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  Money on everyone's mindAlan Greenspan can breathe a sigh of relief. If the Federal Reserve chairman is looking for signs of wild, untamed wage inflation he won't find it in the electronics engineering community. Yes, EE base salaries hit yet another record high mean of $75,500 in the last year. And for the first time in the history of the EE Times "Salary & Opinion Survey," the 1999 study shows that the average annual pay for the vice presidents of engineering and technical directors who responded scaled past the $100,000 mark, to $105,000 and $106,000, respectively. And the heartland of high tech, Silicon Valley, continues to pay its engineers some phenomenal sala-ries-would you believe a $96,300 mean? Newly graduated EEs are lured with salaries of $45,000, $50,000 or, for one new PhD with an enviable university research track record, $100,000. (Figure) On the surface, such numbers could rattle the nation's chief inflation fighter, who has warned Congress repeatedly this year that he is looking for signs of spiraling wages in a tight labor market. And it is tight in the engineering field. Unemployment for EEs hovers between 1 and 2 percent, according to the Engineering Manpower Newsletter (Orange, Mass.). No question about it: On a broad basis, these are the good old days. The Conference Board, a private research group, this month predicted "continuation of the [economic] expansion through early 2000." The economy is growing at a steady pace of about 2.7 percent annually, which economists consider moderate. At the beginning of August, the Dow Jones Industrial Average stood at 10,700, reflecting a 20 percent rise for the third straight year, while the Nasdaq, home of many technology stocks, hit new highs earlier in the summer. Intel stood at $73, Microsoft hovered in the $80s and Lucent reported new highs in the last year. Some of the stocks have given back their most recent gains, but the trend line has, throughout most of this past year, pointed relentlessly up. But individual EEs would probably tell Greenspan to step up and take a closer look at what's happening. After several years of decline, the number of respondents reporting no increase in pay over the past 12 months rose slightly, to 16 percent of the survey's 503 responding design and development engineers and managers. That's up from 12 percent the year before. "My company is attempting to cut costs by salary containment," reports a Washington State software engineer. (Figure) The average increase was 7.8 percent. Admittedly, that is higher than the 2 percent to 3 percent national inflation rate for 1999, but hardly exorbitant in a reputedly high-demand profession. In comparison, in 1997 and 1998 base salaries ratcheted up by more than 8 percent. Nationally, Greenspan warned that the Fed was zeroing in on the employment cost index as a key inflation indicator. And on a national basis, there were signs of acceleration as the wage index jumped 1.1 percent last quarter. However, dampening this robust picture is the fact that a number of engineering employers have found 1998-99 to be relatively bumpy despite the Nasdaq optimism. Several respondents reported cutbacks in product development because of continued fallout from the "Asian flu." At this time last year, the economic malaise appeared to be threatening the industry with a recession. In fact, the semiconductor industry and several product sectors did lose some ground for much of 1998-99, rebounding significantly only this summer. Agility needed Meanwhile, PC makers scrambled to adjust to the rewritten rules of the marketplace, under which you have to find profits in a $400 machine and learn to sell it over the Internet. And defense contractors spent the year digesting their consolidations of the past three or four years and ramping up for an expected boost in defense spending-especially in electronics. Finally, mergers continued unabated in a variety of industries. All this action meant that design and development engineers and managers had to stay nimble on their feet. Sometimes they could seize an opportunity to advance their salaries and status; other times they had to settle for what they could get. In reality, respondents said they were earning about $3,600 more in base salaries this year than they did last year. (Figure) Indeed, some 39 percent of the respondents think they're being paid less than others in their field, given equal experience and background. Tops among them are engineers in the military and aerospace industry, where more than half (57 percent) see themselves as underpaid relative to others. And salaries lead all categories as a top career concern, indicating that money is on the minds of EEs and bosses alike. About one-third of both staffers and managers rate pay as their top career issue. Younger engineers, under 35, are especially focused on boosting their paychecks: more than 45 percent list salaries as the top concern. As in the past two years, portions of the survey were also circulated to the readers of Nikkei Electronics Asia magazine and Nikkei Electronics Japan; both publications are directed at a technical audience in electronics. Approximately 57 percent of the Asian respondents outside Japan earn less than the equivalent of $40,000, while only 14 percent of Japanese engineers fall below that point. Generally, Americans fare better, though the Japanese engineers in particular count on twice-yearly bonuses and overtime pay. Base salary isn't what it used to be. Not so long ago, American engineers routinely told us that 100 percent of their income derived from a fixed wage. No overtime. No bonuses. No performance inducements. As recently as 1993, 54 percent of the respondents were entirely dependent on salary. Today, that percentage has dropped to 39 percent, indicating new sources of income supplementing engineering wages. It's not coming from overtime: only 14 percent picked up extra bucks from working late hours. Nor is the additional money coming from second jobs, since only a handful of respondents moonlight on the side. That leaves bonuses and performance inducements, along with the biggest true wealth generator of the past three or four years: the stock market. More than half the 1999 American respondents received some form of a bonus in the past year. And 17 percent of this year's respondents tell us they're part of a so-called pay-for-performance plan where some proportion of their paycheck hinges on achieving set goals in marketing, sales, product rollout or other criteria. That gives employees a chance to cash in on a successful project; it also subjects them to pay cuts if a supplier fails to deliver a key part in time, wrecking the project's chance of making a deadline and killing a potential incentive for the development team. Salary factors Sam was poring over charts and graphs; he wanted to make more money. After three years in Alabama, he was willing to move. What will it take, he wondered, to make $100,000? Management? California? A date with the boss' daughter? That $100,000 goal doesn't look so elusive any more. (Figure) The best advice for the fictional Sam is to find his way to San Jose, delve into deep-submicron territory, pick up that graduate degree and accept a management job that requires hiring and firing as well as budgeting skills. Or graduate from one of the better colleges with some Java courses, an internship at a good company and a dash of business savvy and be halfway to $100,000 before officially starting an engineering career. Don't laugh; many of the prospective engineers who responded to the EE Times "College Recruitment Survey" expect to get $50,000 in their first post graduation job. By job title As noted earlier, the technical directors who responded to the U.S. survey do very well on the salary scale. At $106,000, their mean salary tops all others and is $8,000 more than last year's mean wage of $98,000. But a quick look at some of the larger groups of survey respondents finds that some of the biggest wage hikes occurred at the lower end of the job ladder. Reflecting a high demand for savvy hands-on technologists, design engineers and software engineers fared better than senior engineers or even principal engineers in terms of pay increases within their categories. (The principal EEs actually showed a slight decline, but that is probably a statistical anomaly caused by surveying a different set of people from the year before.) As noted in our College Recruitment section, the demand for engineering graduates and people at the lower end of the spectrum is particularly acute. Employers need them, especially in software and design, and are paying higher premiums to get them. Software engineers, once at the bottom of the salary ladder, now average more than systems engineers. Here are some salaries by job title.
Those are our largest groups of respondents; for other titles, the data gets sketchy.
By industry Although it's not the biggest employer in the survey, the components industry does pay well. The 55 engineers and managers from that industry segment who responded to the survey average $85,900. Here are some other segments:
By sales, number of engineers About 40 percent of the respondents come from companies with sales of more than $1 billion. Salaries range from $81,000 among companies with sales of $15 billion and higher to $84,800 at $1 billion to $5 billion companies. The lowest salaries show up among workers at companies with less than $5 million in sales, with a mean of $66,000. Of course, some of those engineers are working at dot.com and startup companies where they're betting on an initial public offering or a stock binge to propel them into higher territory. Consequently, they may be sacrificing some salary today for the promise of riches tomorrow. Others may be working in their own, deliberately small consulting companies. The size of the engineering staff also counts in predicting where the higher salaries will be, though it's not a linear relationship. Respondents coming from companies with 50 to 99 engineers fared the best, at $84,600, followed by engineers working at companies with 1,000 or more engineers, who earned about $82,700. If you join a company with five or fewer engineers in place, don't expect a salary on par with the average; respondents in those companies collected a paltry $58,000. By region It's no surprise that the Western U.S. territory retains its crown as the best-paying region in the country for engineers and managers; indeed, no other region comes close. The mean salary comes in at $81,700 for the overall region, including the Southwest, Northwest, Rockies and Pacific. (One-fifth of the survey respondents come from California.) Here some breakdowns by states for which there were at least 10 respondents: (Figure)
Don't attach too much significance to the fact that Colorado's respondents earn the most; only 3.3 percent of the 503 respondents live there, vs. 21 percent from California, so the data from the Golden State is more reliable. In a class of its own is the San Jose, Calif., metropolitan area. Before gasping at the $96,000-plus mean salary in San Jose, consider that rents start at $1,000 a month, house prices routinely begin at $300,000 and residents there often commute up to two hours to get to work. One magazine reported recent-ly that an engineer was living at a homeless shelter because he couldn't afford a place of his own. Here's what respondents in other metropolitan areas in the Pacific region earn:
Second to the Pacific region, at $73,700, is the Northeast. Once the leader in engineering salaries, the Mid-Atlantic and New England states lost their No. 1 status years ago to the Pacific region. As might be expected, Massachusetts produced the most responses, 28, from this region. Here are mean salaries for states with more than 10 returns apiece:
Some cities and what respondents earned:
The Philadelphia figure is suspiciously low relative to its sister Northeast cities. Next is the South Central region, which encompasses Texas, the deep South and the border states. The average wage comes to $71,800, with Maryland leading the way at $80,300. Respondents in other South Central states reporting base pay as follows:
Some sample cities:
Engineers in the North Central region of the country won't find the highest pay scales, but many will boast of better quality of life and bigger, less expensive houses than in the West. On average, EEs and managers earn about $67,400 there, some $14,000 less than their Pacific region counterparts. The engineers in Indiana lead the pack, at $72,500. Other states:
A relatively high proportion of control, test and instrumentation engineers, an industry that comes in at the low end of the pay scale, may have dragged down the Ohio average. Some sample cities in the North Central area include:
By age For years the IEEE and other engineering organizations have complained of salary compression for engineers, based in part on age. The salary curve, they claim, rises sharply in the first 20 years of an engineer's career, plateaus and then falls off as they head into their 60s. Sure enough, the EE Times survey's salary curve parallels that track. It shows big boosts for respondents in their 20s and 30s, virtually no increase for engineers in their 40s and a decline after 55. (Figure) Norm Matloff, a computer science professor and outspoken opponent of looser immigration rules, maintains that age discrimination in the industry is rampant. Moreover, the IEEE and other organizations have confirmed that it takes much longer for an older engineer to find a new job than a young-er one. To some extent this age-pay curve is to be expected. Human resource officers acknowledge that younger workers receive the sharpest increases of the entire work force as they are brought up to speed with their more experienced coworkers. But after the age of 40, it is presumed that most workers will be on par with people of equal talent and capability and the pay hikes will diminish. The best way to avoid this plateau, say the experts, is to move to another job. For engineers, this usually means management. Design and development engineering managers in this year's survey average about $90,000 and are 44 years of age. The staff engineers are younger, 40, and earn a mean of $72,200. Not everyone likes to see engineers move outside their field. In an interview with the IEEE-USA publication Today's Engineer, Bob Lutz, the former Chrysler vice chairman, said, "At Chrysler we started encouraging engineers not to become MBAs. If you are an engineer, rather than try to disguise yourself as an MBA, go for that advanced engineering degree rather than trying to become something else." Lutz recommended that engineers "stay on top of their craft." In a company with a dual track, that may be possible. In fact, there is some evidence to suggest that if the engineer is an expert in a high-demand technical field, he or she may do better than a manager. By technical skills As Lutz said, one does not have to become a manager to get the highest salaries. But the engineer does have to become very good in a technical area where help is scarce and highly sought after. That calls for deep technical expertise, some marketing tools to promote yourself and a good dash of luck in picking the skill that will command the biggest bucks. The highest-paid nonmanagers in the survey are engineers with deep-submicron IC design skills, averaging $90,700-virtually the same as an engineering manager without the supervisory responsibilities. Past surveys have seen a number of respondents with deep-submicron design skills break through the $100,000 mark. In Washington State it's not unusual to find six-figure software designers. However, there is a downside to becoming a deep and narrow expert: You may become obsolete if you don't stay one step ahead of the marketplace. (Figure) Here are some other salary figures measured by technical skills. Bear in mind that most respondents have multiple sets of skills and usually will fall in multiple categories.
Just as former Cobol programmers suddenly found themselves popular when the need for Y2K fixes drove up demand, some longtime analog experts may be seeing an increased demand for their skills. In the past year, analog designers' mean salary rose from $70,400 to $75,900. The need for communications equipment with both digital and analog components is contributing to the analog revival, as is a scarcity of new talent entering the field. Other skills that experienced sharp increases in the past year include DSP (up $6,100) and ASIC design (up $8,000). Salary vs. country of origin Just over 80 percent of our 503 respondents are U.S.-born. Compare that to 1993, when the figure was 84 percent. In 1998 there was a fierce congressional debate over raising immigration limits for professionals. Led by the Information Technology Association of America and other industry-sponsored groups, those favoring higher limits to allow the immigration of more than 100,000 professionals per year argued that new programmers and engineers only added more fuel to the U.S. economic expansion. Opponents, led by the IEEE-USA, called for maintaining the limit at the time, stating that immigrants are taken advantage of by American employers and drag down salaries for the ample supply of engineers and programmers currently in the United States. (Figure) As in past years, the EE Times Salary & Opinion Survey doesn't show any blatant salary abuse by employers. Respondents of Asian origin-at 12 percent of the responding sample the largest group-earned an average of $77,500, some $2,000 more than the overall average. Admittedly, the sample is small and as an English-language publication, EE Times probably is not widely read by newly arrived immigrants from non-English-speaking countries. But here are a few salaries listed by country or region of origin:
Some 77 percent of the survey respondents listed themselves as Caucasian or white, followed by Chinese (9 percent), Asian Indian (3.2 percent), Hispanic (2.2 percent) and African-American (1.6 percent). In this breakdown, we did not differentiate between native born and immigrants.
By gender Women accounted for only 4 percent of the respondents. Last year the women outpaced the men in salary; this year women lagged, $75,700 to $70,300. By education Readers with master's degrees made up 36 percent of the sample; 8 percent hold PhDs. BSEEs constituted 31 percent of the responses; additional BS degrees brought the figure to 40 percent. MSEEs average $81,500, vs. $73,500 for BSEEs. MSCS respondents reported a mean of $87,000. The $90,900 mean for PhDs makes one wonder whether the extra schooling and tuition are worth it. PhDs say they are perceived as overqualified. (Figure) Return to 1999 Salary & Opinion Survey
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