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New vs. Expereinced Engineer Salary Spread

New vs. Expereinced Engineer Salary Spread

New vs. Expereinced Engineer Salary Spread

(OP)
Why is the salary spread between recent graduates and experienced engineers so low?  Hopefully you get a raise after working a year, but guess what the starting salary of recent graduates goes up as well.  A year later, the same story.  This is great for the new engineers, but shows that
 employers place little value on each year of experience.

Also is this a problem in just the U.S.A. or is it world wide?

RE: New vs. Expereinced Engineer Salary Spread

Here in Canada the Salary spread is low for the first few years.  Generally these are training years before liscensure.  Once you have a liscence the Salary spread gets much larger.  Typically a liscenced engineer will receive 5-10k more for similar work than a non-liscenced Engineer.

The key here is that in Ontario liscensure (now) indicates 4 years of Engineering related experience and knowledge of law and ethics.  From the employer standpoint the 4 years of Engineering related experience indicates an increased ability of an Engineer being able to work with minimal supervision.

Mind you this wasn't always the case but that is the trend that my exposure has indicated.

Also look closely.  Salaries usually shift more as responsibilities shift. Twenty years experience in an entry level position should not be getting that much more than an entry level individual.  So if you are comparing entry level immediately after grad vs entry level 4 years down then yes the difference should not be significant.  After 4 years you shouldn't be in an entry level job.

RE: New vs. Expereinced Engineer Salary Spread

My engineering association conducted a survey and the average increase per year was approx $1/hour.

Basically a new grad would make approx $20/hour (42,000/yr) and an engineer with 20 years experience would make approx $40/hour (84,000/year).

This is an average of course and it does and should depend on responsibility and skills.  For example someone doing CAD in a cubicle will not make as much as someone in management and responsible for a department.

PS - I also live in Canada.  There is a jump in wage when you go from being an EIT (Engineer in training) to a PENG (Professional Engineer requiring 4 years of acceptable experience).

RE: New vs. Expereinced Engineer Salary Spread

The problem in the auto industry is that it plateaus.

Sure after 20 years you'll be on 2-2.5x a starting graduate's salary, but after that there are no more increases to be had. So for the next 15 years, if I stay here, my choices are to go into management (not very likely), accept that my pay will not increase in real terms (maybe), or do something else (quite likely).

Which is a rather strange way of motivating your senior engineers, who have spent a lot of time learning about the comapny they work for and the products they make.



 

Cheers

Greg Locock

RE: New vs. Expereinced Engineer Salary Spread

Also, experienced engineers are more savvy about not talking about how much they make.

If the ladies don't find you handsome, they should at least find you handy.

RE: New vs. Expereinced Engineer Salary Spread

Why is that? Are they ashamed? I can think of no single action that is more likely to depress salaries.

Cheers

Greg Locock

RE: New vs. Expereinced Engineer Salary Spread

Generally, it's bad politics to openly discuss one's salary, especially with peers and underlings in the workplace.  It can breed all kinds of awkwardness and resentment.

If the ladies don't find you handsome, they should at least find you handy.

RE: New vs. Expereinced Engineer Salary Spread

Hmm, but anyone in the company can find out what pay band I'm in, and they can make a damn good guess where I am in it, and we know what equivalent engineers are paid in other companies.

There is even a suggestion that we go to fixed pay increments, in which case I imagine everyone could find out exactly what anyone was paid. I don't understand the logic of that proposal, by the way.

Cheers

Greg Locock

RE: New vs. Expereinced Engineer Salary Spread

Increases from starting salary will vary widely depending on economics, location, competition for jobs etc.  Within a company, the annual increases (at least in most of my experiences) tended to be smaller than the jumps you could get by moving to another company.  My first job averaged 3.5% annual increase while I was there.  I was considered above average as salaries (unofficially of course) could only increase 3%.  In other words someone working equally as well would have only received 2.5%  My salary jumped 20% when I took a position with another company.  While there I averaged 13% annual increase (good pay but poor management).  Another 15% by moving to where I am now and the increases have so far averaged around 8%.

My view on salary surveys is that the are interesting from a comparison with the previous year.  Most are to general to be of use directly.  It is up to you to take charge of your career and renumeration.  No one else is going to.

Regards,

RE: New vs. Expereinced Engineer Salary Spread

Can I ramble on for a minute?  I've got spare time today!

I think that your original question (or observation) of the relatively narrow spread between entry level engineers and project managers with 20 years experience is interesting and I've often wondered the same thing...For example, an entry level civil eng college grad (on the PE, project management track) may earn around $40,000 in my area.  A project manager with PE and 20 years experience may earn roughly double that, about $80,000 (similar to what another poster said).  In my opinion also, that's not a very wide spread between someone who knows nothing to someone who's very well seasoned.

Now, other things to consider are the following:  the more experienced engineer may have been given the invitation of company ownership and with it, good size bonuses possibly.  I know in our company, some bonuses for part owners are sometimes on the order of the entire year’s salary of an entry-level engineer.  That's a little more like it, right?  Or the experienced engineer may be the president/CEO/owner in which case their earnings would be higher too, I would think.

Although it's my humble opinion that engineering's a good way to make a living and it's rewarding in many ways, you're definitely not going to become rich doing it-it's just not the right vehicle to accomplish that in 99.9% of the cases.  If you want to become rich and make real money, I think that you should own an engineering company and hire a CEO, managers, etc. to do the work for you.  Or better yet, if I started a business, it probably wouldn't be in the engineering field at all.  There's too much liability and not enough profit.

Furthermore, every employee a company hires has the potential to learn the profession and then start their own company.  This has to be a sore spot for any engineering firm owner!  I think the same thing goes for lots of chiropractors and doctors-who wants to train someone, show them the ropes, and tell them the secrets and then have them come back and become their competition!?  In contrast, a widget manufacturer has employees who put together widgets.  If there's no work, they get laid off and then when there is work, they come back happily.  There's a much smaller chance that they'd break off and start a widget manufacturing plant of their own.  See what I mean?  Manufacturing widgets is the answer!  It seems like arguments like these would dictate that the spread of salaries would be naturally wider between entry-level engineers and experienced engineers.  It doesn’t seem to be the case though.


RE: New vs. Expereinced Engineer Salary Spread

Only in America would someone say that they are not rich if they make $80,000AM/year!

RE: New vs. Expereinced Engineer Salary Spread

Speaking as someone who earns well above the average , my theory is:  engineers start out pretty well equal fresh out of school.  However, after that it's your ability (at least to a certain extent) that drives your pay up.  I've sometimes heard other engineers described as having "one year experience - 20 times over".  This means the person never really learned anything over time (not that that applies to anyone here!)  And an average salary describes both the go-getters and the plodders, the good engineers and the politicians, and those unfortunate souls who somehow passed engineering school without a clue.  So I wouldn't worry about the "low point spread."

And, QCE, it maybe only in America, but my company just had a young engineer, who showed a lot of promise, quit after 1 1/2 years - he went to work as a pharmaceutical salesman at twice the salary we were paying him!   So maybe we should say not rich enough!!

Patricia Lougheed

Please see FAQ731-376 for tips on how to make the best use of the Eng-Tips Forums.

RE: New vs. Expereinced Engineer Salary Spread

My former company adopted the "pay for performance" flavor a number of years ago in which only a maximum of 10% of the total employees could qualify for bonuses and everyone was bunched up into 5 paybands and any of the general wage increase was dependent upon your location in the pay band -- I complained to our HR department that we wanted all "eagles" but we were only willing to pay for "turkeys" -- several years I got no pay raise since I was at the top of my pay scale and one of our "non-performer" engineers got over a 10% pay raise because he was at the bottom -- and then they offered restricted stock options (didn't mature for 4 years -- most ended up worthless) and then used these to calculate our pay raise... those of us who used to spend the extra hours, the extra effort suddenly went home at quitting time...  (of course the officers took home 50% pay raises and 200 to 500 % bonuses)  needless to say, the company was on a death spiral until the CEO got nailed...

RE: New vs. Expereinced Engineer Salary Spread

VPL - You prove my point exactly.  I think if you can make $80,000 doing something you like you are much richer than the person that makes double that doing something that they don't enjoy.  Your job is a major part of your life and I have seen a lot of people on these threads admit that they do jobs they don't like because they get more money than their already reasonable salary.  For those people I feel sad.

Back to the original post, I think it is agreed upon that your wage will be set by you and not your company.

RE: New vs. Expereinced Engineer Salary Spread

Yep.  Moved back to Milwaukee from San Jose, cut my salary in half and doubled my standard of living.

RE: New vs. Expereinced Engineer Salary Spread

I think part may be supply and demand.

The supply/demand of entry level engineers is a much bigger pool of both applicants and jobs. Since at that point people aren't specialized.

As you get experienced/specialized, now all of sudden the opportunities for lateral move to competing company will be greatly diminished.  If you change specialities there will invariably be a salary cut.  So opportunities are in a much narrower set. And if economy is down, no-one's hiring, opportunity for lateral move may be near nothing.  Not so for the top-notch entry-level engineer, he can just change industries and specialties to go into whatever is hiring.

And I agree as many have suggested the individual plays a big role.  In the end the company has it's own best interest at stake and if individuals are truly valuable the company will usually do what is needed to keep them there.

RE: New vs. Expereinced Engineer Salary Spread

Personally I find that a lot of this is based off of the industry you are in. As far as I've seen it, manufacturing does not pay as well overall as some of the other industries you can choose with a technical degree. The raises you get are based not only on performance, but also with a major emphasis on how it affects the bottom line of product cost. This is not necessarily the case in some other industries. Just my observation though.

As far as standard of living etc, there is a huge geographic caveat as far as income as well. In New Orleans, the cost of living is much higher than Baton Rouge (an hour north of N.O.), but the average salary is lower. There are many factors involved in the salary you make, not all of which are based only on things you personally can manipulate.

RE: New vs. Expereinced Engineer Salary Spread

I see nothing wrong with having say a 2.5 x to 3x spread between a new grad and a top earner.  The real spread between the new graduate and the top is more like 4x once the bonuses and ownership effects are factored into the equation. Once you earn enough to cover the basics (new graduate salary) everything else can go towards luxuries.

Take a look at the trades. The same arguments can be made to pay an experienced electrician more than a new just finished apprentice electrician. Do they even get a 2x spread? Nope. They usually get exactly the same amount for 1 year or 35 years experience.

Your standard of living depends more on how you manage your money than on how much money you earn. I know tradesmen at 55 retiring after earning half the salary of engineers who are “forced” to work till 65 to retire.

Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion
www.kitsonengineering.com

RE: New vs. Expereinced Engineer Salary Spread

pmurieko
The situation where new grads are hired at salries close to that of experienced engineers used to be called 'salary compression'. In fact, in the early 80's, electrical engineering starting salaries were rising so fast that it was not uncommon for new-hires to be paid more than engineers with 1 to 5 years experience.

RE: New vs. Expereinced Engineer Salary Spread

2.5X to 3X seems more than adequate to me. Do you know of a field where the spread in salary from recent grad to experienced hand is higher? I don't, unless you start your own business where the oportunity to either make a lot or lose a lot comes with the terrain. What exactly were you expecting to make as an experienced engineer? Less than what you see being paid? And if so, where did you get those expectations?

regards,
JTMcC.

RE: New vs. Expereinced Engineer Salary Spread

JTMcC

Let's take 2.5x over 20 years. That is an annual increment of just under 5% - not exactly a HUGE motivational tool is it, assuming you are on pay for performance? In particular, the increase in pay will be quite rapid for the first five years as the graduate eventually becomes useful, but thereafter it's unlikely to exceed 4%. I am aware that people with satisfying jobs don't particularly relate their performance to their pay, but on the other hand most A types do use pay as way of keeping score, so it does feed into job satisfaction.

Incidentally it is important to account for cost of living and inflation in this. When I joined the company I worked for after university in 1982 I was paid per week only slightly more than what I am now paid for 2.5 hours,in numerical terms! So that is a factor of 13



Cheers

Greg Locock

RE: New vs. Expereinced Engineer Salary Spread

GregLocock,

I thought the question was about the spread in salaries between new hires and experienced hands, at this point in time. That is a new graduate on his first job TODAY makes our theoretical $40,000 while an engineer with say 20 years experience TODAY makes $80,000. That to me is a reasonable spread. If however I am misstaken and the topic is that a new hire TODAY who starts out at 40k, will 20 YEARS FROM NOW be making 80k, then I just don't know enought about the average level of inflation to comment, and it might well be a relative small increase.

JTMcC.

RE: New vs. Expereinced Engineer Salary Spread

"I thought the question was about the spread in salaries between new hires and experienced hands, at this point in time."

It is. I was using today's wages for a grad and a 20 year engineer, in my industry. My contention is that a 5% pa average performance related pay rise is actually not very much, in motivational terms, and to go back to a previous post, when it effectively tops out after 25 years, that's even worse.

I added in the cost of living and inflation stuff to put it into perspective.



Cheers

Greg Locock

RE: New vs. Expereinced Engineer Salary Spread

Then I ask again, what field do you know of where the spread is greater? I know of none off the top of my head.

And I ask again, were you led to believe that you would make more than what you see today? And if so, by who?

regards,
JTMcC.

RE: New vs. Expereinced Engineer Salary Spread

"Then I ask again, what field do you know of where the spread is greater?"

Lawyers

Patent Lawyers in particular

"And I ask again, were you led to believe that you would make more than what you see today? And if so, by who?"

What makes you think I was told that? All I'm doing is putting numbers into a discussion that seems surprisingly long on opinion and short on numbers. Having said that, you are right, when I decided to become an engineer I did not research what would happen to my salary in 25 years time, never having been gifted with that sort of self-discipline. I only try and figure out the optimal course for the next 5 years. Engineering would put me through university, physics would not, it was as simple as that, at the time.

As to my next steps, well I've outlaid my personal gameplan in my first post.

Cheers

Greg Locock

RE: New vs. Expereinced Engineer Salary Spread

But those lawyers are in business for themselves, that doesn't compare to you being an employee, few jobs, as an employee, will regularly pay over the 80k range discussed here.

I don't know if you were led to believe differently, that is why I ask the question. I know a couple of new engineers that are really disapointed in the wage they make, and the wage they see experienced engineers making and they WERE led to believe that the pay would be higher. Hence my question. No offense intended by the question.

Don't be suprised that many folks choose a career with an eye toward more than the next five years.

regards,
JTMcC.

RE: New vs. Expereinced Engineer Salary Spread

Dear All:
Just to add a few lines. I agree with one thread above that says that the big salary increases are when you change company. It happpened to me. In my case was also different since I also moved from one country to other 13 000 miles apart.

Nevertheless, in relation to the area where there is a big spread between new and experienced engineer, I can point out my experience in Pharmaceuticals. When I started working, the other engineer that worked with me and that had 18 years experience was earning around 4-4.5X more than myself, excluding bonus, better car, mobile phone and maybe other fringe benefits that I am not aware of.

PR

RE: New vs. Expereinced Engineer Salary Spread

The VP of Engineering of our midwest based pharmacutical manufacturing firm has been quoted as saying that 1 year of experience is worth roughly $1000 per year added to the salary.  If we are paying new engineers $41K (rough average for the area by my sources), then a 6 year engineer should be paid $47K.  Thankfully, I'm above average in that regard.

They pay little attention to the P.E. degree in terms of reward or reimbursement, but you can bet that  we are touted at every customer presentation.

E-

RE: New vs. Expereinced Engineer Salary Spread

I think that VP Engineering eeds to look a little closer at his estimate.  His proposal means no real value for related experience.  Cost of living increases by about 2-3% per year and he is proposing a diminishing 2.5% return for my time in the company.

I am willing to bet he trains a lot of new engineers that don't stay around more than a couple of years.

If my starting Salary is 40k and someone is still with the company after 5 years then I would expect his salary to be about 47,500 (minimum pending performance) with a signifcant review for pay increase outstanding.
Average performamce about a 15% increase
Above average about a 25 to 30%

Then another 7,500 for the next 5 years.  So after 10 years I would expect that individual to be making about 60k.  This is a true raise of about 1000 per year of experience.

RE: New vs. Expereinced Engineer Salary Spread

CanEngJohn-

You won't hear me argue that our VP shouldn't look at his salary strategy!  

I've been told by several sources (mostly supervisors and former supers) that my raises are uncharacteristic of the company (5-10% each year even with the the declining economy).  Although I'd like to be flattered, I can't help but think some of this is corporate propoganda.

I find your 15-30% raises number astounding! Have you actually seen such raises or is this popular rumor?  When I received my 10% raise my second year I was told by my boss (whom I trust) that it was among the largest given. Perhaps I'm simply working for the wrong company!

Also, we only have performance reviews at 12 months.  We don't receive any COLA during the year like in my previous jobs. There is no bonus structure, nor gain sharing either.

E-

RE: New vs. Expereinced Engineer Salary Spread

Depends on whether the company/industry is doing well.

I got a 16% raise a long time ago, when I was working in the commercial sector.  

The aerospace sector has pretty much compacted and tends to have a raise pool in the 4-5% range.

TTFN

RE: New vs. Expereinced Engineer Salary Spread

Hey ludikris,
It is not unreasonable to go from $20/hr to $25/hr in one year.  You do the math.  No rumors!

RE: New vs. Expereinced Engineer Salary Spread

QCE-

Changing jobs is a very good way to get that type of raise!

E-

RE: New vs. Expereinced Engineer Salary Spread

Engineering hiring salaries are market driven.  Raises are not.  

When engineering talent is tight, hiring offers go up.  The demand for entry level engineers is often higher (as a percentage of the available pool) than the demand for experienced engineers. (Because they can do the scut work while gaining experience freeing up the time of the experienced engineer)  So there is more pressure on entry level salaries to rise than on experienced salaries.

Once hired the market pressure is greatly relieved.  To some extent you're captured.  All of us have heard stories about an engineer that quit and applied for his old job getting a hugh raise in the process.  

HR people treat employees like commodities.  Plug in another one with no detriment.  That keeps salaries down.  Engineers are difficult to judge objectivly.  We all know about the people that got the same raise we did when they couldn't solve a problem worth a damn.

So why worry about it.  Nothing in life says salaries are fair or proportional to contribution.  Look at the multiples of CEOs, entertainers and pro athletes to engineers.  Is that justified?  I love what I do.  I'm sending four kids to college doing it(thank you scholorship programs).  

RE: New vs. Expereinced Engineer Salary Spread

Isit4iam,

I can't agree with you that raises are not market driven.  My experiences are that they tend to run in step based upon the success the company has experienced.  When cash flow gets tight, so do the purse strings for salary increases.

It is perhaps ironic that a company wishing to attract and retain exceptional employees would use pay raise percentages as a basis for layoffs or reductions in force ("cut everyone who made over a 4.5% increase last year") for example, but I have seen it happen.  Depending on how the company you work for operates, sometimes it is better to fly under the radar, at least in a tight job market.

Regards,

RE: New vs. Expereinced Engineer Salary Spread

PSE,

You are mixing markets.  The market for engineers is independent of the markets for the products of the companies engineers work for.

Financial success of the corporation has some effect on the raises available but the downside is much greater than the up side.  If sales doubles I guarentee raises won't.  

There is a logic HR people use in designing compensation systems.  It just isn't logical to us.  One assumption is that if the function remains the same then the effective economic benefit should remain the same, ie: cost of living.  A second assumption is that engineers are interchangeable commodities.  Both of those assumptions ignore the value of experience in the organization and engineering skills.

Engineering is tough to evaluate.  How do you compare the contribution of engineer A to engineer B.  Its usually very subjective regardless of the systems companies use to evaluate personnel.  Odds are you aren't going to get the raise you think you deserve and the evaluation system has to find reasons you didn't get it.  

We are expected to succeed so success isn't weighted enough while failure is easily seen and documented.

I've been in endless discussions about why engineers have to leave the technical track for the management track to hit the big bucks.  I wish is wasn't so, but it is.  

Significant changes in salary (+10%) occur, for the most part, when positions change.  There are exceptions of course. I got a 31% bump in 18 months when corporate HR decided everyone with a BSME belonged in a salary band two grades higher than the one I was in.  I quit shortly thereafter anyway because the work offered no opportunity for creativity.

Which leads me to the only important point I have to make.  Find something you love to do and figure out how to live on what it pays.

RE: New vs. Expereinced Engineer Salary Spread

Everyones salary/raise is market driven, period. If you don't believe that, then what do you tie salary/raises to? Voodoo? Luck, good or bad? Ouiji boards? The market drives every part of the workplace, even if you don't know or understand how and why.

JTMcC.

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