As America entered the Cold War, approximately 50% of physics Ph.D. graduates entered academia, says Roman Czujko, director of the Statistical Research Center at the American Institute of Physics (AIP) in College Park, Maryland, citing AIP statistics. The proportion of those taking postdocs is unknown, but it probably was small. Most of the rest went to private industry, with a few going to work in national labs, for nonprofit organizations, or in sundry occupations. By 1979, about 45% of physics Ph.D. graduates were taking postdoc positions, and some 55% held permanent jobs within a year of graduating.
Those proportions indicate a healthy workforce, with competitive job offerings and a balance between basic research and applications, Czujko says. Today that balance has changed. According to AIP data, in 2010 the number of physics bachelor's degrees and Ph.D.s awarded in the United States set or equaled respective all-time highs. One year after finishing their Ph.D.s, 60% of physicists were in postdocs. Nearly half of all physicists work in industry, and only about 35% work in academia. This reflects two trends, Czujko says: a relative decline in the number of tenure-track academic jobs in most physics fields, and increasing opportunities in certain fields for math-savvy physicists.
Interested in a career in the finance industry? Read "In Person: What Not to Do With Your Physics Education." 
One such field is finance. For many years, the finance industry has hired math whizzes—including physicists—into relatively high-paying "quant" positions. Physicists who go to work in finance typically earn more than those who stay in physics. According to Czujko, AIP data show that about 10% of Ph.D. physicists who go into private industry—that is, 5% of all Ph.D. physics graduates—go into finance.
The rise in the popularity and visibility of finance (and other nonresearch) careers has presented some universities and physics departments with a difficult decision: Should they prepare students for fields that have open jobs—including finance—or stick close to their traditional missions? A few institutions are offering some training in finance, but not everyone thinks that's a good idea.
Steven Kahn, chair of the physics department at Stanford University in Palo Alto, California, says it's unrealistic to expect academia to remain the premier career choice for top students when other fields offer better prospects and higher salaries. "There's still arrogance within the physics community that the best physicists stay in physics, that the people we're losing [to other fields] aren't necessarily those at the top," he says. "I think that's an arrogant attitude and I'm not sure it's true."
The phenomenon of physicists—and other scientists—pursuing careers off the well-trod path is well established and has been for decades. But while some alternative careers, such as teaching, science policy, or industrial research, are well accepted as putting physics training to productive use, some critics bemoan the loss of skills when physicists go to work in the finance industry.
Researcher, writer, and entrepreneur Vivek Wadhwa  of Singularity University in Moffett Field, California, is perhaps the most visible critic of technically trained students entering finance. Wadhwa wrote, in an essay on TechCrunch  published in March of last year, "I was shocked—and upset—when the majority of my students became investment bankers or management consultants after they graduated. Hardly any became engineers. Why would they, when they had huge student loans, and Goldman Sachs was offering them twice as much as engineering companies did?"
In an interview with Science Careers, Wadhwa says that an apparent scarcity of jobs within academia is not a sufficient reason for physics departments to start helping physicists prepare for jobs that don't utilize their training. In fact, he says, before they train physicists to do other kinds of work—especially finance—physics departments should probably scale back enrollment. "If these departments can't create employable graduates, then those departments shouldn't exist," Wadhwa says. "In other words, why should we be using our national resources and making it a priority to churn out more investment bankers? Investment bankers can afford to train their own people."
Rather than retooling their curricula or starting new programs to meet the financial industry's needs, Wadhwa says, departments should give physicists the skills they need to create their own jobs—and jobs for others; that is, they should offer more entrepreneurship training. "Teach them how to take their idea and turn it into an invention," he says. "That would be win-win."
Kahn declined to comment on the relative benefits of entrepreneurship training, but argued that professors and departments should help students prepare for the careers that they—the students—want. "I personally don't think a physics mentor should discourage a student from moving forward in any direction he/she wants to pursue," Kahn wrote in an e-mail to Science Careers. "I think our only role would be to try to help to find contacts for the student to discuss career opportunities with more knowledgeable people."
What makes the finance industry so alluring is that it offers jobs now, at good salaries, to do work utilizing skills many physicists already possess. When Stanford's physics department embarked on a project to reconnect with its far-flung alumni, Kahn says, it found that the majority of Ph.D. graduates who've left academia are working either in the information technology industry or on Wall Street. The Stanford grads he spoke to complained that the physics programs "were essentially apprenticeships" designed to "reproduce faculty," he says. "The majority of those who I talked to said they'd left the field because of disenchantment over the inability to get an academic job, but none were unhappy with the way their lives had turned out."
So, earlier this year, Stanford's physics department decided to create a program to help current physics students—graduate and undergraduate—connect to physicists working in finance, as well as to internships and employment opportunities in the industry. The department does not offer courses in finance, and doesn't plan to.
Several years ago, at the University of Illinois, Urbana-Champaign (UIUC), physics professor Nigel Goldenfeld created an arrangement that allowed physics Ph.D. students to earn a master's degree in finance as a regular part of their physics coursework. That finance-degree fast track no longer exists—Goldenfeld cites financial reasons—but says the program was quite popular with students.
At Princeton University, quantitative finance courses are taught and tailored to physics and math students by the university's finance school. Princeton’s Bendheim Center for Finance also teaches students about the variety of career paths available in finance for those with quantitative training. The courses are open to all students, but the certificate is available to only undergraduates. The program has no formal ties to the physics department but is advertised  on its Web site.
Seven years ago, the University of Houston (UH) in Texas became the first doctoral program in the United States aimed at getting physicists into finance careers; today, it's still the only one. Gemunu Gunaratne, a professor in the university's Ph.D. program in econophysics , says that the dearth of jobs in academia was one of the main reasons he and his colleagues created it. "Our school is not ranked in the top 25 or anything like that, so graduates can have a harder time finding employment in academia," he says.
The Houston program is designed to train as many as three students per year but usually it takes just one, Gunaratne says, partly because few applicants have sufficient education in applied mathematics. (Funding for the program is another reason for low numbers.)
Lars Seemann, a recent graduate of the UH econophysics program who studied under Gunaratne, took a job a few months ago at Quantlab Financial LLC  in Houston, providing quantitative analysis for a range of trading and investment operations. Seemann studied physics as an undergraduate at Heidelberg University in Germany and sought out the UH program after taking a finance course taught by a physicist.
Initially, Seemann planned to go into academia. "But during my Ph.D., as I talked to many people, I saw how competitive it is and I started to question whether it was really worth it to go through all these postdocs and even changing cities," he says. He took an internship at Quantlab toward the end of his Ph.D. program, and several months before he graduated they made him a generous offer. He believes he eventually could have landed a job in academia doing biophysics research—his academic passion—but he's happy doing quant work. "I love it because it involves a lot of problem solving, coding, research—just without grant-writing, publications, and the pressure of teaching."
It's possible, says Stanford's Kahn, that a bump in the number of physicists pursuing finance careers could make it harder for less prestigious research universities to recruit and retain talented professors to teach the next generation of physicists. He is also concerned about is his department's ability to ensure the quality of finance-career training for its students. "The truth is, academic physicists really don't know anything about business," he says. Consequently, it can be hard to judge the quality of mentorship experiences or internship programs, for example.
Lyman Page, the chair of Princeton's physics department, wrote in an e-mail to Science Careers that fewer than 10% of Princeton's recent physics grads have gone into finance. In his view, those numbers are too small to cause any concern about the loss of talent.
Gunaratne believes the Houston program, too, is too small to have a negative impact on the field. "Maybe if we were taking more people, this might be an issue, but as is, it's not," he says.
UIUC's Goldenfeld says that while it is true that many bright physicists leave the field for the financial sector, including some of his own students, plenty of bright students remain. So far, he sees no evidence that physicists pursuing finance is having a negative impact on scholarship. The obligation of educational institutions to help physicists find good jobs still trumps any danger to society caused by physicists leaving physics, he says. "I think it's always a good idea for physics departments to be helping their students find future careers, whether they be in traditional physics directions or out of it. I believe we do owe our students absolutely the obligation to make as many connections for future directions as we can. And I think finance is as valid an area in society as any other."
Michael Price is a staff writer at Science Careers.