What's In Your Paycheck?

In this issue, the editors of Electronic Design once again present the results of our annual salary and opinion survey. Nearly 3000 of you answered our wide-ranging questions and shared your insights. Based on that research, this report provides a clear perspective on how you and your colleagues are doing and where salaries are headed.

As in our previous surveys, we took a close look at how compensation (salaries, bonuses, and benefits) varies across several parameters—including company size and type, job functions and titles, geographic region, and engineering experience, as well as age, gender, and level of education.

This year we also included questions about retirement planning—the age at which you plan to retire, how those plans may have changed, how you plan to spend your retirement years, the likelihood of accepting another engineering job out of retirement, your experience with financial advisors in planning for retirement, your retirement sources of income, and your retirement savings goals.

And with the presidential campaigns in full swing, we wanted to know your views about the upcoming election, which party best represents the engineering community, and your views on the most critical issues facing the country today.

SALARY ISSUES The average U.S. engineer now makes $106,271 in salary and bonuses. Salaries in 2008 edged up 3.6%, while bonuses were up 2.8% and stock option compensation grew 4.4%. Engineers expected their total compensation (base salary, bonuses, stock options, and other income sources) to grow 2.6% this year, but average increases across the industry came in at 3.6%.

But the wealth isn’t being spread around equally. According to our 2008 survey, barely 64% of engineering professionals saw an increase in their paychecks this year, while 26% saw their compensation remain the same. Only 60% of engineers feel adequately compensated for the work they do—down slightly from last year—and just 56% believe their pay package is equal to or more competitive than what’s being offered by other employers (again down slightly from a year ago).

Still, better than four out of five engineers are willing to promote their chosen profession to students considering an engineering career. “Aside from the intrinsic reward of exercising one’s intellect, our country requires our young people to be competitive in terms of education and ability in the global market,” commented one engineer. “I feel that this is the last area of economic dominance the U.S. maintains and that it is vital for us to preserve it.” Another engineer put it this way: “Design is rewarding, the salary is decent, and it’s one of only a handful of university programs that lead to a ‘real job.’”

2008 increases in specific job categories fared better, particularly for those in management positions. Executives that typically take part in our annual surveys usually range from heads of large corporations to owners of small engineering firms. On average, tech executives saw the biggest bump in income this year, pulling down $134,771 in 2008—or 7.4% more than in 2007. Engineering managers saw their pay stubs grow 2.1% in 2008 and now bring in $127,315 annually. Engineers involved in design and development average $102,376 in annual income, up 1.2% from a year ago.

Semiconductor houses lead all electronics industries in compensating engineers (averaging $131,859), followed by computer manufacturers ($121,319), medical electronics firms ($118,802), software firms ($110,826), communications systems manufacturers ($109,981), avionics companies ($109,814), automotive electronics companies ($107,594), and test & measurement organizations ($106,377).

Nearly half of our readers said that a headhunter or recruiter had contacted them at some point during the past 12 months. So it was surprising to learn that only 33% of survey respondents said they believe their company is more focused on employee retention this year—down from about 40% two years ago. “Companies are treating engineers like furniture—totally replaceable and cheaper from abroad,” mentioned one engineer. “They continue to demand extra time for free since you are an at-will employee and are replaceable.”

Two factors that are inextricably linked to higher wages are company size and geographic region. As we’ve seen in our previous surveys, larger companies tend to dish out bigger salaries, bonuses, and raises. They’re also more generous when it comes to non-cash rewards and benefits such as stock options, 401(k) plans, pensions, patent awards, continuing education opportunities, and health coverage.

According to the survey, geographic location, not surprisingly, also plays a big role in income levels, For instance, locations around Silicon Valley, the Pacific Northwest, and Boston saw higher salary increases in 2008 than others. As a group, the Pacific states (California, Washington, Oregon, Alaska, and Hawaii) retained the top spot as the best place for engineers to earn a living by averaging $124,757.

In the Mountain states (Arizona, Colorado, Montana, New Mexico, Nevada, Idaho, Utah, and Wyoming), incomes averaged $111,923. Following closely were the West South Central states (Arkansas, Louisiana, Oklahoma and Texas) at $110,604 and New England (Massachusetts, Connecticut, Maine, New Hampshire, Vermont, and Rhode Island), where totals averaged $109,524.

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Engineers in the South Atlantic (Florida, Georgia, North Carolina, South Carolina, Virginia, West Virginia, and Washington, D.C.) averaged $106,163. Their colleagues in the Mid-Atlantic (New York, New Jersey, Pennsylvania, Delaware and Maryland) were next on the list, averaging $104,623 and edging out engineers in the East South Central states (Alabama, Kentucky, Mississippi, and Tennessee) at $104,451.

Trailing the field were engineers in the West North Central states (Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska, and Kansas), with an average income of $98,299, and the East North Central states (Indiana, Illinois, Michigan, Ohio, and Wisconsin), where total earnings averaged $94,782. One positive note: average engineering incomes were up in every region this year.

Engineers who design chips for a living once again took home the most pay in 2008, averaging $135,050 in total compensation— including an industry-leading base salary of $122,030, plus $5220 in bonus money and another $7800 in stock options and other incentives. Rounding out the top five wage earners this year are computer product designers ($130,308), medical device designers ($116,782), avionics systems designers ($111,190), and military systems designers ($108,415).

Not surprisingly, engineering experience usually translates into higher pay. The older you are, the more you make (although at age 55 salaries begin to tail off). And if you haven’t already done so, our survey confirms that it’ll pay for you to go back to school and add some graduate courses to your bachelor’s degree.

Engineering continues to be significantly less financially rewarding for women than for men, despite the fact that men and women hold similar jobs and have similar education, and women took a significant hit in bonuses this year. Male engineers currently average $97,495 in base salary (+3.6%) and $9237 in bonuses and other income (+2.5%) for a total compensation of $106,732 (+3.5%).

Women, by comparison, average just $78,629 in base salary (+2.4) and $7118 in bonuses and other income (–16%), totaling $85,747—meaning total income was flat in 2008 and widening the income disparity with men to more than 24%. So after several years of seeing the salary gap narrowing year-over-year, for the second year the gap has widened.

Engineers are working longer hours than ever—54 hours a week when you factor in work at other locations (including home) and time spent on call. That represents an hour more on the job than a year ago. The good news is that longer hours usually translate into bigger paychecks. “There is always potential for career path and salary advancement if one is willing to work hard and pay attention to the broader trends and can be adaptable to new types of jobs,” stated one engineer.

“For instance, opportunities in the ‘green’ sector are growing rapidly,” the reader continued. “It’s kind of like diversifying your investment portfolio. The more roles you have experience with within a business, the more marketable you are. If, however, one intends to stay in one type of engineering role throughout their career, the outlook continues to get more and more bleak in this country.”

The number of engineers receiving health benefits from their employers decreased from 67% to 62% in 2008, and the fact that salary increases are being overshadowed by rising healthcare costs continues to be a common grievance among engineers. “Health insurance costs keep increasing,” complained one engineer. “We’ve been through a many year salary freeze and have only been receiving increases for the past couple years. But performance-based incentive programs have been introduced and are appreciated.”

In exchange for bigger paychecks, companies have started to cut back on other indirect cash rewards like 401(k) match plans, pension plans, and tuition reimbursement. “Benefit cuts continue to increase every year,” grumbled one engineer.

“Over the past six years, we’ve seen a steady erosion of our benefit package while salary growth has been erratic,” the reader added. “Large staffing reductions have already been made with more looming in the future. Some of the cuts are characterized as temporary but appear to be permanent. Morale is horrible and the future outlook is not one of growth or stabilization.”

HOW YOU'LL RETIRE This year, we also took a look at how engineers are planning for their retirement. According to the survey, 13% said they’ll never retire and 16% aren’t sure when they’ll give up working. “By observation I decided that retirement is most often a fatal mistake,” said one engineer. “Retirement takes away the ability to enjoy the assets that working allowed. It is unhealthy to suddenly divorce yourself from what you really want to do. I don’t know of anybody that survived it for more than a few months. If you want to stay alive you have to keep your hand in something useful to others.”

Those with retirement on their minds typically plan to hang it up at age 65, but nearly four in 10 say this is later than the age at which they’d planned to retire. For some, the reasons were positive. “A few years ago, there would have been more advantages in my personal life to being retired, and at that time my professional life was good, but not as good as it is now,” commented one.

“For the past couple years, I’ve been working on a project that was just about ideal for me, and the product, recently released, is getting rave reviews,” the reader continued. “For the next year or two or three, I expect to be working on some things that will be even more mentally challenging and lead to even cooler products.”

But for most engineers, the reasons were related more to financial issues and concerns. “The cost of living has outpaced salary increases for several years, especially regarding housing and education expenses. Additionally, the uncertainties and weaknesses in the evolving global economy have made it extremely difficult to gauge how much retirement income will be necessary, not to mention the uncertainty of whether Social Security will exist in a form that offers the same level of benefits that we had been led to expect years ago,” one reader said.

“And medical costs have skyrocketed, and the need to provide an ample cushion for medical expenses in retirement has forced many to commit to working more years just to be able to retire with the appropriately sized nest egg,” the reader added, reflecting the views of many readers.