For the second consecutive year, compensation levels stay flat as OEMs continue to ride out the recession.
Hunkering down and holding on—in this, engineers are really no different from professionals in other market sectors. With the unemployment rate pegged above 9% for the foreseeable future and not expected to return to a “natural rate” until 2016, engineers will likely have to learn to be happy with the job they have rather than the job they want. Compensation, meanwhile, is expected to remain flat over at least the next few years, which may see some engineers losing financial ground to inflation—an unusual trend in what is typically a well-paid profession.
The continued globalization of engineering will likely dampen domestic employment growth to some degree. There are many well-trained, English-speaking engineers worldwide willing to work at much lower salaries than U.S. engineers.
The rise of the Internet has made it easy for part of an engineering project previously done by engineers in this country to be completed by their counterparts overseas. Still, the reality is there will always be a need for onsite engineers to interact with other employees and clients.
During his speech to a joint session of Congress last month, President Barack Obama specifically cited small businesses as a key to job creation. “Everyone here knows that small businesses are where most new jobs begin,” Obama said. “And you know that while corporate profits have come roaring back, smaller companies haven’t.”
IEEE-USA President Ron Jensen believes that to help encourage job growth in the engineering sector, Congress should reauthorize the Small Business Innovation Research (SBIR) program and invest in America’s technology infrastructure.
SBIR is a competitive, federally funded program that helps small companies conduct research into new technology. However, because Congress has failed to pass a long-term SBIR reauthorization, companies cannot be sure of the program’s reliability.
“High-tech entrepreneurs are job creators, and our country should do everything we can to support them,” Jensen said. “Congress’ failure to reauthorize the program for more than a year at a time has created uncertainty among small technology companies, and uncertainty breeds hesitation, which breeds stagnation. Congress could end this uncertainty by passing a long-term reauthorization of the program.”
Obama also highlighted the important role that infrastructure investments play in the economic health of our country. Jensen believes that Congress should recognize that infrastructure in the 21st century must include a robust and intelligent electrical grid.
The recent blackout in parts of Southern California, Arizona, and Mexico demonstrates that our grid needs to be strengthened. Emerging technologies offer innovative ways to increase the reliability and efficiency of the system.
“A reliable, efficient, and affordable electric grid and IT infrastructure can power job growth across our country,” Jensen said. “Investing in our nation’s electrical infrastructure not only creates jobs today but also lays the foundation for a strong economy tomorrow.”
Increases in pay have been tough to come by in recent years for engineers. Last year, raises averaged a paltry 1.2%, and this year’s raises were barely half that amount. Across the country, engineers report an average total compensation of $104,370 in 2011 (in salary and bonuses), compared to $103,680 last year. The situation today seems a lifetime away from 2008, when average engineering incomes hit a peak of $106,271 and pay raises were nearly 4%.
“In today’s environment, salary advancement seems to be nonexistent,” said a project engineer in Ohio. “Any meager increases that might be doled out are quickly consumed by rising employee contributions to benefits.”
Design & development engineers earned average base salaries of $92,484 this year and total compensation of $100,700. Engineering managers saw the biggest boost in their paychecks in 2011, on average earning $119,366 in base salary and $131,556 in total compensation. About half (53%) of the corporate managers we surveyed work in small companies and startups (annual revenues under $5 million), and the ones we spoke to take home an average base salary of $108,078 and total compensation of $120,865.
Engineers are evenly split over whether engineering offers the same opportunity for salary advancement as it did five years ago. “I see reports that new grads are earning average salaries of $50k to $65k, so I think the potential to begin there and advance up the career path is still there,” said a hardware engineer in Michigan.
“There seem to always be jobs in engineering versus other fields and there are not enough engineers graduating each year, so that should push salaries up due to supply/demand,” noted a design engineer from Colorado.
“The industry is changing, but the opportunities are still out there,” said a consumer electronics engineer from Texas. “Engineers must shift their thinking and be prepared to migrate to new opportunities in order to remain successful.”
But some survey respondents were less bullish. “Five to 10 years ago, companies still saw the value in core product experience as something that needed to be retained and passed on,” stated an engineering manager from Connecticut. “With the expanding reliance on sourced labor and little permanent hiring of young engineers, there are few people to carry the knowledge forward. The average age of engineers is climbing and reduced enrollments in engineering majors are creating a perfect storm of the need to turn elsewhere (offshore) to fill those needs.”
Geographic location plays a big role in income levels, and the Pacific region is still on top with total incomes averaging $117,984, followed by the West South Central region ($116,416). Next up was the New England states ($108,838) and the Mid-Atlantic region ($106,295).
The market segment you work in is another major factor that’s influencing pay. Chip houses led the way in engineering pay again this year, at $141,272, followed by computer OEMs ($119,496), military contractors ($113,313), communications systems ($113,266), and medical electronics firms ($106,969).
But no matter where you work, chances are you’re working harder for the money than ever before. This year, engineers on average claim to be putting in a whopping 65 hours a week on the job, including 41 hours at the office, 11 hours at home, seven hours at other locations, and six hours on call.
“I think companies are expecting more work from fewer individuals,” commented anR&D engineer from Pennsylvania “This was established during the recession, and I don’t see that expectation changing back to where it was previously.”
One department lead engineer in California put it this way: “Corporate America is squeezing the life out of every employee possible. I’ve survived four layoffs and essentially absorbed the workload of six other colleagues. My pay has changed by 3%, up thankfully. The only place growing is upper management and their friends.”
Certain perks made a comeback in 2011. Nearly 57% of survey respondents say they expect to see 401(k) match plans from their companies this year (compared to only 49% last year), and 63% were back to getting company-paid health benefits (compared to 57% in 2010).
There were some glimmers of hope on the employment outlook in this year’s survey, as 33% of survey respondents say their company plans to increase the number of engineering jobs in the coming year, up from 29% a year ago. What’s more, nearly half (48%) say their organization is having difficulty finding qualified candidates for open engineering positions, compared to 42% last year.
“Due to job market growth in the sector, and competitive career recruitment, my company has been forced to step up the game to retain top talent,” offered one development engineer currently with the International Automotive Components Group. “Wage increases and additional benefits have been reinstated this year.”
The toughest positions to fill are in analog design (38%), software (37%), systems engineering (36%), power electronics (29%), and mechanical design (27%).
Despite the tough job market, most engineers remain bullish on the profession. The majority (55%) still find themselves sufficiently challenged intellectually with the projects they work on, while only 10% claim they’re not. Nearly two-thirds (63%) feel adequately compensated for the work they do. And, 86% would recommend engineering as a career path to a young person looking to choose a profession.
“Comparing other career choices with engineering can show how engineering is still a very promising and challenging career today,” said a senior engineer with more than 30 years of experience. “Considering the current economic crisis in the USA and in most other industrialized nations, engineering continues to be a leading technologically oriented career that has more opportunities for employment than other choices. Technology is advancing faster than ever, so engineering is the best career choice to keep up with technology, and keeping up with technology is the best bet for any profession.”
Engineering remains a field that requires constant education to keep up with emerging technologies as well as the latest applications. In fact, staying current with new and emerging technologies is the number one issue causing engineers to lose sleep this year—even more than concerns about the general health of the economy. But 44% of those surveyed feel their company doesn’t do enough to support continuing education among its engineers.
“They don’t offer to pay for seminars or conferences for engineers anymore,” said a senior product development engineer at a military contractor. “To attend a conference, I must use vacation time rather than paid work days. This indicates to me that the company isn’t interested in furthering my knowledge/skill sets, even though it would be a benefit to the company.”
“Tuition reimbursement was reinstated very recently after being suspended for several years,” said an electronics products manager in Detroit. “Travel authorizations for trade shows are almost impossible to get, and there’s no money in the budget to cover tuition charges for online seminars or training classes. In-house course offerings have also been scaled back drastically over the last decade.”
“It isn’t a lack of financial support, so much as a lack of emphasis on staying current and sharing information,” said a senior project engineer in Indiana. “ I think this is common in many companies. Some people will do it on their own, but I think the results are more synergistic when there is a corporate emphasis.”
What’s more, only 47% believe that today’s graduating engineers are as well prepared for the job as they were—and 40% feel they’re less prepared.
“Students coming into the field have far too little hands-on experience with technology,” said a senior project engineer, “although wonderful tools, computers, and the Internet have replaced many of the technical hobbies of previous generations. Since many public high schools cannot afford to maintain industrial arts programs, many students have no idea how anything is actually made.”
“The universities today teach you how to solve problems, but they don’t teach you about leadership, contract negotiations, or the legal hurdles that can affect engineers,” observed an engineer from North Carolina.
“Many of the new hires and interns have the engineering knowledge, but many of them lack basic Unix skills,” quipped a senior MTS from Wisconsin. “They have grown up on Windows PCs and are not prepared for working on real systems. It takes them much longer to become self-sufficient.”
But not everyone sees it this way. “Internships and co-op assignments are more common today, so many new graduates come into the workplace better prepared than I was for the realities of the working world,” said a product manager who responded to our survey.
A senior engineering manager at Rockwell Collins had this to say: “Today’s graduating engineers have a greater opportunity to make an immediate impact to society because of the amount of information available at their fingertips, namely, the Internet.”
We asked survey respondents this year to tell us some of the things they didn’t learn in school that they wish they had. While many got specific about particular technologies like embedded programming, CAD, and analog circuitry, most talked about things outside of engineering like project management, team building, mentoring, time management, interpersonal skills, business law, marketing, regulatory requirements, accounting skills, technical writing—and dealing with corporate politics.
“I could have used a stronger business background,” complained a lead engineer now at Honeywell. “The ability to make a business case for spending money on engineering development is essential to any engineer working in commercial engineering.”
But in reality, there are no shortcuts to on-the-job experience. “I learned in college that there is more to know than you can learn in college,” said one senior engineer. “As one of my professors explained, college gives you the skeleton of knowledge to be an engineer. Experience puts the flesh on the bones.”
And what advice does today’s working engineers have for students getting ready to enter the field? Continue to learn the basics, don’t discount graduate school, do as many internships as possible, don’t expect to get your dream job overnight, bring passion to your first job—and start saving early for retirement.
“Do not stop learning,” advised a principal engineer at Oracle. “Stop and you will fall behind and likely never catch up. Be open to new ideas and creative solutions. Be willing to share new ideas with peers. Working together in a team is the only way projects can move forward with the speed needed to keep up with your competition.”
“Believe in yourself,” suggested one senior electrical engineer. “You are the one who has the tools and ability to solve the difficult problems that the world faces. Find energy alternatives, and develop ways to provide safe water and healthy environments. Politicians and lawyers can’t do these things— but you can.”
“You have the knowledge, but experience takes time,” pointed out a research lab technologist at the University of Toronto. “Make a thousand rules of thumb for yourself to cover every aspect of design, and use them.”
An engineer/developer at Ericsson summed it up this way: “Don’t just rely on your college degree to make you successful. Find something in your field or specialty to become intensely passionate about and focus as much time and energy as you can to becoming an expert in that thing. Then, find another, somewhat related aspect to become an expert in and also become an expert in how this new information ties into the previous information. Continue doing this and never stop. You may not be able to directly apply a lot of the experience and information that you’ve attained, but you’ll have a better understanding of how the world works, and that type of information can be applied everywhere.”
It’s been a bumpy ride for engineers over the past few years, and that’s not likely to smooth out in the near future. Many companies have cut engineering budgets to the bone, and then some. Amenities are almost nonexistent. Money for travel and training are difficult to come by, which has many engineers frustrated and in some instances worried about their futures.
At the same time engineers tend to be very self-reliant. They typically believe that talent and hard work will carry them through, despite what may be temporary tough times. If their outlook can be summed up in one sentence, it might be that people who are good at what they do will continue to advance through good times and bad.