DN Staff

July 10, 1995

18 Min Read
Engineering salaries reflect new design challenges

Many of America's corporate elite garnered record sales and profits last year. Downsizing appears to have played its course. The stock market continues to reach a fever pitch. And, although economic growth is slowing, it continues an upward climb.

With this good-news scenario, job opportunities for engineers and the outlook for improved pay appear encouraging. Right? Not exactly.

Experts predict that neither the job or salary picture will get much brighter in the near future. For instance, automotive sales have taken a dip from expectations. Car makers are trimming their sales forecasts and they remain wary of a continuing downturn. Meanwhile, Detroit's competition hasn't stalled out. Japanese car makers, still bedeviled by the strong yen, are cutting costs. And their suppliers improved productivity 38% in the past two years, according to Arthur Andersen & Co.

Such economic uncertainty has caused many chief executives to keep costs under a tight rein. "We're nervous," says Frederick Stratton, chairman of Briggs & Stratton, the $1.3 billion sales leader in small gas engines and auto locks. "We don't know if this is the peak of the cycle, or a midpoint in the intermediate trend. We think it's the midpoint." But he acknowledges that he could be wrong, and adds that his company, like many capital goods firms, won't be adding new capacity anytime soon.

And don't expect Washington to gallop to the rescue, with the new Congress vowing to shave costs across the board. There's little doubt that the federal defense budget will continue to dwindle. Moreover, Western European, Russian, and Chinese arms makers are marketing their own wares. "Every major country seems to have its own dying defense industry," says Gary Reich, analyst with Prudential Securities.

Where the rewards are. So where are the engineering jobs and who will reap the rewards of today's fast-paced economy? Design News can provide readers with a few important clues, based on the results of its annual Careers Survey.

And, what better place to start but with the salary scene. About half of this year's 2,792 respondents average $52,060 a year, up only $467 from the 1994 figure of $51,593. Most of this increase came from those engineers who fall into the $60,000 to $70,000 a year salary bracket.

According to the survey, engineers in the defense and aerospace industries commanded the highest salaries, averaging $55,900 and 55,600 a year, respectively. Counterparts in the appliance and industrial controls sectors received the lowest wages, averaging $45,990 and 45,500, respectively. Taking all industries into consideration, the average wage totalled a respectable $50,700.

Moreover, when you compare engineering salaries with other professions engineers do quite well. In a review of 1994 weekly average salaries by the Labor Department's Bureau of Labor Statistics, only lawyers, chemical engineers, airline pilots, and physicians made more than design engineers who responded to the Design News survey. And the difference wasn't that great--$1,126 per week for lawyers versus $975 for design engineers.

Pay raises slim. As far as salary increases go, about half of the respondents report that they received pay raises under 5%, with the average being only 3.5%. This compares closely with the 1994 results, with slightly more receiving over 10% and slightly less receiving no increase. Those making less than $40,000 did better than others in that they were less likely to get increases under 7% and more likely to get increases over 10%.

In spite of paying the most, survey results show that defense and aerospace industries offered less than 5% or no increases to their engineers. This would appear to coincide with the consolidation and downsizing of these two industries, as well as the cut in defense spending.

But even this scenario doesn't tell all of the story. In its latest report, the Engineering Workforce Commission (EWC) notes that the purchasing power of the engineers' base salaries (converted to constant 1994 dollars) remains at 20-year lows. The only engineering positions where real wages are significantly above their lowest level for this period, EWC says, are those at the highest levels of experience, "where widespread downsizing and early retirements have thinned out the number of people in the profession."

Even those top-rung positions, the EWC report explains, are not all that well paid, at least in comparison to the levels of compensation they were worth just a few years ago. And the EWC adds that, at the entry level, there have been no improvements.

Experience counts. Almost three-fifths of the Design News survey respondents have at least a bachelors degree in engineering, while one fifth have earned a masters or PhD in engineering. As in past surveys, there appears to be a direct correlation between more education and higher annual salaries.

Still, nearly 25% of the engineers with BAs or non-engineering degrees commanded salaries in the $50,000 to $60,000 range, the same percentage as those engineers with Masters degrees or PhDs. Dissimilarities start to occur in the $60,000 to $70,000 range, where only about 16% of BA and non-engineering degree personnel fell into this group, as opposed to slightly more than 20% of the MA/PhD types. The spread gets even wider when salaries top the $80,000 mark, with only just over 5% of the BA/non-engineering degree workers falling in that range, compared with nearly 12% of their MA/PhD counterparts.

On the other hand, those engineers holding MAs or PhDs who earn $60,000 to $70,000 annually jumped a couple of points to nearly 24% after 16 years on the job. Less than 13% of those with BA or non-engineering degrees with this same length of service were in this salary range, a drop of more than 3 points from last year.

Holding a degree also makes a difference when you compare engineers with other professions. For example, a recent survey of undergradute majors and those with graduate degrees conducted by three leading associations disclosed that engineers and those with advanced technical degrees top the list when it comes to average starting salaries. An MBA with an undergraduate degree in a technical field commanded an average starting wage of $44,500, according to the survey. A mechanical engineer with an undergraduate degree just out of school pulled down $36,000 a year on average, while a chemical engineer averaged $39,900 a year.

Satisfied workers. The survey also reveals that engineers tend to be stable employees. In fact, the average time spent by all respondents at their current posts is 6.5 years. A total of 27% said they had been at their firms for more than 10 years, with only 8% reporting they had worked at their current place of employment for less than one year.

At least part of this stability might be attributed to job satisfaction. According to the survey, two-thirds of the respondents indicated they are "satisfied" or "very satisfied" with their engineering careers. Engineers at companies that employ less than 20 are more satisfied than the average, while those at companies between 100 to 1,000 employees are less likely to be reasonably fulfilled. On an industry basis, engineers in the automotive arena represent the most-satisfied group, while those in the aerospace and instrumentation fields are the least happy with their jobs.

Although these statistics compare closely with last year's survey, there were more respondents with 11 to 20 years experience, less with over 20 years. Perhaps this represents another trend stemming from the vast downsizing undertaken by major corporations over the last few years. Many times, companies looking to thin out their engineering staff offered engineers early retirement with extended benefits.

These figures also suggest that engineers continue to further their education while on the job. Proportionately, the survey shows that more PhDs can be found in companies with less than 20 employees, with more Masters degrees in companies having greater than 5,000 employees. Four out of five of the respondents report they have been engineers for over five years; almost one-third for more than 20 years.

Heavier burdens. What impact did the recent rash of mergers, acquisitions, and corporate downsizings have on engineers? According to Design News readers, the biggest effect has been added duties. Merger activity, the respondents reveal, has resulted in a 9% greater workload, acquisitions 12%, and downsizing 36%. Expansions, too, have resulted in increased duties, say the readers, who reported a 22% jump in assignments at those companies. Even those respondents whose companies were not affected by any of these actions indicated that workloads had increased 9%.

This finding parallels the results of another recent Design News survey conducted by the Simmons Market Research Bureau. In that study, a majority of design engineers reported that their duties had multiplied greatly over the last few years. In addition to product or system design, many of them had the added responsibilities of R&D, management, testing and quality control, and the design of equipment for in-plant use.

Along with this trend, over 90% of the engineers interviewed for the Simmons study noted that their companies had adopted concurrent engineering as a product development strategy. As a result of this activity, nearly 40% said that they had gained more influence in the design of a project and its specifications.

Increased responsibility and influence don't always lead to job satisfaction. Asked why the engineers left their last job, the leading response (28%) had to do with finding more challenging work. Another 26% cited higher salaries as the main reason for making a move, while 25% lost their jobs through layoffs.

Getting ahead. With all of this uncertainty facing today's engineers, one concern stands out among the respondents in regard to keeping their current jobs or moving up the corporate ladder--building technical expertise. How do the readers go about accomplishing this task?

Over half of the respondents chose engineering magazines as the most helpful tool in building this expertise. Next in line came seminars sponsored by engineering associations (29%), followed closely by in-house training (23%) and trade shows (20%). When asked how engineering magazines address this need, three-quarters of the respondents believe their most useful value is in helping them learn about new technologies. The best way that magazines deliver this service, say the respondents, is by reporting the "latest news." Over two-thirds also say magazines are excellent sources in finding products, while half noted their importance in helping them to locate suppliers.

Where the jobs are. With the engineering population continuing to dwindle, are there any opportunities in job marketplace for design engineers? If it's only a monetary reward that tops the job search, then engineers should, as reported earlier, look to the defense and aerospace industries. However, more than likely they will find the hiring flag at these industries at half-mast, with future prospects even dimmer.

If its salary and location that's important, then the survey indicates that job seekers should concentrate on the New England, Rocky Mountain, Mid-Atlantic, and Pacific regions of the country. Keep in mind, however, that when vying for a job in many of these regions you will be competing against numerous experienced engineers that already live there. Also, keep in mind that the cost-of-living expenses are higher in some of these areas than other regions.

If those prospects don't appear to suit your taste, how about focusing on industrial sectors? Electronics, medical, and telecommunications industries all seem to have rosy futures. But again, the majority of these firms tend to be nestled in the Northeast and West Coast areas. Some exceptions: the Southeast region for telecommunications and electronics, and the Southwest for telecommunications.

In view of these somewhat slim pickings, where should design engineers concentrate their job-search efforts? Try the smaller companies, those with 100 or less employees. A recent Small Business Administration study showed that some 20 million small businesses around the country are putting people to work. In fact, the report notes that such entrepreneurs provided 100% of the net new jobs created in the U.S. between 1987 and 1992. Moreover, the Simmons study reveals that there has been an increase of almost 100,000 design engineering jobs among small OEMs since 1989.

As the Design News survey shows, however, many of these firms are likely to be in the instrumentation and machine-tool business. And, as the salary survey points out, those industries are among the lowest on the engineering pay scale. But that might not be so important to an engineer that is out of work, prefers a more bucolic setting to the crush of city life, or merely wants to shake the job tree and see what falls out.

So, what's your best bet? If you can locate one, try a small telecommunications or medical company located in the Southeast part of the U.S.

It all boils down to this. In spite of the current economic whirlwind, the continuing 're-engineering" of companies, and the prospect of doing more with less on the part of the federal government, design engineers remain a resilient breed. The Design News survey revealed that 38% of the respondents want to remain a design engineer, and that 35% would like to move into a management slot. This appetite for engineering bodes well for keeping the U.S. on top of the technology tower.





































































































So you want to start a business

What skills are paramount in order to start your own business? Marketing skills are seen as the most important by a majority of the respondents to our Careers Survey. Technical and management skills are also essential according to about half of the respondents. In spite of this perceived need for skills, many of the respondents rate themselves high in technical skills, but relatively few have a high opinion of their management, marketing, or financial skills, or their ability to protect the ideas that might have persuaded them to strike out on their own.

Also, a fledging engineer entrepreneur should not expect to make big bucks right out of the starting gate. The vast majority of respondents who own businesses have sales of less than $1 million. Slightly more than half had a revenue growth rate of only 5 to 10%, although 14% reported that their businesses have grown by more than 30%. Before this dissuades anyone from joining the ownership ranks, keep in mind that two-thirds of the businesses run by the respondents are less than 5 years old, with one-quarter in existence for less than a year.

For those who try and succeed, the effort can be financially and physically rewarding. Some of these winners are the focus of this issue's features section. Check them out if you are serious about joining the ranks of entrepreneurs.

Internet no engineering tool--yet

Hardly a day goes by that you don't read about some new venture that involves the "Information Highway." But how widespread is the use of electronic media among engineers, and what value do they derive from such services?

Design News posed this question to readers in this year's Careers Survey. Some of the responses may surprise you. Here's a look at a few of the findings:

One-quarter of the respondents report they are connected to the Internet. CompuServe and America Online are the most-used services, with Prodigy close behind. Higher income and more highly educated respondents are more likely to be connected to the on-line services, the survey shows. Over a third of the respondents work at companies with more than 1,000 employees, with nearly 50% of those in the defense industry connected to the Internet.

What kind of services would engineers like to see presented on the info highway? Almost three-fifths of the respondents would like to search for information about new products. Nearly as many would welcome a look at stories on problems and their solutions.

Cost the key. But are engineers willing to pay for this service out of their own pocketbooks? Almost three-quarters say they are not, at least for on-line technical information from engineering magazines. Of those who are willing to pick up the tab, most would subscribe to the least expensive option.

The growing use of CD-ROM provides another option for engineers. In fact, more than one-quarter of the respondents have a CD-ROM drive at work and one-quarter have them at home. Home ownership, it appears, relates directly to income, with over one-third of those who make $70,000 or more using them in their homes.

Even those engineers who have access to these services are not sold on their usefulness. "I have recently been forced onto the 'Net' as a result of a new job and am not overcome with joy using this thing," notes one Georgia reader. "I have yet to find a way to dog ear a page, highlight a sentence, or sit by a wood stove in a comfortable chair and read."

Perhaps more of the respondents reflect the view of Tony Rizzo at AT&T Bell Labs. "I use Internet primarily for access to netnews," he says. "For example, I've gotten some valuable references on the subject of design of experiments from sci.stat.math."

Carl Montgomery, a project engineer at EMS Technologies, has mixed emotions about the services he receives. "The cost of the on-line service is borne by someone--and there are restrictions to the mobility of the medium," he relates. "I don't see myself with a laptop on the sofa and a cup of tea. Besides, services like America Online are too slow. No wonder Bill Gates uses the hourglass for the waiting icon."

But the perception of Greg Nieman, a Philadelphia system engineer, may best sum up the thinking of engineers about the current status of electronic media. "I find that surfing the Internet is a great way to find sources of information and some application info," he notes. "But I'm not ready to put the paper magazine in museum cases. I find that technical illustrations are still too slow to load to permit much browsing for new ideas."

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