This final paragraph suggests that American engineers are being over-educated for what the market desires. I believe that is the case in Australian Universities as well. Graduates leave with highly specialised degrees which are over-educated for the labor market. Most engineering degrees could be two years in length and the individual would be just as capable and productive as with a four year degree.
I think that Cam is pointing to a major problem here, and one not limited to engineers. In recent decades we have seen a process of professionalisation in many occupations. Training periods have got longer across the board.
There is nothing wrong with this per se. However, it is now creating problems in terms of supply and expectations.
Longer training periods make professions less responsive to changes in demand, while changing expectations may make people less willing to undertake more mundane tasks that formed the original core of the work. Those tasks still have to be done, so a new para-professional group is born.
A particular problem arises where the process effectively creates a new silo. One side effect can be to lock that group into past knowledge, reducing its capacity to move in new directions.