News & Analysis
ENGINEERS' PAY JUMPS
Terry Costlow
11/13/2000 11:02 AM EST
Engineers discussing salaries and perks might find themselves gushing. Well, why not? Over the past year salaries have seen their largest increase in many a moon, and far more technical workers got stock and stock options while nearly two-thirds received bonuses.
That's a big improvement from eight years ago, when Arkansas Gov. Bill Clinton was, like his vice president today, battling a man named George Bush for the presidency. Regardless of whether or not generally conservative engineers credit Clinton for fueling the long-running economic boom, most would have to agree that they have fared well during the years when he sat in the Oval Office.
This year, the mean salary reported by our respondents rose by the highest-ever year-to-year percentage, 9.7 percent, leaping well past the $80,000 mark. Earnings of $82,780 put the typical engineer nearly a third of the way to the next plateau, $90,000. That's certainly gotten many of you excited.
"The last three years have been incredible. I have gone from $72k (with seven years experience) to $115k (now with 10 years experience.) Changing jobs is by far the best way to get the big salary jumps," wrote one of our first respondents on the Web.
He's doing much better than the average engineer. But despite the enthusiasm of many engineers and managers, not everyone is thrilled. Many feel they are being left behind while managers and corporate executives roar ahead. At least one engineer feels no better off than a blue-collar worker.
"Engineering is becoming a labor function rather than a profession," said a senior engineer from the East Coast. "Effective salaries for engineering staff are falling as corporate [pay] is skyrocketing."
While engineering salaries might not have blasted skyward, they haven't been earthbound.
Just how far have engineers come since President Clinton was elected? In 1992, $57,400 was the mean salary. And that was the year in which we adjusted our Salary Survey to allow for the fact that a few lucky engineers were raking in more than $70,000. Before 1992, the question had so few EEs answering "above $70,000" that we didn't have breakdowns above that lofty wage.
But that change was the beginning of some solid earnings growth for engineers.
This year, only 14.6 percent of our respondents had salaries below $60,000. Even a good percentage of college students, 18.9 percent, expect to make $55,000 or more in their first jobs. Add grad students to the mix and the mean expectation for the Class of 2000 is $52,600, barely $4,000 less than what the average engineer made in 1992. Still, while that's great for newcomers, it doesn't always sit well with those who have been on the job a while and aren't making much more than the greenhorns.
"New hires get too much relative to current employees; our raises are not generous enough," complained a Northeastern designer who's only in his 30s-not that distant from being a new hire himself.
These wage hikes have solidly surpassed price increases. Inflation has been relatively tame during the Clinton years. The only time it went over 3 percent was in 1996, but that year's 3.3 percent rate was followed by 1.6 and 1.7 percent increases in the next two years.
The unparalleled growth of the 1990s that brought this dramatic wage run-up makes it easy to forget that in 1992, engineers were more concerned with holding a job than whether they would get close to a 10 percent raise. Unemployment averaged 7.5 percent through most of that year. A full 31 percent of our readers said they were "not at all secure" about their jobs.
Giants like IBM and General Motors were struggling, laying off thousands of employees. The world scene was dominated by the breakup of the Soviet Union, which was of particular interest to engineers in the U.S. defense sector.
In the electronics industry, meanwhile, the name "Pentium" was disclosed after weeks of buildup and the Alpha chip was unveiled by a then-independent company, Digital Equipment.
But 1992 was pretty much the last time that engineers had to worry all that much about being out of work. Today, there's far more concern about the shortage of engineers. It isn't just in salaries that engineers have made great strides since the days when Sonic the Hedgehog became part of the gaming landscape, Basic Instinct was a hot new movie and Nirvana's successful "NeverMind" album was making grunge a stylistic trend that rivaled the exotic-coffee boom newly emanating from the Northwest.
The industry has also seen a sharp rise in stock ownership, which has become the pathway to wealth for a rapidly growing number of engineers and others. While that may seem to be a mixed blessing given the dramatic roller-coaster that the exchanges have become, it's usually considered a good thing. Just keep reminding yourself that stocks have won out over the long haul.
The lure of stock options was particularly powerful during the first part of the year, when the Internet gold rush was not yet a memory, and initial stock offerings and stock options were making millionaires out of engineers, secretaries and seemingly anyone else. The influence of stocks was felt everywhere, even affecting those in public works.
"I went from teaching college electronics to becoming a full-time engineer to take advantage of stock options. Took a salary hit to change, though," said a board-level designer in the Northwest.
But later in the year, stocks weren't quite the moneymaker they had been. Some engineers decided to turn back to more secure forms of compensation.
"The stock market drop is forcing me to change my job," said a Californian.
Just over half of you said you own stock options or have a stock purchase plan at work or both. But those who are nervous about sinking prices might be somewhat calmed to know that almost the same percentage own less than $10,000 worth of their employer's stocks. The poll was done during the summer when most stock prices were well above their current values, so some larger brokerage accounts may be below that value today.
And how does this participation in corporate ownership compare with the picture in 1992? Good question. Stock plans were rare enough back then that we didn't even ask about them.
But then, back in 1992, stock prices weren't nearly what they are now. In January 1992 the Dow Jones industrial average broke 3,200, climbing to 3,400 in June. It fell during the remainder of the year, closing at 3,301. Still, that was enough to make it the envy of the rest of the world. World markets were down 5 percent in 1992, yet the Dow rose from 3,168 on Jan. 1 to its 3,301 close.
And even though having stock can sometimes give ticker watchers a fluttery stomach, it's still better to have shares than to get nothing. But outside the United States, there seems to be much less stock ownership. For example, only 17 percent of our survey respondents from Japan said they have stock options.
For those who don't get stocks, or who don't want to worry about their dramatic ups and downs, there's still another upbeat change. Nearly two-thirds of our respondents, 62 percent, got some form of bonus in the past 12 months. Once again, that's a marked increase over 1992's total. Then, only 48 percent got a bonus.
Engineers who don't get a bonus nowadays have at least one positive way to view the situation. Those who get bonuses don't always get amounts that are princely. Fifteen percent received less than $1,000, while 26 percent got from $1,000 to $2,999. Of course, there were a fair number of people who got nice bonuses-at the upper end of the scale, 22 percent got bonuses of more than $10,000. Overall, the mean bonus was $6,230.
While salaries and financial perks have risen sharply, the average reader's view on them has not changed much since the days when Bill and Hillary both lived in Arkansas instead of in Washington and New York. Just over half our respondents feel engineers get the same compensation as those in comparable professions. In 1992, some 54 percent said they felt "adequately rewarded for [their] on-the-job efforts." Today, the question is phrased differently, asking whether base salary is "comparable to others in your field." The percentage remains almost identical, with 55 percent answering yes.
Although engineers may not be doing as well as those in fields like medicine or law, they're still earning well above the average American family's income. If the combination of rising salaries, stocks and bonuses didn't provide enough income to keep the wolf from the door, many respondents had the option of sending the spouse off to work. Of the 80 percent of the respondents who are married, about 22 percent had working spouses. For those families, the average income was $115,000.
That's also a substantial improvement over 1992, when Walt Disney Co.'s Aladdin had children dragging their parents to the theaters to see a movie that many now have memorized, thanks to its later release on video. We didn't inquire about total family income, asking instead what a working spouse earned. The average was $28,000, so the average household would have made $85,400 back then. "That ain't bad at all," we wrote in 1992. Neither is $115,000 for this year.
U.S. engineers appear to be earning far more than their Asian counterparts, according to a survey done by Nikkei Electronics Japan, a longtime EE Times partner for this Salary Survey. About 47 percent in the Japanese survey made less than $60,000, with only 37 percent making more than $70,000.
Underscoring the Japanese economy's troubles, only 34 percent got a raise in the previous 12 months. That doesn't set too well with Nikkei Japan's survey respondents. Slightly more than half of them felt their salary was less than that of others in the field who had similar qualifications and work experience. Only 42 percent felt they were better off than their peers, well below the 55 percent of EE Times readers who shared that feeling of superiority.
It's not often that any Joe or Jane on the street can provide guidance to engineers on how to get ahead. But the career advice many nontechnical people would provide these days is true: If you want to make money, think computers.
The computer industry has the highest mean salary, at $97,500. What's even more surprising is that although that surpasses the mean wage for managers, more than half our computer industry respondents were staffers with titles like senior engineer, design engineer or principal engineer.
Though it's not nearly as glamorous, it turns out that the components industry pays better than every other category save computers. Component engineers average $88,000, not bad for an end market where many of the products sell for just a few cents apiece.
Next, with an average of $86,500, were those in the communications industry-the only other group to earn above the survey's mean salary.
Here are the mean wages for other categories:
- Military/aerospace, $78,500
- Automotive/consumer, $76,500
- Control/test/instrumentation, $73,800.
As in the past, roughly 80 percent of the survey respondents were born in the United States. However, being born an American doesn't put workers in the top pay scale. Wages for non-U.S. employees average $85,200, while folks who were born in the USA average $82,000. Some of the non-U.S. workers make substantially more than Americans. However, sample sizes for many regions are small, so they don't have solid statistical accuracy.
That said, Europeans make an average of $89,600, led by the seven engineers responding from the United Kingdom, who had a mean salary of $101,100.
Those from Asia claimed a mean of $83,000, led by 27 workers from India who average $87,100. Engineers who hail from China and Taiwan match or exceed the salaries of U.S.-born workers, earning $82,000 and $82,300, respectively.
There are, of course, sore points throughout our study that dim the bright spots. One downside to any salary survey is that there are going to be a number of people whose wages are below normal. In both job function and types of industry, there are those above and those below the $82,800 level.
Staff engineers as a group fall below, with a mean salary of $80,800. That's sharply less than the $96,700 mean for a much smaller number of managers. Given that high base, it's no surprise that a solid 39 percent of management personnel are making more than $100,000, with a fifth of the 108 managers topping $120,000.
That's great if you're in management. But it leaves many staffers in the trenches feeling that they take the blame while superiors take the cash.
"Management gets too much and engineers are left holding the empty bag for all the company's ills," said an engineer earning about $50,000.
But while those of you in the trenches may not being doing as well as those in management, it's no longer unusual to find staff engineers who make over $100,000. There were 18 percent at that level this year.
It wasn't so long ago that the mere thought of an engineer's making $100,000 was pretty much a dream. At the start of the Clinton era, when Clint Eastwood's Unforgiven made Westerns popular again, there weren't many managers or engineers making what seemed like a CEO's wages. In 1992, only 3.3 percent of our entire sample, managers included, earned more than $100,000.
While it's great to make a huge salary, engineers in Silicon Valley and places like Boulder, Colo., and Dayton, Ohio, know that what really counts is how much you have left after basics like housing are paid. Given that Silicon Valley is known for having some of the highest housing costs in the country, it's not surprising that pay there is well above that for other regions.
Housing costs have gotten to be such a problem in the Valley that many are concerned that comparatively poorly paid government employees like police and teachers won't be able to live in the area. In May, the median housing price in Santa Clara County exceeded $500,000 and only 229 county houses sold for less than $350,000, according to Intel. That prompted the company to establish a $10 million bond program to help alleviate the strain. But even with that program, it takes a family income of $74,000 to qualify for an inexpensive home.
In San Jose, Calif., the mean salary is $101,800, while nearby Oakland averaged $93,600. Although those in northern California can feel pretty good about those salaries, they weren't necessarily the highest averages. In Colorado Springs the mean was $115,000, while in Worcester, Mass., it was $108,300.
But that's where statistics can be misleading. There were 66 respondents in San Jose, a pretty reliable barometer. But in Worcester only four respondents weighed in, and with only three in Colorado Springs, one well-paid manager could really skew the averages.
In the broader outlook, California still ranks No. 1 by a long shot. The average wage there is $94,901. That's substantially above the $87,100 mean for Massachusetts or the $85,200 for Colorado, which also had statistically validnumbers of respondents.
Other states with more than 15 respondents averaged:
- Arizona, $80,900
- Colorado, $85,200
- Oregon, $81,1000
- Pennsylvania, $78,300
- Illinois, $$79,400
- Indiana, $78,600
- Florida, $78,600
- Minnesota, $77,400
- Texas, $74,500
- New York, $71,800
Unsurprisingly, another factor that has an impact on wages is age. Salaries pretty much take a linear path from the start of an engineer's career, at least until he or she hits 55. Those aged 20 to 24 average $55,800, rising dramatically to $67,200 for those 25 to 29 and $76,200 for those in the 30-to-34 category.
Those solid raises continue up to $93,100 for engineers and manager aged 50 to 54. But then there's a significant decline-those 55 to 59 make only $85,100, and respondents in the 60-to-64 age bracket fare a bit better, at $90,000. And anyone working past the age of 65, according to the survey respondents, averages $74,000, less than engineers in the 25-to-29 category.
The size of the company is also a key factor in wages. Generally, bigger is better, both in paychecks and the companies that hand them out.
Workers at companies with greater than $1 billion in revenues averaged $85,000 or better, and workers at corporations with sales of $1 billion to $2.9 billion had the highest average salary, $95,200. Behemoths with $15 billion or more offered the next highest paychecks, averaging $89,800.
Smaller companies at both ends of the spectrum paid the most for businesses that had less than a billion in sales. Those with sales of less than $10 million paid the best in this category, handing out paychecks that averaged $82,000. The small companies ranked only a bit behind the stingiest of the over-$1 billion companies.
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