Further, at least in Computer Science, most of my fellow PhD students came in explicitly not interested in professor jobs. They just wanted the freedom to work on larger problems (in a research lab or at the higher levels in a company) that a PhD affords.

Now in my fourth year, I can say that there are very few of us who are even planning to do the tenure-track academic job hunt. More than there are jobs available (in the US), of course.

I think CS is somewhat unique. Most of my professors got their MS, worked for a decade or two, then went back for their PhD and taught from there. In a way, it's great: most of my professors have fairly extensive real-world experience. Last semester my SENG prof was sick, so he got one of the CS profs to come in and talk to us about industry for a day. Here's a guy who was a software architect for some fairly large companies talking about his fuckups, and the stupid things he learned in school that he had to unlearn in the real world. I find having that kind of experience on tap to be eminently useful.

I don't think it's that unique. When I was in school, in the early 1980s, many engineering professors had similarly returned to the university after gaining professional experience. I remember hearing that that was normal for most engineering schools. And while less common, it was also true of many in the business school.

That's undoubtedly true. My comment was meant to be taken as a foil to arts PhDs. My cousin's boyfriend is doing an economics/geography/statistics post-doc (modelling the behaviour of people in cities in regards to travel to and from work, traffic, etc), and his focus is entirely on research. He would be very hard pressed to get a job in the private sector, so his goal is to get published many times then get a tenure track position at a research university. There's nothing wrong with that, but I appreciate the fact that my professors have actually worked in the field they're training us for.

It depends heavily on exactly which engineering field you're talking about, and what kinds of jobs. Engineering PhDs in non-computing fields (ie materials, mechanical, bio-, etc) are often faced with the dilemma of being overqualified for most of the jobs which may be hiring at any given time.

Most engineering jobs don't require anything like the research abilities in a PhD, and the candidate with a B.S. is a lot cheaper. R&D departments are a different story, but there are only so many R&D jobs to go around--especially if you're subject to any location or personal-relationship constraints.