Are You Earning What You're Worth?

As a whole, the engineering profession in the U.S. remains in a state of flux as globalization continues to move jobs offshore. For some, that means loss of work and flat wages. For others, it means new opportunities and higher income.

According to the latest data compiled by the U.S. Department of Labor's Bureau of Labor Statistics (BLS), the number of employed electrical and electronicsengineers shrank by 101,000 from 444,000 in 2000 to 343,000 last year, a decrease of nearly 23%. Computer programmers took a slightly bigger hit during the period with a drop of 181,000 jobs, or more than 24%. According to BLS, however, substantial employment increases for technical managers, computer hardware engineers, and computer software engineers offset these declines. "The drop in computer programmers and rise in managers reflects the trend toward offshoring and the resulting need for professionals to manage outsourced projects," said IEEE-USA president Gerard A. Alphonse.

That assessment is borne out by this year's salary survey. Although total engineering incomes remained relatively flat in 2005, wages for those in engineering management and senior engineering positions actually outpaced inflation. Department heads and section heads, for example, saw their incomes rise just over 4%. Those with management titles, such as technical director, director of engineering, head of R&D, and engineering manager, increased their incomes by an average of 3.9%. Those with VP engineering titles had the highest total compensation overall—averaging just over $120,300—for an increase of nearly 3% over last year. So while lower-level jobs travel overseas, engineers who can move up the food chain reap the appropriate rewards.

The IEEE isn't alone in stressing the growing impact of outsourcing on U.S. high-tech workers. According to an analysis by the Department for Professional Employees (DPE), recently revised downward projections for white-collar job growth for 2002-2012 released by BLS contrast sharply with earlier government estimates, clearly indicating that more and more jobs are being shipped offshore.

BLS says that over the next decade, most job growth will be generated by low-paying positions in the service sector. This is a major shift from earlier estimates, which projected domestic job growth from engineering and other white-collar/high-tech segments.

"The changing job projections show that outsourcing has reduced the nation's ability to create high-skill, well-compensated jobs that are the backbone of our middle class," said DPE President Paul Almeida. " Government and business economists promised that high-tech and knowledge jobs would replace the offshored manufacturing jobs—but now jobs are being exported, too. This is dramatically changing the nature of employment in our country. The figures are hard to deny."

As a result, instead of an average of 152,800 high-tech jobs being added annually to the economy, the most rapidly growing professional/technical occupations are projected to add only 10,600 tech jobs annually between 2002 and 2012—an astounding 90% downward revision.

"The increasing exodus of highly skilled jobs overseas—similar to the disappearance of factory jobs—means diminished opportunities for those who spent years preparing for high-tech and knowledge jobs, and for our society," added Almeida, an electrical engineer who was formerly president of the International Federation of Professional and Technical Engineers.

Salary stasis

The base salary of the average engineering professional in 2005 was $85,015, up just three-tenths of one percent over last year. Bonuses helped pick up some of the slack, growing 3.7%, but these gains were offset by a 6.6% drop in stock/stock-option compensation. Total income (base salary plus bonuses and all other sources of income) was $93,056. Last year, that number stood at $92, 837.

Despite these meager gains, engineers who participated in our survey said they expected to see their total compensation grow 2.7% on average in 2005.

"A shift has been made to give more bonuses for work done, rather than higher permanent salary increases," stated one engineer. "This will lower base salaries in the long run but also reward engineering for meeting company objectives. In the end, it will probably increase pay—it'll just make you work harder for it."

A growing number of corporate engineering managers who took part in the survey tend to work for startups or spin-offs. More than half work for companies with fewer than 25 employees and less than $5 million in revenue. Total compensation for members of this group averaged just over $105,000.

On the other hand, executives and operating managers at larger organizations (those with 1000 or more employees) averaged $131,727, which goes to show that bigger is better—at least when it comes to high-tech salaries. Engineers involved in design and development brought in $90,158 annually, compared to the $78,790 earned by engineers involved in other functions. Engineering managers averaged $114,182.

Job options expand

Like last year, the three industries that were tops in doling out compensation to engineers were semiconductor houses ($110,082), computer manufacturers ($101,770), and communications companies ($100,298). Designers at medical electronics firms saw the greatest gains this year (up 7% to $97,873), which may reflect the fact that these companies are among the most active in looking to hire new engineering talent (see the chart, "Who's Hiring By Type Of Industry," on page 51).

Indeed, one of the most interesting aspects of the engineering profession today is the tremendous diversity of options available to designers. This means that engineers seeking better job opportunities should probably consider hopping over to other markets as they heat up.

As one engineer observed, "The field of engineering encompasses many different industries. With the proper education and motivation, an engineer can choose where to work, how long to work each week, and the compensation for the work. Good engineers will always be in demand."

Does the prospect of losing your job to outsourcing make you apprehensive? There's one more reason to feel uneasy. Engineers working in contract manufacturing earn the lowest salaries ($63,783) and receive the lowest total compensation ($71,116) of any OEM industry. Clearly, one way EMS organizations help OEM companies cut costs is by suppressing their own engineering salaries.

"I cannot blame a company for getting the engineering services they need at the lowest possible price," one engineer conceded. "What else can they do and still compete with other companies who are saving money as a result of outsourcing?"

Another engineer was more cynical. "I do not approve of outsourcing to companies that pay substandard wages. This appears to be the case with China."

West beats east

So where's the best place to earn a living? As in past years, engineers in the Pacific states (AL, WA, OR, CA, and HI) outpaced engineers in other parts of the country in earnings, averaging just over $103,000—despite the fact that their average earnings dropped 2.4% in 2005.

As a whole, the engineering profession in the U.S. remains in a state of flux as globalization continues to move jobs offshore. For some, that means loss of work and flat wages. For others, it means new opportunities and higher income.

According to the latest data compiled by the U.S. Department of Labor's Bureau of Labor Statistics (BLS), the number of employed electrical and electronicsengineers shrank by 101,000 from 444,000 in 2000 to 343,000 last year, a decrease of nearly 23%. Computer programmers took a slightly bigger hit during the period with a drop of 181,000 jobs, or more than 24%. According to BLS, however, substantial employment increases for technical managers, computer hardware engineers, and computer software engineers offset these declines. "The drop in computer programmers and rise in managers reflects the trend toward offshoring and the resulting need for professionals to manage outsourced projects," said IEEE-USA president Gerard A. Alphonse.

That assessment is borne out by this year's salary survey. Although total engineering incomes remained relatively flat in 2005, wages for those in engineering management and senior engineering positions actually outpaced inflation. Department heads and section heads, for example, saw their incomes rise just over 4%. Those with management titles, such as technical director, director of engineering, head of R&D, and engineering manager, increased their incomes by an average of 3.9%. Those with VP engineering titles had the highest total compensation overall—averaging just over $120,300—for an increase of nearly 3% over last year. So while lower-level jobs travel overseas, engineers who can move up the food chain reap the appropriate rewards.

The IEEE isn't alone in stressing the growing impact of outsourcing on U.S. high-tech workers. According to an analysis by the Department for Professional Employees (DPE), recently revised downward projections for white-collar job growth for 2002-2012 released by BLS contrast sharply with earlier government estimates, clearly indicating that more and more jobs are being shipped offshore.

BLS says that over the next decade, most job growth will be generated by low-paying positions in the service sector. This is a major shift from earlier estimates, which projected domestic job growth from engineering and other white-collar/high-tech segments.

"The changing job projections show that outsourcing has reduced the nation's ability to create high-skill, well-compensated jobs that are the backbone of our middle class," said DPE President Paul Almeida. " Government and business economists promised that high-tech and knowledge jobs would replace the offshored manufacturing jobs—but now jobs are being exported, too. This is dramatically changing the nature of employment in our country. The figures are hard to deny."

As a result, instead of an average of 152,800 high-tech jobs being added annually to the economy, the most rapidly growing professional/technical occupations are projected to add only 10,600 tech jobs annually between 2002 and 2012—an astounding 90% downward revision.

"The increasing exodus of highly skilled jobs overseas—similar to the disappearance of factory jobs—means diminished opportunities for those who spent years preparing for high-tech and knowledge jobs, and for our society," added Almeida, an electrical engineer who was formerly president of the International Federation of Professional and Technical Engineers.

Salary stasis

The base salary of the average engineering professional in 2005 was $85,015, up just three-tenths of one percent over last year. Bonuses helped pick up some of the slack, growing 3.7%, but these gains were offset by a 6.6% drop in stock/stock-option compensation. Total income (base salary plus bonuses and all other sources of income) was $93,056. Last year, that number stood at $92, 837.

Despite these meager gains, engineers who participated in our survey said they expected to see their total compensation grow 2.7% on average in 2005.

"A shift has been made to give more bonuses for work done, rather than higher permanent salary increases," stated one engineer. "This will lower base salaries in the long run but also reward engineering for meeting company objectives. In the end, it will probably increase pay—it'll just make you work harder for it."

A growing number of corporate engineering managers who took part in the survey tend to work for startups or spin-offs. More than half work for companies with fewer than 25 employees and less than $5 million in revenue. Total compensation for members of this group averaged just over $105,000.

On the other hand, executives and operating managers at larger organizations (those with 1000 or more employees) averaged $131,727, which goes to show that bigger is better—at least when it comes to high-tech salaries. Engineers involved in design and development brought in $90,158 annually, compared to the $78,790 earned by engineers involved in other functions. Engineering managers averaged $114,182.

Job options expand

Like last year, the three industries that were tops in doling out compensation to engineers were semiconductor houses ($110,082), computer manufacturers ($101,770), and communications companies ($100,298). Designers at medical electronics firms saw the greatest gains this year (up 7% to $97,873), which may reflect the fact that these companies are among the most active in looking to hire new engineering talent (see the chart, "Who's Hiring By Type Of Industry," on page 51).

Indeed, one of the most interesting aspects of the engineering profession today is the tremendous diversity of options available to designers. This means that engineers seeking better job opportunities should probably consider hopping over to other markets as they heat up.

As one engineer observed, "The field of engineering encompasses many different industries. With the proper education and motivation, an engineer can choose where to work, how long to work each week, and the compensation for the work. Good engineers will always be in demand."

Does the prospect of losing your job to outsourcing make you apprehensive? There's one more reason to feel uneasy. Engineers working in contract manufacturing earn the lowest salaries ($63,783) and receive the lowest total compensation ($71,116) of any OEM industry. Clearly, one way EMS organizations help OEM companies cut costs is by suppressing their own engineering salaries.

"I cannot blame a company for getting the engineering services they need at the lowest possible price," one engineer conceded. "What else can they do and still compete with other companies who are saving money as a result of outsourcing?"

Another engineer was more cynical. "I do not approve of outsourcing to companies that pay substandard wages. This appears to be the case with China."

West beats east

So where's the best place to earn a living? As in past years, engineers in the Pacific states (AL, WA, OR, CA, and HI) outpaced engineers in other parts of the country in earnings, averaging just over $103,000—despite the fact that their average earnings dropped 2.4% in 2005.