I guess that education systems differ quite a lot between different countries. So where you do your physics studies could make a significant difference. The OP is probably somewhat USA-centric. In Sweden there are two major undergraduate programs in physics. The general university physics program, and the engineering physics program. The latter is an engineering program and you are awarded an engineering degree. The contents, however, is mostly a physics program. For those going into an academic physics career it is as good a starting ground as the general university physics program. For those going into an engineering career, it is in some respects as good as or better than the more traditional engineering programs, and in some worse. The difference is that you learn less specific engineering, the advantage is that you learn more basic physics and mathematics, and general modelling skills. In USA the tradition seems to be more of traditional pure university physics programs. How about other places?
Physics Ph.D.-s are to a large extent recruited from the engineering physics program. A large fraction (I do not have actual reference here, somewhat anecdotic evidence) of physics Ph.D.-s go later to an engineering carrier, and that is made easier by the fact that those coming from an engineering physics background actually have a formal M.Sc. engineering degree.
The reason some continue to Ph.D. varies of course. But for many the dominating reason is: for fun. They like learning about the real world, this is an important reason (I think) that many are attracted to physics; to understand more about the actual real world that we are living in at a fundamental level. But not just the very fundamental level, an aspect of understanding the real world by actual modelling (mathematical modelling that is systematically tested against real empirical data) is also important, be it at a more fundamental or a more phenomenological level (depending what field of physics you go to). The second reason is they like problem solving, being able to work for a few years on a non-trivial problem but still realistically feasible due to supervision by a professor. Some have already from the start an idea for a carrier after the Ph.D., for some in academia, while others self-idetify as engineers and see the Ph.D. just as a temporary fun before they take up their engineering carrier. While others have a more carefree attitude and don't want to take out future worries as carrier choicies before that day actually arrives. Of course many by choice or necessity (or unexpected oppertunity in few lucky cases) change their carrier plans later, even had they one to begin with. In particular, competition for jobs in academia is fierce, and many who wished for that end up in engineering even so. But that is one of the ideas behind the system. There are no sufficiently reliable methods to predict who will be good enough for an academic research carrier, so many more Ph.D.-s than is needed for that has to be produced. Anyway, since most can get reasonably good jobs as e.g. engineers the cost is not that high, so provided they have fun enough during their time as graduate students it is worth it.
The value of a physics Ph.D for engineering. is to a large extent more skills in problem solving and modelling generally. The value as an engineer of the more actual physics that you know as a Ph.D. as compared to an M.Sc is probably only rarely of significant value. Several other small but significant skills are also acquired, e.g., Ph.D.-s have often significantly (well, somewhat...) better English writing skills by having to write articles for actual publication. The value of engineering physics as compared to a more standard engineering program is similar, though the difference is smaller, and here some of the larger physics knowledge is slightly more often of actual practical use (though I think that more often the stronger training in applied mathematics is a more important advantage of engineering physics as compared to a traditional engineering program, but those are not independent; the strong training in applied mathematics comes from doing actual problem solving in physics).
Whether it is good or not to go into physics depends on your preferences and interests, and your skill profile. My guess from personal experience by myself and acquaintancies; Apart from personal interest, if your talent is for acquiring general modelling skills reasonably well, then going to engineering physics is probably better than going to traditional engineering. Many who go there do, but a significant number don't completely "get it" despite being tought it and formally passing the course exams. For those a more traditional engineering program would have been better. As for continuing for a Ph.D., for most students they should do this if they are among the best in class as M.Sc.-s, and if physics is what they really enjoy in life. For most Ph.D.-s there is a rather large but not very large cost of doing a Ph.D., You delay your engineering carrier by approximately 5/2 years, based on a simple toy modell where a Ph.D. takes 5 years and a year as a physics Ph.D-student is worth a half year engineering experience engineering-carrier-wise. (The lower salary during the very time as Ph.D.-student is no real cost, because it is well compensated by the lower expensives by the life-style as a Ph.D.-student.) For me and many of my acquaintances, that was more than well worth the cost, while for others of course it would not be.
Physics is attractive to many highly intellectually capable students, because
See the comments on the post What attracts smart and curious young people to physics?
But what of career prospects?
In an answer to the Quora question What is it like to major in physics? PhD physicist Joshua Parks wrote:
At Physics Forums, ParticleGrl wrote
We discuss some career paths for physics majors below.
Summary
The popularity of physics as a major
The fraction of students who major in physics is small. What's It Worth?: The Economic Value of College Majors by the Georgetown University Center on Education and the Workforce (pg. 162) reports that there are 936k people with Bachelor's degrees in physical sciences, but only 91k with degrees in physics. Assuming that there are 50 years worth of people with Bachelor's degrees in the United States, we get figures of about 20k physical sciences majors per year and 2k physics majors per year. This is in consonance with a report of the National Center for Educational Statistics, which gives a figure of 20k physical science majors who graduated in 2005. There are about 1.3 million college majors a year, so on the order of 0.2% of college graduates majored in physics.
The proportion increases significantly if one considers the population of highly intellectually capable students. For example, about 2% of Stanford undergraduates major in physics. The proportion will be still higher if one considers the population of Stanford's most intellectually capable students.
Physics
The Bureau of Labor Statistics reports that 17k people work as physicists, so about 20% of physics majors.
Majoring in physics is a step toward becoming a physicist, but it's usually not sufficient. In an anonymous answer to the Quora quest What is it like to major in physics?, the answerer reports
This may not literally be true: the American Physical Society reports that 5% of physics majors who enter the workforce right after college work in physics or astronomy. But broadly, a physics PhD seems to be a prerequisite to becoming a physicist.
Graduate school is a common path for physics majors. What's It Worth? reports (pg. 27) that 67% of physics majors go on to earn a graduate degree (without giving a breakdown of what kinds of graduate degrees they get). The American Institute of Physics reports that there are about 900 US citizens who earn physics PhDs a year, suggesting that a large fraction (30+%) of the ~2k physics majors who graduate in a given year go on to earn PhDs in physics.
The default career path for a PhD physicist is academia. We give some general considerations on our page on Academia as a career option. There seems to be a general consensus that the job market in physics academia is extremely competitive. Don't Become a Scientist! by Jonathan Katz describes the scarcity of jobs relative to PhDs and its implications. Physicist rknop writes
Putting the number of physicists together with the number of physics PhDs, it appears as though roughly 50% of physics PhDs are physicists (whether in academia or industry).
Success in physics seems to be driven in large part by intelligence, so exceptionally intelligent people may have an easy time getting a job, but they have to be sufficiently intelligent to stand out amongst a population that's already strongly selected for intelligence.
Computer programming / software engineering
What's It Worth? (pg. 165) reports that 19% of physics majors end up in "computer services." This is vague, but it seems reasonable to guess that it's mostly software engineering. Answers to the Quora question Why are there so many physics majors in software engineering? give some reasons for this.
Physics majors' coursework and research can involve computer programming, but this tends to be limited. Broadly, if one wants to be a software engineer as a physics major, one has to minor in or double major in computer science, or spend a significant amount of time programming on one's own. In general, one can get a job as a software engineer without a computer science degree, so majoring in physics exclusively doesn't bar one from the career path, but it also seems strictly inferior to majoring in computer science from a professional point of view, for future software engineers.
In an answer to Can a physics major get hired as a software engineer? at Physics Forums, fss writes
Engineering
The American Physical Society reports that 32% of physics majors who enter the workforce directly go into engineering. What's It Worth? (pg. 165) reports that 17% of physics majors are engineers.
The answers to Can a Physics major get a job as an engineer? and Engineering Job with a Physics Degree at Physics Forum suggest that physics majors can get jobs as engineers, but that they're at a disadvantage relative to engineering majors, and that those who plan to be engineers should major in engineering.
Physics majors are sometimes able to go to engineering graduate school, for example, Dan Recht.
High school teaching
The Physics Teacher Education Coalition reports that there are 27k high school physics teachers, 35% of whom have degrees in physics or physics education, suggesting that up to 10% of physics majors become high school physics teachers. We have not yet done a writeup on high school teaching as a career, but hope to do so.
Earnings
The relatively low median starting salary and 25th percentile salary may be dragged down substantially by the fact that physics majors attend graduate school and do postdocs with higher frequency than engineering majors do, during which they have low earnings.
After controlling for years of education and intelligence, physics majors make less than engineers, even mid-career. As above, physics majors complete PhDs more frequently than engineering majors do, and one source reports that physics majors' average SAT scores are about 100 points higher than engineering and computer science majors' on a 1600 point scale (equating to about 0.5 SD in IQ). So it's plausible that they make less money than their counterparts of similar intelligence who majored in engineering or computer science. This doesn't necessarily mean that they couldn't get jobs where they made more money – it could be that they prefer lower paying academic jobs over higher paying jobs outside of physics.
Cross-posted from the Cognito Mentoring blog