diversion of our young talented men and women into fields of law, social sciences and other fields, which, while important in their own right, do not address the basic problem that is before the subcommittee today.

One might say that we have encouraged our young men and women to go into careers that treat symptoms of problems rather than solve problems-an important difference in science and engineering education versus legal and social education.

Again, I don't mean to degrade the importance of those other fields in any way. Nevertheless, there is a fundamental difference in the educational and professional discipline that the two general categories entail.

Another problem of which our subcommittee has become much aware of is a decreasing number of young persons going into under