Electronic Design

Positive Signs Unable To Kickstart EE Salaries—For Now

Bucking the stagnant employment trend gripping many other high-tech markets, the number of employed EEs rose from 327,000 in the first quarter of 2004 to 351,000 in the second quarter, according to the U.S. Bureau of Labor Statistics.

Now the bad news: Employment remains below the 363,000 quarterly average in 2003, putting downward pressure on wages and essentially slamming the lid on engineering compensation at the moment. In fact, according to the Electronic Design 2004 Reader Profile Survey, the average engineering salary actually dipped 2.3% in 2004 to $84,760. Average total compensation (including bonuses, stock and stock options, and other income) across all job titles and functions now stands at $92,840.

"The EE employment figure is encouraging, and we're interested to see if the trend continues," says IEEE-USA president John Steadman. "But we're most concerned with our shrinking high-tech workforce, much of which is attributable to the offshoring of high-tech jobs." (See "EEs Try To Survive The Changing Workplace," p. 31.)

Steadman added that some improved unemployment statistics might be due to some technical professionals becoming discouraged and ultimately leaving the field. "The outsourcing trend has eliminated any semblance of job security, or even the expectation of a good salary," said one survey respondent. "Engineering has become work that can be done in any part of the world with a broadband connection to the U.S. The jobs will inevitably flow offshore, and the salaries for the few who remain will shrink accordingly."

According to the survey, base pay rates for design and development engineers were virtually flat in 2004, averaging $82,669 in salary and just over $90,000 in total compensation. Engineering managers topped out at $102,881 in salary and $113,715 in total compensation, averaging about $1500 less in salary than last year. Executive and operating managers took the biggest hit of all, seeing their base salaries tumble more than $10,000 to $94,968 and squashing total compensation to $106,773. So if you're feeling the pain, your boss is probably feeling it, too.

Like last year, engineers with management titles (VPs of engineering, technical directors, heads of R&D, hardware/ software managers) outpaced all EEs in compensation in 2004. However, average salaries for these positions dipped below last year's levels. Salaries for designers with senior engineering titles (group leader, project team leader, project manager, chief engineer, senior engineer, lead engineer, principal engineer) went up in 2004, but barely. Designers with engineering staff titles (design engineer, project engineer, R&D engineer, systems engineer, applications engineer) fared better, averaging 4% to 5% increases in base salary.

Despite the regression in current wage levels, many engineers remain optimistic. "Engineering can be very rewarding," said one EE. "Economically, it isn't the brightest path, and the next 10 years could be challenging for the profession economically. Once the baby-boomer engineers retire, there may be a surge in demand that will result in better compensation."

Manufacturing and production engineers pulled up the rear in wages this year, suffering a 7% drop in base salary. And consulting engineers, once the prime beneficiaries of contract work coming from organizations forced to scale back staff, saw their base salaries drop an agonizing 14%. That comes mainly because companies found ways to squeeze more productivity out of existing personnel and/or established more formal relationships with the growing crop of contract manufacturing organizations.

The presidents and business owners who responded to this year's survey typically headed up smaller-sized engineering firms (averaging just under $19 million in sales). Nearly one-third classified themselves as self-employed. And, despite what you might hear around the water cooler, these company leaders took it on the chin this year as well, with average base salaries down nearly 11%.

"I'm the owner, so the pay is never enough for the hours spent," said one. "But I enjoy the work I do and the people I interface with—customers, team members, vendors—and the satisfaction of completing a job well done."

So where's the best place to work? Like last year, pay rates in the Pacific states (Alaska, Washington, Oregon, California, and Hawaii) topped the list, this time averaging $96,291 in base salary and $9490 in bonuses—which is about 12% above the national average. The next rungs down belonged to the New England states (Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut), where salaries averaged $90,461 and bonuses totaled nearly $8300. Engineers working in the mountain states (Montana, Idaho, Wyoming, Colorado, New Mexico, Arizona, Utah, and Nevada) saw the biggest percentage drop in average salaries (down 6.3%), while those in the East South Central region (Kentucky, Tennessee, Alabama, and Mississippi) saw the biggest percentage gain (up 5.5%).

If you're looking for a six-figure income, your best bet is to hitch up with one of the IC and semiconductor houses, where the average engineering salary tops $106,000 and total compensation nears $120,000. While contact manufacturing generates much controversy among engineers these days as companies cut costs by outsourcing more design work, it's safe to say that cheap labor is part of the money-saving equation. With an average salary of $65,733 and total compensation at $72,213, engineering professionals at electrical manufacturing service companies are firmly planted on the low end of the compensation totem pole.

On average, bigger companies continue to pay bigger salaries and dole out bigger bonuses. It's also no surprise that the more experience you have, the more you're likely to earn. Salaries rise as you get older, but the rate of growth slows once you hit the magic age of 40.

It certainly pays to go to school, but these days you'll need more than a bachelor's degree to achieve pay parity with the national average being earned by EEs.

"The future for engineering is very exciting. Unfortunately, it now almost requires a master's degree," noted one engineer. "In fact, I would recommend that all engineering students starting out take four years of physics and two years in a particular engineering master's degree curriculum. Engineering design is going to be more fun than ever with all of the design implementation tools the future will have to offer."

Men continue to outpace women not only in the engineering employment ranks (this year, 97% of our survey respondents were male), but in the compensation department as well—although women appear to be gaining ground. (See "Glass Ceiling Shows Sign Of Cracking," p. 47) The gender gap in salaries narrowed from about $15,000 in 2003 to just over $11,000 this year, and it tightens even further after factoring in bonuses.

"Engineering jobs are much more accessible to women and minorities than when I started in the field 30 years ago," observed one survey respondent.

On average, engineers put in about 43 hours a week at the office. However, that number balloons 20% when you factor in the time spent on call and working at home or other locations. Not surprisingly, engineers who work the most hours can expect to see the biggest incomes too.

Are the long hours really worth it? One engineer put it in perspective this way: "Engineers work too hard and don't get paid enough, but it is still one of the coolest things that you can do with your mind."

As salary levels continue to limp along, engineers look to employers for more relief with cost-of-living expenses and other company perks. Seven out of every 10 survey respondents receive health benefits and 401(k) matching programs, and about one in four say they get stock options, stock purchase plans, and training for continuing education. Clearly, as engineering pay struggles to regain its footing, these paycheck-boosting goodies will gain in importance.

As one engineer put it: "My share of health-care costs has increased dramatically, but the company has enhanced my stock and 401(k) options in the past year."

Others also saw salaries and benefits starting to bounce back as their companies began crawling out of the recessionary doldrums. "Mid-2004 is the first time in three years that compensation increases have been possible for my company," commented one engineer. "We weathered some storms and created a significant place for ourselves in the market. Now we can expect continued growth and continued compensation increases in the years to come."

Another response said: "We are asked to pay more each year for health costs. The costs are banded upon certain salary ranges, and if your salary crosses over the band, your health costs go up accordingly. When I first began work 26 years ago, all health costs were paid by the company. Now the employees pay a monthly fee plus copays. Education has taken a hit for employees, but the company seems to understand the need for continuing education and is working to reinstate classes at work. We used to have an extensive continuing education program, but budget cuts in the 1990s dismantled a lot of them. They are now trying to revive a portion of them to keep our skills up to date."

Still, most EEs could identify with the growing trend in rising healthcare costs, benefit cuts, and the scale-back of bonuses and promotions that has swept through high-tech businesses. As one designer equivocated, "In 2004, we began to take on a greater portion of health insurance premiums. I expect this trend to continue with greater employee burdens. The company bonus was waived in 2004 due to market pressures—presumably for 2004 only, but it won't surprise me to see it made permanent. Rumors are that personal-leave amounts will be reduced in the near future."

So, all in all, 2004 hasn't been a banner year for the engineering profession. But it's important to keep things in perspective. While things may not look that rosy when compared to the booming 1990s, engineering is still a great way to earn a living. After all, the average salary of today's EEs remains way above the national average of many professions. And the look on your cousin Fred's face when you explain that you've been analyzing the power spectrum of quantum-dot blinks is still priceless.

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