DN Staff

July 8, 1996

20 Min Read
Engineering gets hot

Last year at this time Design News reported that America's corporate elite had compiled record sales and profits. We also stated that downsizing appeared to be on the decline, and that the stock market had repeatedly soared to new records. Moreover, economic growth, although slow, continued its upward climb.

As we tabulated the outcome of this year's Design News Annual Salary Survey, the ecomomic setting presented nearly an identical image of what had transpired in 1995. Reflecting that rosy picture, the 1996 survey shows that engineering salaries continue to climb, and that job opportunities look even brighter.

On the downside, the survey points out that engineers must work harder at their jobs, they have less time to complete their work, and the type of work they do is in constant change. The data also would seem to indicate that older, more comfortable jobs may be on the decline, skills demanded of engineers are in a state of flux, and the larger, more established companies may not be the best place to work, particularly if an engineer wants to move up the job ladder or get the most pay for the time spent on the job.

Let's start this year's Salary Survey review with the good news--salaries and job opportunites. On the salaries front, the survey reveals that the engineers in the OEM marketplace who responded earn on average $53,660 a year. This represents a $1,600 increase from the $52,060 average yearly pay reported in 1995.

Engineers in the computer and business-machine industries captured the top spot when it comes to the highest average annual salaries ($62,180). They were followed by telecommunication engineers, who earned an average $58,810 a year. Long the leaders in the salary wars in past surveys, defense engineers ($58,590) and aerospace engineers ($57,900) slipped to third and fourth places on the wage-scale list.

On the low end of the scale are engineers in the machine-tool and appliance industries, with average annual wages of $47,750 and $45,500, respectively. However, these figures average between $2,400 to $4,700 more than the lowest pay-scale earners last year, who were from the industrial-control, machine-tool, and appliance industries.

Another 1996 survey, this one taken by Source Engineering, an engineering recruiting specialist located in Dallas, TX, also dissects the 1996 engineering salary scene. The firm reports that the median salary for junior software engineers is $42,000, $50,000 for engineers, and $57,000 for principal engineers. In the manufacturing sector, median salaries ranged from $37,000 for junior engineers, $46,000 for senior engineers, and $56,000 for principal engineers.

In a recent article, Business Week examines why engineers employed in the electronics industries fare better. "A couple of years ago we didn't have much competition for workers," says Kenneth Coleman, senior vice-president for administration at computer workstation maker Silicon Graphics Inc. "Today when you're recruiting someone, they have three or four offers."

Trilogy Development Group, a privately held software company in Austin, TX, has boosted base salaries by almost 15% over the past year to attract the kinds of technical and marketing people the company needs. "The competition out there is insane," says John D. Price, vice-president for marketing.

At SABRE Decision Technologies, a unit of AMR Corp., salaries overall rose about 6% to 7% last year. The unit, which provides consulting and software to American Airlines Inc. and other companies, hired 800 people in 1995, and expects a similar increase this year.

Another interesting tidbit reported in the Source Engineering survey involves salaries enjoyed by team leaders, a growing trend in the engineering profession. Small-group project leaders disclosed median salaries of $73,000 in the manufacturing sector, while large-group manager/directors earned $87,000. In the software arena, these same professionals had median incomes of $81,000 and $95,000, respectively.

A recent article in U.S. News and World Report says "it shouldn't come as a revelation that software is hot--or that the engineers who feed the hunger have become a precious commodity." Sales in the U.S. have been up 27% yearly, on average, since 1982; last year's $35.6 billion in revenue from packaged software is expected to more than double by the year 2000. Carnegie Mellon University reports that recruitment of its software engineering students is up this year by more than 20%. The average pay, according to the magazine: entry level $30,000, midlevel $45,000, and senior level $60,000.

Raises on the rise. On a similar note, the Design News survey shows that our engineer respondents received an average pay raise of 4.9% in 1996. This amounts to 1.4% more than the 3.5% average reported last year. Topping the list of raises at 5.4% are engineers who work in the automotive and telecommunications industries.

At the bottom of the raise scale are engineers employed by defense and aerospacefirms, who reported increases of 4.3% and 4.2%, respectively. The slimmer wage hike, no doubt, reflects the continuing downsizing and consolidation of companies that focus heavily on this industrial sector.

Job outlook sunny. Along with the favorable salary picture comes a promising job forecast. Growth and the replacement of people leaving the labor force will add more than 865,000 new positions for engineers and engineering managers by the year 2005, according to the American Association of Engineering Societies (AAES). Analyzing data from the U.S. Bureau of Labor Statistics, AAES's employment experts predict the most rapid job expansion will come in computer engineering. This engineering segment, says AAES, will pass mechanical engineering to become the second largest engineering discipline. Still at the top of job providers, the AAES states, will be electrical and electronic engineering.

More than 362,000 of the expected openings represent job replacements. The re-maining jobs will stem from growth, mostly in services, such as consultants in computer and data processing, engineering services organizations, R&D labs, and management and accounting firms. Comments R.A. Ellis, himselfa consultant for AAES: "Engineering is becoming a consulting profession."

To make his point, Ellis reveals that Bureau of Labor Statistics (BLS) figures from 1983 to 1993 show that "Business Services," which in-clude the engineering profession, have grown at a rate of 105% over the ten-year period. The most recent figures, he adds, continue the trend. By the year 2005, the Business Services area will grow at a rate of 7.33%, with computer engineers heading the "Top Ten" at 9.27%, electrical engineers at 8.84%, and mechanical engineers at 6.68%.

The Source Engineering survey attests to this outlook. Speaking of the computer industry in particular, D. Les Ward, Source Services president, reports: "Today, the industry is comprised of 70% permanent employees and 30% consultants. By the year 2000, this percentage is projected to be 70% consultants and 30% permanent employees."

Persistence pays. As in past surveys, and as expected, engineers on the job the longest and with the most education earn the most. Those engineers with less than five years experience average $39,310, those with from six to 15 years $51,180, and those with 16 or more years $62,880.

The type of education received paints a similar picture. Engineers with no formal education or with two years of schooling make an average of $47,020 a year, those with a BA or non-engineering degree $54,250, and those with higher degrees $61,910.

Company size also makes a difference in how much you earn. Engineers in companies that employ less than 20 workers earn on average $50,700 a year, those in companies with 500 to 1,000 employees $51,000, and those in firms that employ more than 5,000 workers $59,650.

Happy campers. How satisfied are design engineers in their current positions? Nearly eight out of ten (78%) of the respondents say they would choose the same career again. This compares with only two-thirds of last year's respondents who said they were "satisfied" or "very satisified" with their jobs. Interestingly enough, there was very little difference in the level of satisfaction between those engineers who have been on the job five years or less and those who had 16 or more years of experience. The same holds true for engineers who have little or no college education or those holding PhDs.

As with last year's survey, engineers employed in companies with 5,000 or more workers appear to be the least satisfied, followed closely by those who work in companies that employ from 1,000 to 5,000 workers. Engineers who work at facilities with 20 or less employees were the most satisfied. On an industry basis, engineers in the medical, industrial-control, and consumer-product sectors represent the most-satisfied groups.

Regional ratings. In times past, it was almost a safe bet that you could find the highest paying and most jobs in regions that contained a plethora of high-tech or aerospace and defense industries. That may no longer be the case.

A recent Wall Street Journal story points out that regions do still matter, but less than in the past. It notes that the past 15 years have brought a series of regional-rolling recessions: the oil-patch bust, the farm crisis, the Rust Belt woes, and the collapse of the bicoastal economy in the late 1980s. The good news, says the WSJ, is that the U.S. has been spared a simultaneous calamity on a national scale, and most of these regions have recovered.

Looking ahead, though, some economists wonder whether regional blowouts are less likely in the next downturn, whenever it might come. They note that service-industry jobs are stable, ever-more important, and everywhere. But that rosy note does little for those employed in the engineering profession.

However, the article goes on to say that some highly vulnerable states have changed the most. For instance, Texas derived nearly 20% of its economic output from oil and natural gas in the early 1980s. Today, energy-related economic activity has dropped to less than 6%, thanks to diversification, primarily into high-tech and service industries.

New England, once a hotbed for engineers, presents somewhat of a mixed bag when it comes to jobs. Analyzing New England's economy, Yolanda Kodrzycki of the Federal Reserve Bank of Boston feels that high-tech will continue to be the most important driving force in the region's economy over the next few years. She defines high-tech to include computers, software, medical instruments, biotechnology, pharmaceuticals, and R&D.

Right now, such industries account for 10% of all jobs in the Boston area. Kodrzycki adds that the industry peaked in 1985 at about 260,000 jobs. She predicts a job growth of 0.7% for the rest of the decade. On a happier note, she reports that high-paying, high-quality engineering jobs will increase at a rate of 1.5 to 2% per year. She adds that about one-quarter of all high-tech jobs are divided about equally between management, production, clerical work, and engineering.

Nevertheless, engineers like to know where their counterparts are located and how much they make, so we asked our readers to indicate where they work and what they earn. The Design News survey results look something like this: engineers in the Pacific region make the most on average ($58,910), followed by those in the Mountain states ($56,820). At the bottom of the regional pay scale are engineers who work in the West North Central U.S. ($50,410) and the East South Central part of the country ($51,040).

Competition coming. Even with the promising job outlook over the next few years, worldwide generation of new professional degrees in engineering and closely related fields like computer science, according to AAES, has reached the unprecedented level of more than one million per year. Moreover, the U.S. accounts for only about 119,000 of these degrees, or about 12% of the total.

Another way to place these numbers into context is to compare them with the entire U.S. technical workforce, which includes roughly 2.2 million engineers, technical managers, and computer scientists. This pool of U.S. labor is being matched every two years by the global numbers of new graduates in these disciplines.

Most American engineers compete in a national job market, but U.S. employers are increasingly operating in a much larger worldwide market. Lower labor costs for foreign engineers are not the only reason for the globalization of technical work, however, says AAES. Innovation and progress on emerging technologies, once seen as a strength, if not a monopoly of the Western economies and Japan, is beginning to spread to other areas.

For example, U.S. patents were awarded to 39,555 American organizations and citizens in 1985. By 1990, this number had increased to 47,393, a rise of 20%. During the same period, the number of U.S. patents awarded to Europeans went from 16,530 to 18,998, an increase of 15%. In contrast, the number of patent awards for the six Asian nations went from 12,975 to 20,481, an increase of 58%.

What does this mean for U.S. engineers? There could be two possible scenarios, says AAES. First, there could be a weakening of demand for people here, and, as a result, more engineers in the unemployment line. Right now, at least, it appears that the demand for technical people in the U.S. is so strong, AAES believes, "that it can readily absorb all of the qualified persons who are seeking jobs, including experienced engineers, new U.S. grads, immigrants, and recipients of work that has been passed along to foreign locations."

However, AAES adds, the happy state of affairs for engineers still does not preclude effects of the second type: downward pressure on pay. The AAES review states that a gut feeling exists concerning rising foreign competition on engineering pay scales, "but firm data are not yet available to confirm those suspicions."

Getting ahead. What does it take in today's marketplace for engineers to get hired, retain their current positions, or move up the job ladder? Ted Gautschi, Design News' longtime management guru, has this to say about the subject.

"Accept that the nature of employment is changing," Gautschi warns. "Due to global compeitition and rapid technological advancement, many corporations are reducing fixed costs and increasing flexibility by commissioning work to a contingency work force--part-time workers, freelancers, subcontractors, and independent professions. Others are creating virtual corporations by gathering teams around core groups to complete a project, then disbanding the team when the project is done."

In response, Gautschi advises, the engineer to take active control of his/her career. He suggests these actions:

- Establish a vision for your career. What do you want to accomplish? You may need to modify your vision as time goes on, but that's o.k.

- Remember this vision when you make professional and other life choices.

- Network. Stay in touch with your contacts by telephone, fax, visits, letters, and holiday greetings.

- Lend a hand. Networks involve two-way communication, so help others when you can.

- Keep the company aware of your value. Make your positive actions known. It might be useful to document your accomplishments.

- Ask for feedback on your performance. Get this from someone you trust, then take appropriate action.

- Keep your skills up-to-date. Learn new ones. Accept new job assignments, learn more about the business or industry, participate in society conferences, or continue your education.

What tools help engineers keep current, perform their jobs better, turn out quality products faster, and enable them to compete more successfully in today's job market? The Design News survey reveals that to better cope with these issues engineers have turned to design teams (52%), software (44%), and outsourcing work (28%).

In a nutshell, the 1996 Design News Salary Survey points out that engineering professionals can look forward to another good year of hiring and stable employment. Small to mid-size companies are expanding rapidly by hiring mid- to senior-level engineers, while larger firms are returning to the practice of hiring new graduates. And, salaries continue to climb.

However, as Gautschi warns, gone are the days when an engineer started and ended his career with the same company. Instead, employers are looking for individuals who have experience in more than one industry, have worked with multiple products, are flexible, and have fine-tuned their interpersonal skills.

Key to remaining marketable is to keep abreast of technological trends, develop a strong network of contacts within and outside your company, and keep your skill sets current. If your job plan follows this advice, no doubt you will see this reflected in next year's Salary Survey under the headings of salary increases and new job opportunites.


SALARY BY EMPLOYEE SIZE

LESS THAN

21 TO

101 TO

501 TO

1,000 TO

MORE THAN

20

100

500

1,000

5,000

5,001

AVERAGE SALARY

$50,700

$48,480

$48,930

$51,000

$55,660

$59,650

$20,000 TO $30,000

14%

10%

9%

5%

2%

2%

$30,001 TO $40,000

19%

26%

20%

28%

10%

8%

$40,001 TO $50,000

26%

27%

30%

27%

26%

18%

$50,001 TO $60,000

12%

15%

22%

30%

29%

27%

$60,001 TO $70,000

11%

10%

10%

10%

17%

20%

$70,001 TO $80,000

5%

6%

5%

4%

8%

14%

Over $80,000

12%

6%

5%

6%

8%

11%


SALARY BY YEARS OF EXPERIENCE

LESS THAN

6 TO 15

16 OR MORE

5 YEARS

YEARS

YEARS

AVERAGE SALARY

$39,310

$51,180

$62,880

$20,000 TO $30,000

16%

4%

1%

$30,001 TO $40,000

42%

11%

5%

$40,001 TO $50,000

29%

34%

14%

$50,001 TO $60,000

9%

30%

27%

$60,001 TO $70,000

2%

13%

22%

$70,001 TO $80,000

1%

5%

15%

OVER $80,000

1%

3%

16%


SALARY BY REGION

AVERAGE

LESS THAN

$40,000 TO

MORE THAN

SALARY

$40,000

$70,000

$70,000

PACIFIC

$58,910

10%

15%

23%

MOUNTAIN

$56,820

4%

6%

7%

WEST SO. CENTRAL

$54,460

5%

7%

6%

NEW ENGLAND

$54,110

8%

7%

8%

MID ATLANTIC

$53,770

10%

11%

14%

SOUTH ATLANTIC

$52,200

11%

11%

8%

EAST NO. CENTRAL

$51,500

35%

30%

25%

EAST SO. CENTRAL

$51,040

5%

4%

3%

WEST NO. CENTRAL

$50,410

12%

9%

6%


SALARY BY EDUCATION

NONE/2YRS

BA ENG/NON-ENG

MA, PhD, MBA, ADV

AVERAGE SALARY

$47,020

$54,250

$61,910

$20,000 TO $30,000

12%

4%

1%

$30,001 TO $40,000

23%

14%

4%

$40,001 TO $50,000

27%

26%

18%

$50,001 TO $60,000

22%

26%

26%

$60,001 TO $70,000

8%

15%

23%

$70,001 TO $80,000

4%

8%

15%

OVER $80,000

4%

7%

13%

Education, years of experience, size of the company, and where you live play major roles in determining the size of the paycheck you take home.

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