After essentially going nowhere during a period of tremendous demand for engineers, salaries are on the rise. That's the conclusion of the 1998 EE Times "Salary & Opinion Survey," a computer-generated, random survey of 681 design and development engineers who are EE Times readers.

Last year, it apparently was a case of perception outpacing reality. With chief executive officers, recruiters and non-engineers buzzing about soaring salaries, the average EE salary in the 1997 study didn't reflect any surge-or a shortage. The average pay was $67,400, up just $2,300 from the year before. Only engineers in Silicon Valley appeared to be raking in big bucks, averaging $85,200.

Now the figures have caught up. The experts really have something to talk about in light of the following developments that show up in this year's survey:

• Widespread wage hikes.
• Pay freezes dissolved.
• More managers and engineers entered the Six Figure Club of $100,000 salaries.
• The average two-earner engineering family cleared $100,000 in 1997 to 1998.
• Full employment.

However, the good news arrives with a warning label attached to it. Asian economies are in a major recession, and since January more than 35 electronics, semiconductor and defense companies have announced job cuts, among them Compaq Computer, Intel, Motorola and Digital Equipment.

So for the time being, it's a case of wait until next year to see whether the economic shakeup in Asia cuts short this rare burst of good health for engineers' wallets and pocketbooks.

This year's survey shows that the mean engineering base salary broke past the $70,000 mark, to $72,000. That represents a $4,600, or 7.5 percent, increase over 1997, the biggest jump in the survey's averages since the early 1980s.

However, responding engineers and managers calculate their average mean increase at an even higher 8.3 percent, nearly five percentage points higher than the national Employment Cost Index increase of 3.5 percent in the last 12 months.

But averages can be deceiving. In any group of 681 engineers some high earners are bound to skew the figure, and the profession has some wealthy people in it. So the median wage increase-the point at which half the sample is above and half below it-is a tamer 5.4 percent, not far off employers' estimates of their salary increases for exempt workers. The 1998 American Electronics Association Benchmark Survey indicates that the 1997 wage hikes averaged 4.7 percent with employers anticipating a 4.8 percent rise by the end of 1998 and a 4.9 percent boost in 1999.

Little inflation
Inflation remains a non-factor, with costs estimated to rise about 1.7 percent to 3 percent this year. Engineers-and most every other occupation-beat the inflation rate again this year.

In a year that saw a shortage of software and information-technology personnel so severe that a national conference was called, it should come as no surprise that the biggest winners in the wage-hike sweepstakes were software managers. They averaged an 11.4 percent boost in the last 12 months, the highest of any job title. Vice presidents of engineering also fared well, with 10 percent hikes.

Other results:

• Senior engineers: 7.8 percent;
• Technical directors: 8.7 percent; and
• Project engineers: 7.4 percent.

Managers widened the wage gap between themselves and engineers in 1998, earning an average of $80,000 vs. $60,000 for non-managers. Design and development managers experienced a $9,000 boost, about 9.5 percent, vs. the $3,000 hike for design and development engineers. This produced a $20,000 differential between design engineers, software engineers, systems engineers and test engineers and their supervisors, who included software managers, senior engineers and project engineers. That difference is significant when compared with the $13,000-to-$15,000 separation that was the case between 1993 and 1997.

Of course, there is always a gap between bosses' and employees' remuneration. But some respondents object when they perceive unfairness.

"The top management in our division gets $200,000+, plus a bonus of two times my salary, yet we can't even get paid overtime," one defense engineer complained. "P.S.: I won't be here long."

How much of a pay spread?
Some offered an intriguing reply to the question, "When comparing two people in your company of the same age and same educational background, how much do you think the maximum difference in their pay would be?" The mean "difference" would be 26 percent. The gap between average managers and engineers is about 33 percent.

Asked what they consider to be high and low salaries for EEs in the United States, the respondents deem $46,000 as low and $99,500 as high.

The details
The wage freeze meltdown continues. In 1993, 28 percent of the respondents reported that their pay was frozen. Five years later, that figure has shrunk to 12 percent. Moreover, 86 percent of the engineers who returned their questionnaires now report that they ended up with more money in their paychecks.

Corporations seem to recognize that to retain their people, they have to at least match the pay scale of their competitors. Otherwise it's goodbye, Boss. True, there has been significant turnover among survey respondents: 15 percent say they started new jobs in the last 12 months. But though that may be higher than the national average of about 1 percent per month, it's lower than the figure calculated by the American Electronics Association. That trade group reports an average turnover rate of 21.8 percent for electronics engineers at its member companies, but 25.5 percent for software and programmer analysts and 23.7 percent for software engineers.

The recent wave of job cuts may cool this urge to move on. But there's still a significant group of engineers who are dissatisfied with how much they're being paid. More than 35 percent of the sample believe they aren't being compensated at the rate of others in a comparable position.

"In my experience," wrote a South Dakota engineer, "salary has been the main issue I have heard about. Corporations should try to pay their engineers the same as what other companies are paying."

The discontent grows even worse when broken down by job title. Though they are considered managers in this survey, more than 40 percent of the project engineers who replied think they're underpaid. And in a smaller pool of section heads, 46 percent echo that sentiment.

"When will companies realize that it is cheaper to pay a little more to the people they have than to find new people?" asked a California senior engineer earning in the middle $60s-less than the respondents' average wage of $72,000. Senior engineers as a whole are more satisfied than the average, at 70 percent.

Irritating to some is the pay disparity between newcomers and long-time employees. "The company I work for pays new experienced engineers market value while paying engineers with years of service much less," says a Colorado staff engineer.

"DO NOT," advised our South Dakota respondent, "pay new engineers more than engineers with several years of experience at the company."

Companies wrestle with this problem all the time. With new BSEE graduates commanding $42,000 to start, it puts companies in the uncomfortable position of having a newcomer earning more than the three-year engineer in the next cubicle. Savvy compensation departments fine-tune the salary structure to prevent this.

Overtime and bonuses
Overtime remains the exception rather than the rule for American engineers. Eight out of 10 respondents didn't earn a dime of overtime in the last 12 months. But while no overtime pay has been the rule for years, employers have been changing their policy toward bonuses.

Year by year, more engineers report getting a bonus. This year, a record 57 percent of those replying to the survey received additional incentives that averaged 5.4 percent of their salary, or more than $4,000. Indeed, the 1998 AEA Benchmark survey of employers confirms the wide use of bonus and incentive programs; 68 percent of the employers that responded offer incentives to exempt employees.

While bonuses are on the rise, only 15 percent of the respondents work for companies with a formalized pay-for-performance plan. Each company has its own rules, but some engineers have their entire paycheck tied to meeting preset corporate goals. In good years, the paychecks soar. In bad years, they sag. That makes it difficult for these engineers to buy big-ticket items.

There is no significant change in the management pay structure. Some 76 percent of the survey respondents report that they work under the standard fixed-pay arrangement. That's only a percentage point less than in 1997. Few respondents showed any enthusiasm for a pay structure dependent on seniority. They prefer to be rewarded based on performance. And in Japan, companies are revamping their compensation systems to allow more flexibility for individual contribution rather than seniority.

Show them the money
With salary ranking as the No. 1 career concern among respondents, it is instructive to see how much money it would take to lure them to new jobs. A Washington, D.C., design engineer even urged, "Pay us like lawyers.".

The data can be interpreted two ways. One might be surprised at how little cash would spur an engineer to move, indicating high vulnerability in the engineering work force. Or, the responses could be seen as indicating that it would take quite a bit to steal away engineers, indicating that on the whole they are quite satisfied.

One-quarter-154 respondents-say that for $20,000 or more they would consider moving on. But an equal percentage say all it would take is $5,000 or $10,000. That isn't much for an experienced EE or software engineer. Even more disquieting is the fact that 9 percent checked off $0 to $4,900, which indicates that factors other than money are involved.

On average, it would take a $13,000 wage hike to induce the survey respondents to leave their jobs. Naturally, the higher the position, the more it would take. Vice presidents earning more than $90,000 would probably sniff at a $13,000 raise. Design engineers, however, will look at $11,000, and even the much-in-demand software engineers come in below average at $11,000.

Family income up
Families of engineers are doing very well these days. About 77 percent of the respondents reported that they are married and 56 percent of the spouses have a job that produces income. The average spouse earns $31,700. So if the average engineer were married to the average spouse- admittedly a speculative match-the family income would top out at $103,700, a nice neighborhood in which to reside. And if both were to pull down respectable professional salaries, the money picture would be much brighter, indeed.

Some 44 percent of the respondents' families depend solely on the engineer's income for support. That's not an extreme variation from our sample 10 years ago: In the 1988 survey, 47 percent of the engineering families relied solely on the engineer's pay for their income.

So which is the best region of the country to work if money is on your mind? What skills pay the best? Does an MSEE really pay off? And what job titles score highest in terms of pay?

Salaries by job title
It was noted earlier that the salary increases of 1998 have spread out somewhat unevenly, with managers in general enjoying higher raises than engineers. But even among managers, the increases varied widely.

Listed below are some examples of wages by job title and the increases (in parentheses) over last year:

• Principal engineer: $85,400 ($7,100)
• Senior engineer: $71,400 ($2,600)
• Technical director: $98,800 ($1,200)
• Owner-partner: $75,600 ($13,000)

Here are some examples for engineers:

• Design engineer: $58,100 ($2,300)
• Software engineer: $64,100 ($3,500)
• System engineer: $69,000 ($8,700)

Salary by region
For years now, Pacific-region employers, driven by Silicon Valley, have paid engineers better than anyone else. The largest concentration of EEs are in California, Oregon and Washington, but employers there also face the stiffest competition for people. Look down Zanker Avenue in San Jose, Calif.; off the Lawrence Expressway in Sunnyvale, Calif.; or in the new business parks of Milpitas, Calif.; and you see electronics firms packed side by side, all staffed by EEs and computer scientists as well as other information technologists. Competition forces employers to pay prevailing or above-average wages.

Valley engineers earn, on average, $86,500. That's more than enough to make their counterparts in the Deep South disgruntled because there engineers clock in at $60,300, according to the survey. Engineers in Knoxville, Tenn., Greenville, S.C., and Jackson, Miss., have to be satisfied knowing that their cost of living is considerably lower than in the Valley. Consider that the taxes on a three-bedroom home in Nashville total $700: Now it's the Palo Alto, Calif., engineer's turn to gasp. Go to www.homefair.com for a comparison of salaries by region.

Here are some EE pay scales by region:

• Mountain States (Montana through the Rockies to Arizona): $74,000
• Pacific (from Washington state to California): $79,900)
• West South Central (Texas, Oklahoma, Louisiana): $70,600
• New England: $77,000
• Mid-Atlantic (New York, Pennsylvania, New Jersey, Delaware): $68,000
• East North Central (Illinois and Wisconsin to Ohio): $63,400
• West North Central (Minnesota to Missouri and the farm states): $68,700
• South Atlantic (Maryland to Florida): $65,000

Here are figures for some "engineering hub" cities as well:

• San Jose, Calif.: $86,500
• Boston: $90,500
• Phoenix: $76,700
• Austin, Texas: $75,200
• San Diego: $71,400
• Portland, Ore. $65,700

With the Commerce Department reporting that the sales of new homes smashed records in June, Silicon Valley residents have likely recovered most of the value they lost during the real-estate price slide there in the mid-1990s as other areas of the country are experiencing healthy increases. That, of course, is good news for homeowners, but not so good for home buyers.

Salary by business skills
For the first time, the survey asked the design and development engineers and managers to list their business skills. A complete discussion of the growing importance of those skills follows in the chapter "The Way We Work."

Here is a look at which business skills pay off. Nearly every respondent has more than one skill, so everyone appears more than once. This list is by no means a clear differentiation. Rather, it offers clues to which "soft" skills the highest earners possess. In the real world, an engineer is judged by a variety of skills, not just one.

• Personnel hiring: $80,400. The respondents who checked off this category scored highest in average salary. Understand that these are not human-resources people. With nearly 85 percent of respondents working as design and development managers or engineers, they are "hiring managers"-departmental supervisors and executives with responsibility for bringing on new people. That responsibility leads to a fatter bottom line for themselves.

• Budgeting: $77,700. Engineers seeking higher wages will need to understand where the money goes.

• Time management of others: $77,100.

• Team leadership: $75,400. Most respondents have led a team at some point in their careers. Those who have earn $3,400 more than the average respondent.

• Oral presentations: ($75,400) and written reports for outside publication ($77,300). Communications skills are highly prized these days. Companies are hungry for EEs who can get up in front of a client and clearly describe the product or contribute a technical article to a professional journal or publication such as EE Times. Writing internal reports, however, doesn't translate into higher pay ($72,500). It is assumed, no doubt, that an engineer can write a memo, report or document for internal use.

The only business skill to rank lower was purchasing ($70,400). With only one of six survey replies listing purchasing responsibilities, it is apparent that a line still exists between who does the specifications and who does the buying.

Salary vs. technical skills
As was the case last year, the top earners possess expertise in two key areas: deep-submicron IC and ASIC design skills. Again, virtually all respondents possess multiple technical skills so this category provides clues only to the skills of the highest paid engineers.

Clearly, those who can design at the deepest IC levels get paid well. Their salaries come in at $86,900, higher than for any other technical skill. There could be another influence here, however, as readers of the 1997 Salary & Opinion Survey pointed out: There is probably a disproportionate number of Silicon Valley engineers in this group. That could be why the average Silicon Valley wage is $86,500, only $400 lower than the IC designer's mean.

That assumes, however, that all deep-submicron design takes place in the Valley. It doesn't. Lucent Technologies Inc. IBM and the former Digital Equipment Corp. all have IC designers squeezing every tenth of a micron out of chip surfaces.

Other top design skills that appear to influence pay:

• Network design ($78,600)
• Wireless design ($76,600)
• ASIC design ($77,400)
• DSP design ($73,900)

Skills that don't seem to be linked to higher-than-average pay include analog design ($70,400); digital design ($71,100); circuit design ($69,800), and C and C++ programming skills ($70,800).

Interestingly, some of the most severe shortages have been for those lower-paid skill sets. Everyone wants analog designers and software programmers, but among survey respondents those skills don't command the biggest paychecks. Circuit design, C, C++ and circuit design skills are assumed to be a part of the electronics engineer's tool box.

Education: Get the MS
Yes, Virgil and Virginia, go for the MSEE, MSCS or MBA. They lead to higher wages and, chances are, promotions. Some companies won't even interview new engineers who do not have a master's degree.

The higher the degree, the higher the salary:

• PhD: $86,600
• MSEE: $76,200
• MSCS: $76,100
• MA, MS: $78,000
• MBA: $78,300
• BSEE: $65,700
• BSCS: $71,200

The difference between a BSEE and MSEE is more than $10,000 per year. Within a few years, one would make up the money spent pursuing the master's. Of course, one would also lose the immediate $42,000 that comes upon graduating with a bachelor's these days.

But the Internet could pave the way for engineers to do both: go on for a master's while still working. Stanford University now offers a complete MSEE curriculum over the Internet. For a working engineer, it could take three to four years to complete the program vs. the year it would normally take by attending classes on campus.

The MS degree doesn't guarantee anyone entry into the ever-expanding Six-Figure Club, though. Among survey respondents, PhDs have the best representation in that club, with about 25 percent earning $100,000 or more, followed by other MS/MA degree holders at 20 percent and MSEEs at 13.7 percent. Still, 6 percent of the BSEEs responding to the survey are walking around the hallowed halls of this club, no doubt having demonstrated that ability counts over education.

In fact, some might look at the list above and question the overall worth of a higher degree in computer science since there is only a $5,000 difference between an MS and BS. This most likely reflects the current sizzling hot market for software and IT people, where companies are actually plucking sophomores and juniors from college and paying them for full-time jobs. But in the next downturn, they'll have to find jobs with no degree in hand.

Salaries by country
A national debate has erupted over how many immigrants to allow into the country under a professional temporary-visa category. One element of that debate has been whether immigrants pull down engineering salaries. The answer, at least for those responding to the EE Times survey, is that they don't.

Against the mean salary of $72,000, here are salaries by country of origin (citizen or not) among groups with more than 10 respondents.

• China: $70,100
• India: $74,800
• Taiwan: $73,900
• United States: $71,700

The Chinese are below the average, but so are the native-born Americans. It is important to note that out of 681 respondents, only one of the 36 reporting salaries below $40,000 was not U.S.-born.

At least among EE Times survey respondents, immigrants are not underpaid or being taken advantage of. Of course, one could rightly assume that any EE Times reader is proficient in English and not likely to be abused. And typically, more than eight out of 10 respondents are U.S. citizens. Many of these people from other countries are likely to be Americans.

Salaries by heritage
Slowly but surely, the white male image of the U.S. engineering profession is changing. In 1993, the first time the question about heritage appeared in the survey, 83 percent of those who replied listed themselves as white. There is no likelihood of significant shifts in only five years, but the number of white respondents has nevertheless dipped to 79 percent.

Those of Chinese heritage make up 7.5 percent of the respondents, the second largest group; 3.6 percent list themselves as Asian Indians. Both groups are within 0.5 percent of the 1993 figure.

In terms of salaries, African Americans trail with $59,400 average salaries, a poor $12,000 below the overall mean. But there were only nine African American respondents, so it's difficult to generalize with such a small sample. Other national surveys have indicated gaps as well, but nothing so extreme.

Other results:

• White: $72,300
• Chinese: $74,000
• Asian Indian: $73,900
• Hispanic: $60,800
• Korean: $80,900
• Arab/Iranian: $86,400
• Vietnamese: $63,100

In the case of the last three, there were fewer than 10 respondents apiece, so the data isn't very conclusive.

Salaries by gender
First, it is important to understand that only 20 women responded to the survey. But for the first time since EE Times tracked salaries in the 1970s, our women respondents have reported higher salaries than men. The women averaged $75,400 vs. $71,900 for men. Three of them earn more than $100,000 apiece. In 1993 none reported $100,000 wages (vs. 4 percent of the men).

One calculation of male vs. female salaries, by the National Association of Colleges and Employers, found that newly graduated women in engineering earn slightly more than men. Approximately 15 percent of engineering graduates are women, but only about 5 percent to 6 percent of all engineers are.

Salaries by age, experience
Predictably, experience pays off until you have more than 25 years under your belt. There is a steady progression until then. Except for an uptick after 20 years, significant wage increases tail off after 15 years. The biggest jumps occur early in an engineer's career, between the third and sixth years.

• Less than 1 year: $47,500
• 1 to 3 years: $51,800
• 3 to 6 years: $58,600
• 6 to 9 years: $64,800
• 9 to 12 years: $67,700
• 12 to 15 years: $76,300
• 15 to 20 years: $76,800
• 20 to 25 years: $82,400
• 25 years or more: $80,400

The pattern of salary distribution by age is similar, with one exception: the big drop for over-65 respondents. However, there were only nine respondents; they may be working part time or as consultants.

• 20-24: $55,200
• 25-29: $55,100
• 30-34: $64,600
• 35-39: $73,800
• 40-44: $75,700
• 45-50: $77,900
• 50-54: $82,100
• 55-59: $85,200
• 60-64: $78,300
• over 65: $56,200

The aberration occurs in the 20-something groups, where respondents actually dip a bit after 25, but that is not likely to happen to you. The reason: those in their early 20s are a bit precocious this year, and there may be a Yahoo! engineer or two in the group who have struck it rich this year. Major money is being made by engineers involved in Silicon Valley startups that are going public.

Salaries by industry
The industry that pays the best according to the 1998 EE Times "Salary & Opinion Survey" is the consumer-electronics business, at $75,700.

Here are some other numbers:

• Computers and peripherals: $74,700
• Components and subassemblies: $73,600
• Communications equipment: $73,100
• Military-aerospace: $70,900
• Test and measurement: $71,600
• Medical electronics: $66,700

To some degree, these results are influenced by location. For instance, medical electronics engineers tend to come from the Midwest, a lower-paying area, while consumer electronics businesses are often found on the West and East Coasts.

Another factor to consider is sales volume, because the more the company sells, the better it pays its engineers. Among respondents working at companies with sales of $15 billion or more, the average wage was a robust $78,300. That's $12,000 higher than EEs in companies with $50 million to $250 million in sales.

Bigger is better also applies to the number of engineers. At companies with more than 100 on staff, the salaries top $75,000. Those with fewer pay less, ranging from $63,000 to $68,000.

A direct correlation exists between the salary and number of persons supervised. Managers who oversee 10 or more averaged $94,400. Others:

• No supervisory role: $67,700
• Supervises one to five persons: $71,000
• Supervises six to 10 persons: $81,800.

The best combo?
So the factors that give you the best odds of making top dollar are as follows:

• Work for a Silicon Valley employer.
• Get an MS or a PhD.
• Take on management responsibilities. Specifically, become a hiring manager in your department and oversee the budget.
• Want to stay a techie? Become an ASIC expert or deep-submicron designer.

More and more of you are now crossing the $100,000 mark. It's about time.

Return to 1998 Salary & Opinion Survey