New vs. Expereinced Engineer Salary Spread 1

[pmureiko]

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?

 

[CanEngJohn]

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.

 

[QCE]

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).

 

[GregLocock]

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

 

[TheTick]

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.

 

[GregLocock]

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


Cheers

Greg Locock

 

[TheTick]

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.

 

[GregLocock]

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

 

[PSE]

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,

 

[MRM]

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.

 

[QCE]

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

 

[vpl]

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.

 

[pablo02]

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...

 

[QCE]

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.

 

[TheTick]

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

 

[electricpete]

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.

 

[That1Guy]

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.

 

[RDK]

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

http://www.kitsonengineering.com

 

[Comcokid]

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.

 

[JTMcC]

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.