Engineering Jobs Follow the Money
But can engineers follow the jobs?
GRADUATES: HANS NELEMAN/GETTY IMAGES; MONEY: DON FARALL/GETTY IMAGES
Want more money? There’s no mystery where jobs for engineers can be found; they move with the economy.
For example, after years of stagnant oil prices, money is flowing into the oil patch. And that’s good news for petroleum engineers. Since 2003, their employment has grown by 8 percent per year, and—even after subtracting for inflation—earnings grew by 2.3 percent per year. If sustained, that would mean a healthy 25 percent increase over inflation in 10 years.
Each kind of engineering has its own market with different starting salaries. Data for 10 different specialties are shown in the table ”Engineering Employment and Earnings in 2007.” Civil, mechanical, and industrial engineering have the most jobs, but median earnings are higher for petroleum, computer hardware, and aerospace engineers.
Even if jobs quickly follow the money, going where the jobs are isn’t so easy, if it means changing from one field to another. One way is to go back to graduate school to study a different engineering discipline. Still, one’s former salary can hold the new one down.
Thus, in 2007, starting salaries for petroleum engineers were at US $60 700 for baccalaureates and only $57 000 for those who held master’s degrees. That’s because typically someone with a master’s degree has a bachelor’s in some other field—for many, the master’s is a way to shift from one career path to another.
Civil engineering also has a negative earnings differential for the master’s relative to the bachelor’s, and for computer hardware engineers, while positive, it is very low. The master’s differential is greatest for electrical, industrial, and aerospace engineering—15 percent or more for each of them. The master’s appears to be well worthwhile in these fields.
The Ph.D. has the highest differential relative to the master’s in computer-hardware engineering with more than a 50 percent gain in starting salary. The differential is greater than 15 percent in all of the fields for which we have data.
Opportunities for U.S. electrical engineers have roughly followed activity of the economy as a whole, but detailed analysis shows that the relative positions of specialties can change even within a few years. Since 1999, employment declined in the first four years, and then grew in the four years that begin with 2003. Earnings similarly declined, and then grew modestly.
Just as each area of engineering has it own salary ranges, job trends differ widely. Employment in chemical engineering declined in both the earlier and later periods—in fact, it declined more during the period of 2003 through 2006 even as the overall U.S. economy improved. As for chemical engineers’ earnings, they grew modestly at first and then declined.
Agricultural engineering saw faster increases in employment in 1999 through 2002 but only in the next four years did earnings shift from decline to increase. The surge in the price of farm products is increasing opportunities and earnings for agricultural engineers. Civil and computer-hardware engineering have had positive growth in employment and real earnings in both periods. [See the two tables, ” Engineering Employment and Earnings in 2007,” and ”Average Annual Growth in Employment and Earnings,” compiled from a number of different reports issued by the U.S. Bureau of Labor Statistics, for summary data for all 10 engineering disciplines.]
But surveys of employment and earnings of engineers give an incomplete picture of the life prospects of engineering graduates. Not everyone who graduates with an engineering degree becomes an engineer. Many people who begin careers as engineers move to other pursuits over the course of their working lives. Indeed, by some accounts, half of the engineers move to managerial, production, and sales roles. At some point earnings may be higher in other roles than in engineering.
Similarly, the experience of women may differ from that of men. Women are more likely to return for higher education than men are. Because women earn so much less than men when both have less education, the gain in earnings to women is often higher than for men. Education tends to narrow earnings gaps, yielding bigger gains for women. (As in just about every area of employment, in engineering women still earn somewhat less than men at the same level of education.)
The notion that engineers follow the money is a little too simplistic. Earnings and employment can move together or in opposite directions: in some specialties, employment levels can increase even as earnings fall. In others, employment declines as earnings grow. When a sector of the economy grows, expanded opportunities for engineers typically yield increased employment and higher earnings but, more generally, the relationship of changes in the overall economy to opportunities for engineers is more complex.
About the Author
Malcolm Getz is an associate professor of economics at Vanderbilt University, in Nashville, Tenn., and the author of Investing in College, a Guide for the Perplexed (Harvard University Press, 2007).