An interesting paradox in the technology world is that there is both a shortage and a surplus of engineers in the United States. Talk to those working at any Silicon Valley company, and they will tell you how hard it is to find qualified talent. But listen to the heart-wrenching stories of unemployed engineers, and you will realize that there are tens of thousands who can’t get jobs. What gives?

The harsh reality is that in the tech world, companies prefer to hire young, inexperienced, engineers. And engineering is an “up or out” profession: you either move up the ladder or face unemployment. This is not something that tech executives publicly admit, because they fear being sued for age discrimination, but everyone knows that this is the way things are. Why would any company hire a computer programmer with the wrong skills for a salary of $150,000, when it can hire a fresh graduate—with no skills—for around $60,000? Even if it spends a month training the younger worker, the company is still far ahead. The young understand new technologies better than the old do, and are like a clean slate: they will rapidly learn the latest coding methods and techniques, and they don’t carry any “technology baggage”. As well, the older worker likely has a family and needs to leave by 6 pm, whereas the young can pull all-nighters.

At least, that’s how the thinking goes in the tech industry.

brown-and-linden-1In their book Chips and Change, Professors Clair Brown and Greg Linden, of the University of California, Berkeley, analyzed Bureau of Labor Statistics and census data for the semiconductor industry and found that salaries increased dramatically for engineers during their 30s but that these increases slowed after the age of 40. At greater ages still, salaries started dropping, dependent on the level of education. After 50, the mean salary of engineers was lower—by 17% for those with bachelors degrees, and by 14% for those with masters degrees and PhDs—than the salary of those younger than 50. Curiously, Brown and Linden also found that salary increases for holders of postgraduate degrees were always lower than increases for those with bachelor’s degrees (in other words, even PhD degrees didn’t provide long-term job protection). It’s not much different in the software/internet industry. If anything, things in these fast-moving industries are much worse for older workers.

For tech startups, it usually boils down to cost: most can’t even afford to pay $60K salaries, so they look for motivated, young software developers who will accept minimum wage in return for equity ownership and the opportunity to build their careers. Companies like Zoho can afford to pay market salaries, but find huge advantage in hiring young workers. In 2006, Zoho’s CEO, Sridhar Vembu, initiated an experiment to hire 17-year-olds directly out of high school. He found that within two years, the work performance of these recruits was indistinguishable from that of their college-educated peers. Some ended up becoming superstar software developers.

brown-and-linden-2Companies such as Microsoft say that they try to maintain a balance but that it isn’t easy. An old friend, David Vaskevitch, who was Senior Vice-President and Chief Technical Officer at Microsoft, told me in 2008 that he believes that younger workers have more energy and are sometimes more creative. But there is a lot they don’t know and can’t know until they gain experience. So Microsoft aggressively recruits for fresh talent on university campuses and for highly experienced engineers from within the industry, one not at the expense of the other. David acknowledged that the vast majority of new Microsoft employees are young, but said that this is so because older workers tend to go into more senior jobs and there are fewer of those positions to begin with. It was all about hiring the best and brightest, he said; age and nationality are not important.

So whether we like it or not, it’s a tough industry. I know that some techies will take offense at what I have to say, but here is my advice to those whose hair is beginning to grey:

  1. Move up the ladder into management, architecture, or design; switch to sales or product management; or jump ship and become an entrepreneur (old guys have a huge advantage in the startup world). Build skills that are more valuable to your company, and take positions that can’t be filled by entry-level workers.
  2. If you’re going to stay in programming, realize that the deck is stacked against you. Even though you may be highly experienced and wise, employers aren’t willing or able to pay an experienced worker twice or thrice what an entry-level worker earns. Save as much as you can when you’re in your 30s and 40s and be prepared to earn less as you gain experience.
  3. Keep your skills current. This means keeping up-to-date with the latest trends in computing, programming techniques, and languages, and adapting to change. To be writing code for a living when you’re 50, you will need to be a rock-star developer and be able to out-code the new kids on the block.

My advice to managers is to consider the value of the experience that the techies bring. With age frequently come wisdom and abilities to follow direction, mentor, and lead. Older workers also tend to be more pragmatic and loyal, and to know the importance of being team players. And ego and arrogance usually fade with age. During my tech days, I hired several programmers who were over 50. They were the steadiest performers and stayed with me through the most difficult times.

Finally, I don’t know of any university, including the ones I teach at, that tells its engineering students what to expect in the long term or how to manage their technical careers. Perhaps it is time to let students know what lies ahead.

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  • Ruchir

    What they also don’t teach you at Harvard .. or IIMs

  • Selah09122011

    I just watched you on CNN’s documentary on a group of African American try to make it in Silicon Valley.  You made a comment that makes me think that you should add “and Race”.

  • suidae

    FFS, label your axes!

  • Kap_99

    We are supposed to have Anti-Age Discrimination laws.   It would not take much for a government agency to highlight this issue — simply use the same techniques that were used to proactively to fight gender and race discrimination and send out a bunch of resumes that equally meet the job qualifications but with obvious age differences.  This would at least put some of our super star tech companies in the spotlight for their illegal practices.   Hiring the older worker  isn’t always the right answer, but at least they should be afforded to get a chance to bat.  Otherwise, what kind of society are we, that throws some of our brightest and hardest-working employees on the trash heap in their 40’s and 50’s while the country is pushing to have them work until their 70’s?

  • http://wayneharrel.zielix.com Wayne Harrel

    I’m an entreprenuer, want to come to US to start a company. This will create jobs and benefits US economy. But current immigration system wants me to invest at least $500,000 to get EB 5 visa. I already have spent $50,000 on my travels, visa, lawyer and business fees. Is there any way government can make doing business in US that creates jobs anymore difficult?

    In India, I faced corruption and US, hard legal system for Indian entrepreneurs.

    But I will stuck on my idea no matter what and do anything to get access to valley and execute my business no matter how hard it would be.

    The only thing I’m pissed off right now is how to make good connection between developers who really want to build a good business with me. Anyway, its a helpful post.

  • joe

    Vivek, I wonder if you’ve seen this study:

    http://www.docstoc.com/docs/14021642/Steady-as-She-Goes-Three-Generations-of-Students-through-the-Science-and-Engineering-Pipeline

    My sense is that the younger generations are keenly aware of awaits them along the STEM career path, which is why America’s best and brightest are avoiding it.

    • http://www.wadhwa.com Vivek Wadhwa

      Yes, Hal and Lindsay have been doing some interesting work. I have also written about this for BusinessWeek…

  • Scarlet Pimpernel

    Congrate Vivek…you are the firt to publicly state what everyone over 30 has been experiencing for the past 30 years.

  • http://www.teachertalknv.net Corrine Ritchko

    My heart goes out for the older engineers out there? It is not their fault that they are older now. And I believe that they know more than the younger ones. And the trainings that the companies will give to the younger ones, they can also give it to the older ones? Older ones are more mature and responsible. And because they have families to feed, it is their drive to do good with their job to keep it. Whereas younger ones do not really care about their job because they don’t have families to feed.

  • http://robertwiles.blogspot.com Robert Wiles

    While there is a point to “older” workers carrying mental baggage, when we are discussing technology skills there has to be a qualifier. UC Berkeley’s CS department prides itself on not being ‘trade school.’ I have less recent exposure to regular engineering graduates from there, but even if they are not practiced, practical engineers out of the box, they are expected to have the skills and direction to become such. As to “software engineers” – perhaps better called “code designers” – I question some of the need and wisdom to H1B visas for the import of entry-level people. We have no obligation to train our own competition, do we? I would have less issue with immigrant-class visas for people we train and KEEP.
    I agree that the corporate management is short-sighted, but we create that drive by public policy that makes lawsuits over quarterly income affecting decision second guessing. If we do not encourage long-term investing and establish greater rewards (money and prestige) for lawers and MBAs than scientists, engineers and mathematicians we’re going to continue the pattern of diminishing progress.
    With our universities spending more energy on political indoctrination than education (bashing USA, profits, etc), what do you expect?

  • Shri

    I haven’t come across an article in recent times that better captures and distills the very essence of what it is to be a senior programmer these days. Wow ! Thanks for the advice Vivek, but its gonna take me more than a few beers and bottles of wine to follow it. Im 48 and clearly my angst shows !!

  • Steve Bunning

    The problem to a large degree is that engineering is not a profession in the same way as other professions. People can get hired as engineers with little formal training. As was mentioned in the article, Zoho was hiring high school graduates as developers. If you tried to do that for Doctors or Lawyers, you could go to prison.

    Can you imagine the same degree of ageism when speaking of Doctors or Lawyers. “Lets get rid of our experienced Doctors and replace them with recently graduated residents!” Combine that with the top management of high tech companies constantly complaining that there is an engineering “shortage” at the same time as many engineers are unemployed. You only have to examine engineering salaries to get a measure of the shortage. If there truely was a shortage, salaries would be increasing much more rapidly than inflation. What they actually mean is there is a shortage of lower cost engineers. How many H1-B engineers actually have unique skills that are not available here already? There are some, but many have the same skill sets as existing U.S. workers. The only difference is they are willing to work for a lower salary.

    I have greatly enjoyed my career as an engineer, but it is a career that does not value experience the way most true professions do.

  • R. Lawson

    “The sad thing is that there have always been people who blamed these immigrants for making them work harder and compete, and for everything else wrong in their lives.”

    We have a sad history when it comes to immigration. The first arrivals from every major ethnic group – including Chinese, Germans, Italians, Irish, Japanese, Hispanic, and now south-east Asian were used and exploited by industry. They were treated poorly by society and the most vulnerable to corruption in both industry and government.

    You present industry as some savior to immigrants when in fact industry cares nothing for them, except their willingness to work cheaper, longer, and harder than established ethnic groups. I suspect that Indian-Americans over time will earn a strong place in American culture and history. However, allowing corporations to exploit them in the process is no way for a Democracy respecting human rights to accomplish that. We both agree that green cards are preferable to H-1b visas – a good thing. However you don’t recognize that current economic conditions (mass unemployment for example) should have an impact on the level of immigration. Now is not the time when our own people don’t have jobs. Increased immigration now will only breed resentment.

    “What made America what it is are its free markets and immigration.”

    Only in the last 40 years has the United States moved towards free trade, and the result has been a pause in the growth of the middle class (and now a decline). Workers today earn no more per-capita than workers 40 years ago when salaries are adjusted for inflation, and they now pay more for healthcare as a percent of their income and are much less prepared for retirement. My son will need to look the word pension up in the dictionary; I certainly won’t be getting one and very few people in my generation will.

    “If we become protectionist as you are advocating, we will be on our way to becoming a third world country.”

    You are going to need to explain with simple math how this is so. Although free trade has increased exports, imports have also gone up disproportionately. For your logic to have any validity, never-ending and ever increasing deficits in trade must be a good thing. Unfortunately, consumerism has been the main driver of our economy.

    Under the current economic climate we are presented with two bad choices: we can increase personal debt and continue to have the lowest savings rate in the world, allowing bubbles in real-estate, retail, and other sectors to drive our economy. Or we can start behaving responsible as consumers and save a higher percent of our income so that we can retire one day. After all, social security will be insolvent and very few of us can count on a pension at retirement. The responsible decision will unfortunately put our economy on a crash course because irresponsible behavior is what has kept our economy growing.

    In short, our economic growth is currently dependent entirely on consumer debt, national debt, irrational exuberance, and selling our national wealth to foreign interests. The American economy is punished when Americans are responsible with their personal finances. That’s the system “your” economists helped build.

    I am advocating responsible trade agreements resulting in balanced trade. This is a form of protectionism, and your side continues to portray any rational trade agreement as protectionism and as such flawed. There are various degrees of protectionism; unfortunately your side is intellectually incapable of exploring anything other than free trade and has the same label for a person supporting balanced trade as a person supporting the closure of our borders and all trade: protectionist.

    Free traders are really the biggest mental midgets I have ever seen. They don’t even make an attempt to explain away the relationship between free trade and trade imbalances. If anything, many will even suggest that debt just doesn’t matter. Somehow, I suspect these same people have a double standard when it comes to managing their personal finances. They don’t want themselves to be in debt, they are simply hoping the masses will be dumb enough to run up their own personal debt and shoulder our growth. When credit flowed freely, that little scheme worked for awhile. It doesn’t work any more. It almost crippled our system of finance in yet another financial crises that required government action. The free market couldn’t survive on it’s own two feet. What a shame.

    Following your economic polices, we must trade real wealth for cheap consumer goods manufactured abroad. The Chinese are going to beat us one TV, pair of shoes, and plastic toy at a time, until eventually we are a 3rd world nation. If you want to fight protectionism, you need to talk to China and India. My goodness are they protectionist. Manipulating their currencies, having much more restrictive immigration policies than us, and restricting trade when local industry is threatened.

    You’re barking up the wrong tree – the US is on the losing end these trade agreements which is measured by the continuing deficits. Be a good free trader and tell China and India what you really think about their protectionism! Their protectionist actions are a fly in your free-trade ointment; much more than I am. I’ve seen you quoted many times in the Indian press and not once that I am aware of have you challenged the nation of India on their own protectionist (or should I say xenophobic?) ways. What’s good for the goose is good for the gander.

    • vivek

      Roy, I don’t have time to debate you on these misguided arguments. But I’ll just say that the last thing we want to become is like what India and China were. They are learning what we have forgotten. Yes, there are many problems, but protectionism will lead to the demise of American prosperity, not build it. Read my recent articles in BusinessWeek in which I challenged Andy Groves on his bizarre protectionist prescriptions, and the article about how countries like Chile are opening their doors as we close ours.

  • R. Lawson

    The only reason this phenomena occurs is because we allow industries to import and exploit young people, tipping the balance of the supply and demand of workers. There isn’t a shortage of skilled workers, there is a shortage however of honesty from Silicon Valley CEOs surrounding this issue. Like you said, they don’t want to admit it but we all know this to be true.

    We live in a society and our collective interests outweigh the interests of any single industry. It’s in our national interest that we not turn our backs on intelligent people in the later stages of their careers.

    I realize that industry groups will continue to lie about shortages, call people who oppose their practices xenophobes or protectionists (or worse), and spend millions of dollars each year trying to buy influence from legislators around the world.

    My advice to you people who believe that corporations have the right to bully workers, corrupt our governments, and move our nation towards fascism: this is a Democracy. The only reason you have had your way for so long is because the majority of the nation was prosperous. That is no longer the case.

    With a shrinking middle class and a consolidation of wealth in the hands of the few, there will be a backlash. If you look closely, there is a backlash. Just like we have cycles in our economy, we also have cycles in politics resulting in shifts in power and ideology. You would have to be blind to not see this occurring right now. It’s not about Democrats and Republicans anymore. It’s about a public that is angry at politicians across party lines and an insatiable appetite for change.

    I personally support more patriotism and loyalty to our nation, including balanced trade and immigration. That isn’t to say I oppose trade or that I oppose immigration. I support both when implemented smartly.

    I fear however that things will shift towards an unhealthy level of nationalism. The type of nationalism that caused Americans to send Japanese-Americans to internment camps and millions of Jews to be murdered by the Nazis. In the years I have been involved in this debate I have seen how fear and hatred can bring out the worst in people.

    I think it is ironic how Vivek Wadhwa’s zealous support of free (unbalanced) trade, open borders, anti-labor, and pro-corporate agenda will marshall in the the very thing he fears the most. Every action has an equal and opposite reaction. I think this applies towards human behavior also.

    What we need in our country is balance. More moderate governance usually results in minor shifts one way or the other. Today we have a chaotic government and a pendulum with very wide movements. People like Wadhwa pushed the pendulum so far in one direction that they will soon be watching in horror (as will I) when it shifts very far to the other side.

    What did the greed of the roaring 20s lead to? A world intent on destroying itself during WWII. Unless we make some changes and quick, the only way this country is going to put millions of people back to work anytime soon is war. Probably a war that will make Iraq and Afghanistan a footnote in history. What else would you expect from a nation that spends over 50% of our national budget on the military?

    It’s a much safer world in the middle. We need immigration and smart immigrants, we need business to thrive, and we need global trade. We don’t however need immigration to continue being a labor arbitrage tool, corporations to rule the Earth through their purchase of governments, or massive trade and budget deficits. These things aren’t sustainable.

    I hope and pray that the extremists on all sides (globalists/corporate elites, and nationalists alike) will find themselves in the minority and over-ruled by moderate thinkers. Unfortunately, I suspect the world is heading down a very dangerous path. All it will take is another Lucitania, 9/11, Pearl Harbor, Hitler, weak League of Nations (today the U.N.), Ferdinand Archduke, or other similar event to ignite the passions of global war once again. It will be a similar story, just different players and different alliances. History has an uncanny ability to repeat itself.

    • Administrator

      Roy, this is the ignorance that plagues the anti-immigrant movement. It has always been like this in tech–well before you had H1Bs entering the country. So what do you expect, that Silicon Valley companies will pay $150K for older workers rather than $60 for newbies, out of patriotism?

      What made America what it is are its free markets and immigration. The sad thing is that there have always been people who blamed these immigrants for making them work harder and compete, and for everything else wrong in their lives.

      If we become protectionist as you are advocating, we will be on our way to becoming a third world country. This makes the pie smaller, not bigger.

      Vivek

      • D Flinchum

        If we become protectionist as you are advocating, we will be on our way to becoming a third world country.

        Vivek, we are already on our way to becoming a third-world country as our middle-class disappears and we import more products – and people – from abroad.

  • http://www.jaswa.com Raj Jaswa

    Is salary the only measure of an engineer’s worth?

    Most of the folks who decide to stay with engineering, through the end of the career, do it because they love what they do. They find engineering creative, stimulating and challenging. Many a senior engineer will tell you that they are surprised that they get paid to do the work that they do – because they enjoy their work so much.

    These are the senior (and not so senior) engineers that I want on my team and luckily, Silicon Valley provides many ways to compensate valuable contributors besides the weekly paycheck!

    • Administrator

      Raj, you may well employ older engineers, as did I during my tech days. But most tech companies aren’t like us. They favor the young and cheap. Even though older workers have many advantages….