It has not been a good year for corporate America. The high-tech stock bubble burst and shares of a number of telecom companies turned into so much wallpaper; investor confidence nosedived in the wake of corporate accounting scandals at WorldCom, Global Crossing, Adelphia, Enron and others; and the recovery from recession was as much sideways as up.
For the electronics industry, beset by nervous customers, layoffs and sinking stock prices, the recovery never seemed to start. For the 5,900 EEs responding to the 2002 "Salary & Opinion Survey," signals are mixed: Reported average salaries are higher, but so are layoff numbers, unemployment rates and the general level of nervousness and insecurity.
Nevertheless, engineers reported that salaries increased an average $6,200, or 7.4 percent, to $89,100 from 2001's $82,900. That's the second-largest average raise noted since 1993. Only the 1999-to-2000 increase of $7,300, a whopping 9.7 percent, to $82,800, was higher. And this year's increase is almost twice as high as the $3,560 average for the past five years.
As for total compensation-salary, bonuses and overtime-the average total was $92,200. Respondents in our sample reported an average increase of $4,700 this year, with staffers recording a slightly smaller increase than their managers. Staff engineers received $3,900 more in 2002 than they did last year, clearing $88,100, while managers pulled in $113,800 in total compensation, $4,200 more than they saw in 2001.
But those figures do not tell the whole story, as fewer respondents said they had won pay raises this year. And even as overall compensation rose, bonuses were flat and fewer engineers received them. In addition, the value of most engineers' stock options has tanked but most still believe options help retain and recruit staff. And despite the higher average salary, engineers for the most part seemed more pessimistic than the previous year, when average EE salaries were lower.
In fact, the economy was so bad this year that a 64-year-old senior engineer wrote that he "feels sorry for the young" and added, "I am glad that I am as old as I am."
One of the young, a 30-year-old design engineer from Boise, Idaho, echoed the thoughts of many: "I am concerned a sharp downturn could endanger my job." And a Hillsboro, Ore., 34-year-old in engineering services said his family was forced to "put a few things on hold, such as hobbies and vacations." But, he added, he "hopes it will turn around by end of the year."
Those comments are typical of most Americans, according to economist Scott B. MacDonald of Aladdin Capital, a hedge fund management firm in Stamford, Conn. He said he believes that the weak economy has made people cautious and concerned about salaries, employment and their savings, even if they are doing better on paper than they were a year ago. MacDonald blamed the dot-com collapse of almost two years ago as well as cost-cutting measures at many corporations where engineers work.
"The economic deflation resulted in a huge reduction in wealth, and with the nation's jobless rate currently around 6 percent there's an aura of uncertainty this year that wasn't present in 2000," said MacDonald.
A 45-year-old chief engineer in Reston, Va., blamed the slump on "greed from Internet new-economy, get-rich-quick firms."
On the West Coast, a manager called the economy "bad, with no technology engine to power a recovery."
Uncertainty fuels cuts
The climate of uncertainty has caused many companies to cut back on salary increases this year. Just about half-52 percent-of survey respondents said they received raises this year, far fewer than the 79 percent who got raises in 2001.
An increased number of engineers, 39 percent, said their salary stayed the same compared with 18 percent in 2001. And 8 percent said their salary decreased vs. 2 percent last year.
On the flip side, 45 percent who replied to the question said their employers froze or cut back salaries compared to last year's 13 percent.
But there were exceptions. With regard to salary cuts, there were more in the components industry with 20 percent reporting them. But when it came to freezes, only 23 percent of respondents who work at military-aerospace companies reported being caught in a pay freeze.
Staff cuts
In addition to cutting or freezing salaries, electronics companies have cut engineers by the thousands this year.
The survey indicates that industry layoffs contributed to a 4.8 percent unemployment rate for EEs in the second quarter, making for the highest three-month figure since the early 1990s. In addition, companies are doing very little hiring. Some of the replies put faces to those numbers.
Said one Web respondent: "Eleven months of layoff and no suitable job in sight and unemployment extension has run out. For my family and me it is an economic depression."
Another reported that he is "unemployed for over six months with little hope of finding comparable work. Hiring is nearly nonexistent."
The gap increases
Some things never change, and in this case that means that when it comes to salary, it was better to be a manager than a worker. Though both staff engineers and their managers reported 6 percent pay hikes, the average paycheck for those considered "staff" engineers increased from $80,000 to $85,100. Meanwhile, management salaries jumped from an average $102,700 last year to $109,500 in 2002. This year's pay increases raised the disparity in salaries to $24,400.
Viewed on a percentage basis, managers have base salaries that are almost 29 percent higher than those of staffers. Similarly, managers' total compensation is 29 percent more than their staffers'.
Since both salaries and compensation increased in 2002, most survey respondents, 53.5 percent, thought they were adequately compensated for their efforts. In addition, 56.4 percent said their base salary is comparable with that of others in their field with the same qualifications and work experience.
Bonuses
Despite the downturn, companies rewarded engineers with higher salaries and total compensation in 2002, but many of them stopped short at doling out bonuses to control costs.
In 2002, 54 percent of respondents said they received no bonus compared with only 38 percent who were similarly deprived last year.
The 46 percent who were awarded received on average $6,300 per year, exactly the same amount received by 62 percent of respondents in 2001.
Stock options
The average value of employer stock options that U.S. engineers currently own dropped to $25,300 in 2002 from a mean of $30,700 in 2001.
In 2002 some 60 percent owned stock options in their companies, yet many have seen the value of those options nosedive because of the declining stock market. The upshot is that the mean value of respondents' stock options dropped to $25,300, off 16 percent from last year's mean of $30,700. Some 90 percent of respondents reported declines in option values in 2002.
The same is true of employers' stock that respondents own today. The current mean value of stock in their own companies that employees own is $25,700, down 8 percent from 2001's value of $28,100.
Yet with stock prices depressed and the outlook for the stock market uncertain, it's interesting that 65 percent of respondents said they still believe in stock options as an attractive recruiting or retention tool. However, that's a drop from the 69 percent who favored options in 2001.
On the flip side, more readers were skeptical about whether options are an effective tool for attracting engineers to new jobs or keeping them with their current employer. Approximately 44 percent said stock options are no longer attractive, up from the 31 percent who didn't like them last year.
What matters, then?
If stock options are no longer the enticing reward they once were, what do engineers want?
"Being part of new and innovative technology," said one respondent.
"Overcoming challenges and being on the cutting edge," said another.
Other respondents were concerned with material rewards.
"Good pay, benefits, growth opportunities, good work content," said a 30-year-old engineer.
A 60-year-old senior manager echoed the cynicism of the day: "An employment contract that ties the engineer's compensation and longevity to that of the CEO, CTO, etc."
And a 34-year-old engineer said simply: "A paycheck, there are suddenly lots of unemployed qualified engineers on the market."
Stock a factor
One place where Americans and the rest of the world differ is that 59 percent of U.S. engineers have stock options in their own companies. By comparison, only 16 percent of respondents to Japan's Nikkei Electronics survey said they received stock options.
In the rest of Asia and South Asia, having stock options as a company benefit varies depending on the country. Only one-quarter of engineers in Asia have options, but in the South Asia region the figure climbs to 31 percent. The Taiwanese report the highest percentage of engineers who receive stock options, 41 percent, according to the EE Times Asia survey. South Korea comes next with 23 percent and China last with 13 percent.
Lifestyles not affected
Even though the stock market suffered setbacks this year and most respondents' portfolios dropped in value, 61 percent said it didn't have an impact on their lifestyles. For the rest, one-quarter of respondents said they altered retirement plans and another quarter put off purchases of big-ticket items (multiple responses given).
As in 2001, the youngest group in our analysis was the largest to say their lives hadn't been changed. Approximately 69 percent of respondents under 35 answered that way.
However, more people said the stock market's slump made a difference in their day-to-day spending than did so last year. This year 11 percent of our sample said they watched their pennies, compared with only 5 percent of respondents who felt the pinch last year.
Planning for college also was more of a concern this year for 17 percent of respondents, compared with only 7 percent in 2001.
And some engineers have held off on major life decisions. As one Web respondent said, "My life has been put on hold for two years because of the downturn."
In this year's survey, as in 2001's, salaries varied from region to region of the United States. This year some regions (and fields) saw declines, while others continued a steady rise. The increases or decreases were mostly a factor of the strength of the engineering market in some places combined with the cost of living and overall economy of the region.
The prize for the biggest dollar increase goes to the Northeast, where the average rose $9,789 to $88,989. Engineers in Massachusetts, New York and Pennsylvania did well on average. Salaries in those states rose to $96,130, $85,411 and $81,272, respectively, from $85,000, $72,500 and $79,000 in 2001. However, in areas like New York and Massachusetts the continued rise in the cost of housing during 2002 might translate into no change in net buying power.
For the most part, the West was the next best place to be since engineers there received an average $6,281 raise, bringing the mean to $96,881.
In California, where the average rose to $103,421 from $97,000 in 2001, the best pay went to those working in San Jose. Engineers there collected an average $113,884 in 2002, up from $105,000 in 2001.
Engineers in Colorado also recorded an increase, going from $75,200 in 2001 to $90,663 in 2002.
There were some strange dips in salaries in two large electronics-rich Western cities. In Phoenix, the average dropped from $98,900 in 2001 to $92,088 in 2002, possibly reflecting the oversupply of engineers after widespread layoffs by semiconductor companies such as Motorola.
Following the same pattern was Portland, Ore., where the figure went from $99,800 in 2001 to $90,870 in 2002, most likely because the market was flooded with IT and engineering talent left jobless in the dot-com debacle.
In the North Central region-which includes Illinois, Michigan, Minnesota, Ohio, Indiana, Wisconsin, Missouri, Iowa, Kansas, Nebraska, North Dakota and South Dakota-engineers' mean salaries rose $4,707 this year, bringing the mean to $78,297, the lowest of all regions of the country. Engineers in Minnesota, who made $85,395 this year earned the best salaries in the region; following closely were those in Chicago, at $83,637.
Engineers in the South Central United States-Texas, Florida, Maryland, North Carolina, Virginia, Georgia, Alabama, Tennessee, Oklahoma, Kentucky, South Carolina, Mississippi, Arkansas, Louisiana, Delaware, District of Columbia and West Virginia-received on average $3,032 more this year than in 2001 and their salaries averaged $85,032. However, there were some exceptions.
In Texas, salaries rose to $91,330 from $87,700 last year, but two major engineering centers reported differences. In Austin, averages were slightly higher, at $95,288 from $89,500 the year before, while in Dallas they held steady at $91,800.
Designing pays
The highest-paying industry group that employs engineers responding to the survey appears to be EDA: Design-automation software companies paid an average of $108,700 to engineers in 2002. However, because that group represents such a small portion of the sample, just 127 out of 5,900 respondents, this may not be a statistically reliable result.
So tossing out that number leaves computers and components in a tie as the high flyers, both with an average of $97,000. It's an interesting result considering that both industries have had major cuts in staff this year.
Communications industry salaries finished in second place, where the engineers left standing after massive layoffs made $92,600 apiece.
Military-aerospace companies paid the next highest wage, at $85,400. In fourth and fifth places with very close mean salaries are automotive-consumer at $81,100 and control, test and instrumentation at $80,800.
As with past surveys, our respondents were overwhelmingly male and Caucasian.
Men were 96 percent of the respondents; their average salary was $89,396, about $7,700 more than the $81,734 earned by the women. That gap narrowed from $12,800 the year before. But the low number of females responding throws the significance of the figures into question.
Ethnically, 80 percent listed themselves as whites born in the United States earning an average of $88,439. The second largest ethnic group, engineers with Chinese heritage, made up 7 percent of the sample and had the highest salary, $96,751.
Asian Indians were next in numbers but not in salaries, representing 4 percent of respondents and earning $91,475. The second highest salary group was other Asians, including Vietnamese and Koreans, who together made up 3 percent of the sample and earned salaries ranging from $91,000 to $95,000.
Hispanic-Mexican was the fourth largest group in numbers, comprising about 2 percent of the sample and having a mean salary of $82,489.
African-Americans were 1 percent of the respondents and earned $81,945. Again, the small sample size means the numbers are probably less reliable than for the larger groups.
Marriage pays
Married respondents had the most earning power. Mean household income for the 78 percent of respondents who are married was $125,038, a hefty 5 percent increase over last year.
The percentage of respondents who earn base salaries of $100,000 or more also grew, to 31 percent. That's a significant increase from the 23 percent total in 2001 and it's definitely an interesting barometer of how far engineering salaries and the cost of living have come. Ten years ago only about 3 percent of respondents earned $100,000.
Managers lead the charge into the six-figure bracket with more than half, 61 percent, reporting salaries of $100,000 or better. That's an improvement over 2001 when the number reporting six figures was 53 percent.
Meanwhile, only about 25 percent of staffers make six figures.
Education and salaries
As in past years, the 2002 survey indicates that higher education pays off. The small number of PhDs among the survey respondents, about 6 percent, reported a base salary of $107,771. From there, salaries go down along with the level of schooling. Those with an MBA make $98,775, while those with master's degrees in EE and computer science make $96,714 and $95,465, respectively. Engineers with a BSEE earned $84,179 and those with a bachelor's in computer science collected $88,716.
In overall compensation, the largest companies paid the best with the mean total wage package adding up to $96,700. Companies taking in between $50 million and $99 million paid $84,249 in total compensation.
