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01 October 2003

'Steady as she goes'

Industry, incomes down, but a slow turnaround starting to brew

By Gregory Hale

Bill Radin is not surprised income levels for engineers are lower than last year. In his over eighteen years of recruiting and placing engineers and executives throughout the industry, the president of Cincinnati, Ohio–based Radin Associates has not seen the job environment any more difficult. Employment and salary levels are down.

The defense industry is doing just fine, but Radin said manufacturing is coming back "in dribs and drabs, but nothing really trending upward." The next two or three quarters will be "steady as she goes" for the industry, he said.

The numbers back him up. The average total income this year for engineers, counting base salary, bonus, commissions, and profit sharing, was $92,698 compared to $95,528 last year, a decline of 3%, according to the annual "National Society of Professional Engineers (NSPE) 2003 Income & Salary Survey Report." However, if you just look at the average base pay for engineers, the totals are just slightly down from last year, $82,240 versus $82,908 in 2002, a 0.8% decline.

Radin said it makes sense that median salary levels are down, because he sees companies cutting workers paid at the higher end of the pay scale.

John Betton, general manager and senior recruiter at DuBois, Penn.–based Engineering Headhunters, sees it as a simple matter of supply and demand. With more engineers looking for work, employers don't have to pay top dollar. "Pay levels are staying flat," Betton said.

Betton admits it has been a struggle for the two-year-old company, but the computer engineering side of the business seems to be doing well. However, the manufacturing side, especially oil refinery and nuclear engineers, seem to send the headhunter the most resumes, he said.

Betton does see a bright side. "Within the next twelve months owners will start releasing contracts and that will start creating jobs," he said. "Right now, they are too scared to get off their money."

Creating jobs is what headhunters say will help turn around the industry.

"The economy will recover," Radin said. Although he said this poor economy has been the worst he has seen in his eighteen years of recruiting, back in 1990 and 1991 the industry also faced difficult times. He said back then the experts predicted the full-time job as we knew it would go away, and everyone would end up working in part-time positions. But the poor economy, he said, soon corrected itself. "Employment means some piece of work has to get done. There is still a lot of capacity out there, and companies are very cautious about hiring new workers."

"[The industry] is contracting, not expanding, but it will come back because . . . of the intellectual capacity of the country. It's just a cycle."

Intellectual abilities also help when it comes to salary levels.

An engineer with a doctorate degree earned 32.4% more than one with a bachelor's degree. However, the numbers were down from last year.

The median income for an engineer with a doctorate was $101,850 in 2003 versus $105,500 last year, a 3.5% decline. An engineer with just a four-year degree has a median income of $76,900 versus $77,000 last year. An engineer with a master's degree has a median income of $83,000, up from $82,333 last year.

When it comes to experience, an engineer with four years on the job has a median income of $51,100, but the income levels jump to the $62,000 mark when the worker hits the five-to-nine-year experience level. With more time roaming the plant floor, obviously you make more income. A person who has twenty-five to twenty-nine years of experience and holds a bachelor's degree earns a median income of $94,000, while an engineer with a master's degree in engineering makes $98,031, and a person with a doctorate pulls in $129,500.

Salary levels vary by industry, with petroleum engineers topping the charts earning a median income of $110,000, followed by materials and biomedical engineers pulling in $107,000 and $104,000 respectively. Petro-leum engineers also got a $4,100 boost in pay over last year as they earned $105,900 in 2002. Chemical engineers had a median income of $95,000 versus $88,000 last year. A nuclear engineer's median salary dropped to $97,500 from $105,000 the year before.

In addition, manufacturing, mechanical, and mining engineers all lost income from last year. Manufacturing went to $81,150 from $87,000; mechanical went to $84,000 from $85,000; and mining went to $93,000 from $95,700. But it is not all gloom and doom, as some salaries went up in the industry. Environmental, electrical, and control systems engineers all reported increases. Environ-mental went to $78,000 from $75,231; electrical went to $85,917 from $84,329; and control systems engineers jumped to $82,300 from $79,500.

To max out your total income experience, it pays to sit in the executive suite. The median income for engineering executives is $110,000, whereas the median income for those in production, quality management, maintenance, and process control; project management, engineering, and operations; consulting; teaching, training, technical writing and planning project study; and analysis valuation and testing ranges between $76,200 and $82,000. Pay levels for consultants rose a bit this year over last year, from $78,500 to $80,000.

Also, the more people you supervise, the more income you will earn. If you just supervise yourself, your median income is $68,000, down from last year's level of $69,000. However, if you supervise 50 or more professionals your median income is $126,000. If you supervise three to four professionals, your income took a small dip as salary levels dropped this year from last year, $78,000 to $76,300. But if you supervise five to nine professionals, then your income went up to $85,000 versus $81,769 last year.

As it goes that with more degrees, an engineer earns more in salary, the same holds true with certifications. An engineer who has a P.E. will earn more than one who doesn't have that designation. Also, if engineers have even more credentials beyond the P.E., their probability of earning more income increases. An engineer with no licensing earns a median income of $66,000 compared to the $84,200 median income a P.E. earns. If you have a P.E. and an environmental engineer certification, then your median income is $95,000. If you have a P.E. and a certification in forensic engineering, you have a median income of $115,625.

Not only is the industry you work in important in determining how much income you make, so is your location.

If you work in New York, Pennsylvania, New Jersey, Delaware, and Maryland, you earn $88,000 compared to the Upper Mountain states of Montana, Wyoming, and Idaho, which earn $65,982. In the Pacific Southwest, which includes California, Nevada, and Hawaii, the median income comes in at $84,008. In the South Central States, which include the Oil Patch of Texas, Louisiana, Oklahoma, and Arkansas, the median income is $85,000. When it comes to cities, San Francisco tops the list with a median income coming in at $113,000. The other cities that round out the top ten are Houston, $105,600; Newark, N.J., $105,500; Middlesex-Somerset-Hunterdon, N.J., $105,000; Trenton, N.J., $104,000; Monmoth-Ocean, N.J., $101,000; Washington, D.C.-Md.-Va., $98,000; Philadelphia, Pa.-N.J., $97,000; Richland-Kennewick-Pasco, Wash., $96,000; and Allentown-Bethlehem-Easton, Pa., $96,000. On the other end of the spectrum, if you work in the Greensboro, Winston-Salem, High Point, N.C. region, your income comes in at the lowest point in the survey at $62,000. Sioux Falls, S.D., $63,650; Lexington, Ky., $64,000; Indianapolis, Ind., $65,000; Sarasota-Bradenton, Fla., $65,700; San Antonio, Texas, $67,500; Pensacola, Fla., $68,150; Providence, Warwick, Pawtucket, R.I., $69,450; Topeka, Kan., $72,100; and Peoria-Pekin, Ill., $72,500 are the next lowest runners-up.

Although the survey doesn't have very good numbers when it comes to salary levels by gender, you can see parity starting to creep in. Women with three years experience and less earn almost the same if not a bit more than their male colleagues. However, after three years, it starts to separate quite a bit. One interesting note from the survey shows that men and women with twenty to twenty-four years of experience and a bachelor's degree both have a median income of $90,000. However, men with a master's degree and twenty to twenty-four years of experience have an income of $91,027 compared to $86,250 for women.

On a whole it also pays to work for a huge corporation. The median salary for those who work at a corporation that employs 20,000 or more people is $92,800. But if small is where you want to be, then the median income comes in at $75,000. The salary at a company that employs 1,000 to 1,999 is $84,119.

During difficult times, employers look at all ways to lower costs when the work remains, but revenues are not what they once were; in many cases cutting salary or not offering a pay increase is one way to keep employees. Last year 21% of engineers surveyed said they either got a pay cut or no change in salary. An additional 5% said they got less than a 2% increase. But to look at the situation in a more positive light, 55.4% of engineers said they got a pay increase that ranged from 3% to 10.9%. IT

Who did the reports?

InTech would like to thank the National Society of Professional Engineers for supplying information from their 37th national report. For more information on the report go to www.nspe.org. The Commission on Professionals in Science and Technology (CPST) also supplied information from their "Salaries of Scientists, Engineers and Technicians Twentieth Edition." For more information on their study go to www.cpst.org.