I think this article glosses over the assumption of 'equal work' and 'same qualifications'.
I think all of your readers are well acquainted with the real cultural differences between Eastern and Western engineers. Eastern engineers, because of cultural differences, often can't perform even the most basic tasks without specific step by step instructions, whereas Western engineers are more prone to self-guidance and self-management. (Note this is a generalization and potentially dangerous stereotype, not applicable to all people, but is used to illustrate a point.)
The pay inequity is not truly an inequity when one group is so much harder to manage and direct.
For those Eastern engineers who are self-directing and truly have equal qualifications, I have no quarrel with their unrest or demand for equity.
My 2-cent worth opinion.
A lot of engineers in China, for example, may have just 3-year working experience after college before they move on to manager or something else. Also during their 3-year as engineers, they hardly do truly real development, i.e. world-class product. The salary survey should include what kind of commercial products engineer produced.
I cannot comment on engineers on other countries. However, I worked at may Massachusetts and Silicon Valley hightech companies for 18 years after got my Ph. D. I, and many others like me with 10+ years experience, are still worked as developer, day-in-day-out, and chucked out products millions are actually using (which also indicate our career are utterly failure).
We pay much higher income tax. If we count the social security, medicare that we may never see a penny, and state and local tax, sales tax. If we are double earning family, AMT kicks in and we only bring home half of the income on paper.
Also, our cost of living are much higher (SF bay area). Therefore, the income on paper is really not a good gauge on compensations. EE-times survey should adjust those factors.
Your graphic cuts like a knife into a business practice that has long needed to be examined.
Twenty years ago work went to Taiwan and Singpaore. When they got too pricey it moved to Malaysia. When prices went up there it went to India and China. Ten years from now we will be offshoring to Africa. Then what?
When will this industry think about building a sustianable and fair model? I suspect about the time the ocean waters are rising in New York and San Francisco and we start thinking we better take action on that global warming thing, too.
Until then, hey we are helping other countries raise their standard of living. It's just good business.
Bill SJ makes a good point at the end ... what is the relative cost of living in each location? I once lived in the Chicago area and a lawyer friend got a job in Manhattan for a 25% raise. The problem was that she would have needed a third or even 50% raise just to break even! I went the opposite direction and for the same base salary, got the effect of a 10% raise in a cheaper market. For $22K per year in India, an engineer may have a lot of other benefits or lower costs to live, in some ways, better than the $116K person in North America.
I think it's a mistake to think that there is a sustainable condition that grants US-bourne engineers a distinctive merit that justifies higher salary. There is no barrier between US and Asia to keep technical knowledge and culture from moving. Many tech companies in Asia are staffed and supervised by US-educated engineers and scientists: I know many people I used to work with in Silicon Valley who are now in Asia directing technology and product development. It would be extremely naive to think that junior engineers working with these US exported senior engineers today will not grow to be as competitive as US-grown engineers in the future.
One major thing that the report does not factor in is cost of living. What someone is paid in the US (or other country) vs elsewhere can NEVER be a straight apples to apples comparison.
Yes without a doubt salaries are lower in Asia/India/Mexico etc. but - so is the cost of living there. Having been to Taiwan more times than I care to count I can tell you food and housing is far cheaper there than it is in the USA.
What I would like to see is a truly balanced comparison based on purchasing power of ones paycheck. If that is taken in to account I would be very surprised if it is not equal or at least much closer to parity.
From the California Budget Project's "Making Ends Meet" publication, the basic cost of living for a family of four in California is around 50K assuming you don't save anything, have no unforseen medical expenses, no luxury expenses. Pretax this and you get 80K. On top of this, you need to plan for medical costs, retirement, college tuition for kids, daycare costs for toddlers etc, i.e. costs that people in EU, Japan or China do not normally have, and the figure easily shoots upwards of 120K.
Cost of living vs. dollar value of salary explains some of the disparity. However, this is nothing like the disconnect between top management salaries in these countries. In the US, dim witted investors are confused between a company's performance and the management team's. The off shore management teams will eventually prevail because they still value the actual products that are sold and traded. Therefore they value the workforce and creative teams and will grow their own in-house talent. They will be responsible in maintaining their successful teams. Their salaries will go up because they will eventually outproduce us, because we are reducing our productive work force and short changing their potential replacements. The Boeing Dreamliner is an extreme case of managment not taking responsibility for maintaining company talent and outsourcing without any appreciation for the actual work that goes into making something happen. However, it is the tip of the ice berg of corporate America betraying the entire nation by dismantling so much of our creative potential and then looting the profits.
If you think the Eastern engineer's salary will be increased to match the US engineer's you are wrong.
It is far more likely the US engineer will see their salaries going down toward the Asian levels.
Wasn't this the globalization goal all along?
Hey China/India - if you don't keep your wages down, we'll outsource your jobs to Vietnam and Nigeria, where engineers are willing to work for $8k~$10k a year and will be the equivalent of millionaires in their society, where the average wage is $1200 per YEAR.
What goes around, comes around. It's your turn, after a decade of wealth, to get yourselves unemployed via outsourcing and live "the good life" (on credit cards) we American unemployed engineers now enjoy.
That what matter and is differentiating - it is the relative cost of living in each location. Salary without consideration the living cost, social, retirement and medical benefits does reflect accurate picture. Living cost is driving force and market price for both sides engineers and companies, either in western or eastern locations. Double-increase in salary in eastern location will not increase work productivity twice, on the other side it will make at least 5-times increase in living cost coefficient.
I have worked in East for about 5 years before i moved to west. I OPENLY confess that engineers in East want to become manager as soon as they get into Job, i dont know why.. i was also like that..before i came to NA.
I think its unfair to compare West vs East salary.. really there is no comparison...
Only 10% of East engineers will be as good as NA engineer.
Rest of them,,i believe are liability to organizations.... thats my personal opinion....
so please excuse me if i sound too harsh...
I also feel that... i have become more efficient over here... my output is twice in the same ammount of time that i put into work...
In the last ,, salary comparison between East and West is rubbish
As long as population in China, India keep increasing, and people are ready to work for any money in a country where average per capita income is less than $4000, there won't be any crease in wages in these poor countries.
However at the same time, as the market is in West, consumer there are ready to pay much more for the technology (As opposed to East consumers) it makes sense for the companies to employee the people who understand the market, and thus pay them higher for the new technology/innovation.
Once a innovation becomes commodity the work would surely be transferred to the East to keep the cost low. and the increasing population in these countries will further drive the cost low.!
The real comparison should be done with respect to the Economy of the country or PER Capita Income. China and India have combined 40% of world population with less than 5% of consumer willing to pay for the expensive technology.
In this article we are comparing apples to oranges. Before starting on salary consideration we need to see the cultural barrier, cost of living, social attachment, efficiency of work, taking responsibility, number of hours put for work. I know that India is a hub for outsourcing, but the people are so hard working. People sacrifice their family time for work. I agree that amount paid is less in $ but it is very very good salary in local currency. It is same as engineers earning more in LA and NY, where as when same engineer moves to TX, CO the salary will be down by 20%-30%.
Perhaps I am one of the few engineers who have also an interest in history. The Roman empire has risen because of the might , discipline and profesionalism of the Roman military.
One of the main causes of the fall of the Roman empire was the fact , that at the end most of the Roman army, was composed of foreign mercenaries.
Originaly the West has prospered because of its technological cutting edge and superiority in R&D and industrial production over the rest of the world.
Today, many projects are outsourced to the East. Technological universities of the East will surpass the universities of the West.
Finally western hitech company (those who are outsourcing today) will not be needed any more by the East, because the technological superiority will be there.
I think if we find a way to bridge the gap, push eastern engineers upward, and in general show eastern engineers not to let the bean counters under value them, this rift will be beneficial to all of us. I am just a new guy here so I am not trying to sell anything but I am starting a blog on this topic and would love input from anyone willing to share: http://becausemyfriendhasone.blogspot.com/
As you can see it's clearly a work in progress. Feel free to email me with suggestions at firstname.lastname@example.org. Hope to hear from some thoughtful engineers.
ps. I am not trying to sell anything I really want to just get more opinions from engineers world wide and start a conversation.
GeniusEE: Hey China/India - if you don't keep your wages down, we'll outsource your jobs to Vietnam and NigeriaNo Vietnam or Nigeria can come close to competing as long as the Chinese can peg the exchange of their currency ridiculously low even after holding onto a trillion dollars of reserves, courtesy Walmart. It is a fact that other third world countries are also complaining about China's beggar-thy-neighbor policy.
Cost of living and relative purchasing power are not important here. When the capital is in Dollars or Euros and the board/investors/executives are trying to figure out how to make their organization more efficient it's only the absolute cost that's relevant. Most of the organization's cost go to salaries. And when the ratio is 5 to 1 even a cynical engineer would have to believe that outsourcing will lead to an efficiency (output/$$$) gain for the organization. I have, literally, overheard an executive say to his Director of Engineering, "There is no problem that five more developers in India can't fix." (Insert cartoon of fat-cat smoking $100 bills here) It bodes poorly for a large part of the technology work that is (was) done in the west.
It's not all bad. The executives will still need to have a fair amount of support at their disposal. This means that Sales, Product Management, Engineering Management, and high-risk development will be located in the west. Ultimately this favors engineers with significant experience and starves the cultivation of new talent. Only with hesitation would recommend my children to pursue EE or CS degrees.
Equal pay for one type of work with the same quality should be a universal rule. The pay here I mean is to maintain the same living quality in a given society, not in dollar and cent. Although the principle I believe is simple, to come out a good system is a real challenge among different cultures.
One major reason of outsourcing is for cost cutting. It is the management to try take advantages of lower pay working people. The motivation is deadly wrong. But some major companies in the States are proud of their cost cutting strategies. And it is discrimination, period.
On the other hand with the aforementioned pay system, companies in the developed countries may have real cost reduction advantages from the accounting perspective.
Interresting article even if I think it is a bit biaised as we don't exactly know what we compare with. As already said what is important, more than the wage is the money in your pocket once you paid all the charges you have to live decently. If we used this metric I am sure that there is gap but not so high and even in the other dicrection in some areas.
On the other hand as low cost asian countries have been used as low cost subcontractors, management of those companies only looked at the bttom line and then only care about the labor cost so in this sens pure salary comparison has a meaning.
I strongly hope that salary will raise rapidly in these countries as it will be a way to make inshoring of work in Europe and US. Every body agrees that having local teams with people closed each other is always easier to manage with a higher ouptut and efficiency. Always moving to a low cost area is just non sustainable strategy which in the long run run can just be a disaster, looking at the mess in Boeing now is just a concrete example of the problems fiancial management can create when they substitute to engineers to define how engineering work has to be done.
I personally just believe we are at the beginning of the story as global warming, climate change, raw resources shortage with all the consequences we will see in the coming years will drastically reshuffle the cards.
Even though the engineering salaries in the services sector are $22000 on average in India, they provide an upper middle class quality of life here. The reason for this being the abysmally small salaries given to the lowest rung of the industry in manufacturing - who cannot even afford quality housing and health care - which is why we see such abundant slums in India and none in the US. An imposition of a minimum wage program across India ( and China as well though I am not sure of how things work there ) will bring up the quality of life here and subsequently the need for higher salaries in the services sector might arise as well, so as to afford the same relative quality of life as compared to the lowest rung. Until such a program is imposed, we wont see any further rise in salaries in the East.
Meanwhile, if manufacturing is to thrive in the West, it has to be based on core competencies and not just cost differentials. This is where today America needs to desperately invest in next generation of infrastructure such as Trans-American high speed rail powered by low cost alternative fuels like Hydrogen Fuel Cells which will help cut the manufacturing costs by as much as 50% ( 20% by the fact that Hydrogen Fuel Cells are 20% more efficient than diesel or coal and the remaining efficiencies arising out of lower cost and small transit times for raw materials and finished goods )
The industrial revolution started in the West and not the enslaved territories of the commonwealth ( like India ) just because of this reason. If costs had been the driving factor, England would have set up all of its factories in India - whereas what it did was took our raw material and manufactured in the England based on their core competencies in Manufacturing.
Read more about my reasoning and a plan to re-energize manufacturing in the US on my blog at http://ontechandpolitics.blogspot.com
Can there be "overpay" in a market-driven environment? Do you believe there's someone intentionally paying more then what's reasonable? Can hardly be someone's act, specially given the scale, don't you think?
Engineering in North America and Europe is getting "out of fashion", that's the ugly truth. Some 7-10 years ago there were dozens of coop students looking to start their careers with every more or less respected company. Not the same these days.
Marketing, finances, management, law, healthcare - those have been way more attractive lately for people with brains and motivation, - the people who understand true effects of outsourcing, especially long term effects.
Someone here believes Engineers in China or India will eventually make $50K+. That?s clearly a wishful thinking. Those who started the trend and who maintains it knows very well what they are doing. It?s a ?natural? process after all and it?s not too hard to see the tendencies if you have common sense and are not afraid of applying it. With only a few highly-paid best experts left to work in the West as ?supervisors? or ?coordinators? Indian and Chinese Engineers will have to take on the bulk of work still for a small fraction of money an Engineer in the West makes today. Engineers in India or China ?walking out of jobs?? Could you please give a good representative statistics so I can believe it?
When i started in this industry in 86 , a "kid" out of school was making 25k/year while his counterparts working for 10+ years in the company were making 2x-3x his salary. As he saw it he did equal work and wanted equal pay, the boss said no, he quit, started his own company slapping PC's together and selling them to schools or whoever wanted them. He made a few million and moved on.
Point, if you don't like your job/salary, get another one or start your own company.
commented on Nov 20, 2009 8:41:46 PM
As long as population in China, India keep increasing, and people are ready to work for any money in a country where average per capita income is less than $4000, there won't be any crease in wages in these poor countries. "
Engineering is not a job any one of 1.3 Billion people can do, so your supply/demand generalities do not apply to engineering. We know of many skilled Chinese and Indian workers who leave the job after three or four months to go work for a competitor who pays more. And that cycle continues and repeats to the point where India itself has recently been reported to outsource jobs to the USA due to efficiency considerations for the buck (rupee?) spent. Retention of skilled workers is a major problem for India and China NOW as is the salary escalation that results in people jumping jobs. This was also a phenomenon in Silicon Valley in the late 1990's, where you'd call on an engineer and six weeks later they'd be gone to a competitor.
The argument of working hard, versus hardly working is a question of efficiency and skill, something that still generally lacks in these developing countries as compared to USA. Most countries place family, and living ahead of corporate interests, which is a good thing and, coldly, is lacking in American society to where engineers in Si Valley work 12-16 hours a day, parking their offspring in daycare versus nurturing them in a nuclear family atmosphere.
I agree that the net pay is what matters in the grand scheme. A $70,000 engineer nets more money in central Illinois after housing and taxes than he would at $125,000 in San Jose. I could, as an example, work in Thailand for $50,000 and make more net money than either of them.
Cristi The numbers are not that far off. Having a daughter, I am sensitive to your plight, but engineering is factually a male dominated profession and it's no secret that women are significantly less paid than men in this profession. Why, I don't know - maybe you could enlighten us.
Alas, there are two kinds of people in the world. Those who divide the world up into two parts and those who do not ;-). Sure, there will be always SOME jobs that will come back or stay if wages rise elsewhere. Job flight may act more like a wage hysteresis curve though and at the ratio of around 10:1 in wages, it could take a less than equal pay reversal to cause a large reversal. The big question is, with the field becoming more complex and as the bar raises ever hirer as pay drops, will anyone in their right mind do so much for so little? For myself, I am thinking of going back to school to learn consumer electronics engineering to catch one of those returning jobs ;-).
GeniusEE: Hey China/India - if you don't keep your wages down, we'll outsource your jobs to Vietnam and Nigeria
This can't be true. Before u say this u need to understand the positive things that are around india and china... like large population, good brains (didnt mean Vietnam and nigerial is poor in it) etc..
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