EE Salaries Up All Over

Raises are modest in the United States and Europe, big in Asia

5 min read

John Wright rode the tech bubble of the 1990s for all it was worth, hopping jobs and moving up to a six-figure salary. Hefty bonuses and stock options nearly doubled his income. But when the bubble burst, Wright spent nearly three years without a job.

When the dot-com boom began, Wright had a good job as an engineer at Cypress Semiconductor, an established and stable outfit in San Jose, Calif. But in the heady summer of 2000, a headhunter caught Wright in what he describes as ”a moment of weakness” with an offer from a telecom start-up.

Wright stayed with the telecom start-up for about a year, before jumping ship again with an offer from another start-up, enticed by a generous salary, bonuses, and stock perks. ”If everything went right, I'd be set for life,” Wright figured.

Instead, another year brought him a pink slip, and Wright was out of a job. He had socked away enough funds to cover his bills for six months, but it would be another two-and-a-half years until he landed a new job, this time with a defense contractor. His pay has returned to a pre-bubble five-digit salary figure. ”The money's right for the job I'm doing. I'm very happy here, and it's a stable environment,” says Wright, now a senior systems engineer [see photo, "Better Times"].

Wright is not alone among engineers in valuing job security highly. They have ample reason: while engineering wages are moving upward a bit faster than inflation again, bonuses and stock options are now harder to come by. Instead of expecting to hit the jackpot, many engineers are simply looking for interesting jobs that won't disappear—to the benefit of many established companies that found it difficult to compete with the extravagant compensation many start-ups were offering during the boom. Now, ”it's surprising how many times experienced people say they want to work for a stable company,” says Mark Finger, vice president of human resources at National Instruments, in Austin, Texas.

Engineers who aren't changing jobs are continuing to see small wage increases. ”We're seeing salary increases of 3 to 5 percent,” says Steve Patchel, senior compensation consultant at Watson Wyatt Worldwide, of Santa Clara, Calif. That's slightly more than they were getting during 2005, he adds.

Other yardsticks show slightly higher salary increases over the past year. IEEE-USA figures show wage improvement in 2005, after a decline in 2004. The median salary for 2005 was US $97 672, up 5.6 percent from $92 500 in 2004. However, this 2005 figure is virtually the same as 2003's median of $96 787—not enough to keep up with inflation overall, notes Chris Currie, IEEE-USA's manager of product development and marketing. Lackluster raises are also being seen across the Atlantic. ”Salaries in Europe are pretty flat; it's similar to the U.S.,” Finger says.

While EE wages in developed countries in general show little change, there are always niches in which raises tend to be more generous. ”In some select areas, such as nanotech and medical devices, they have increased 10 to 12 percent,” said Scott Sargis, president of Strategic Search Corp., of Chicago.

Sargis also notes that many electronics companies are working more closely with colleges these days, recruiting high-scoring sophomores and even freshmen for internships in an attempt to lock them in early. Though these companies are going after students more aggressively, starting salaries for new graduates aren't moving upward rapidly. Computer engineers can now expect $54 877 on average, while EEs will average $52 899, according to the National Association of Colleges and Employers, in Bethlehem, Pa. Those averages are both up only slightly from the 2005 average of $51 292 for EEs.

Salaries in low-wage countries are rising far more rapidly. Engineers in the Asia-Pacific region earn far less than their American counterparts, but percentage-wise their raises are currently far heftier.

”Salaries in India and China are moving much faster—doubling or even more than doubling—but the cost [of employing engineers there] is still a third to a quarter what we see in the U.S.,” National Instruments' Finger says.

The impact of foreign wages that are mere fractions of U.S. salaries is a hot-button topic for both engineers and politicians. But most engineers acknowledge that it's become a factor in their career planning. Americans must look at roles that can't be outsourced easily, such as that of field application engineers. There's been solid growth in this segment of engineering over recent years. FAEs are more and more in demand as companies expect more help from their component and subsystem suppliers. FAEs travel to original equipment manufacturers (OEMs) and help scaled-down engineering staffs work on complex products while meeting tight design schedules.

”We've got one FAE for every two-and-a-half salespeople. Five years ago, that was one for every five salespeople,” says Phil Gallagher, president of Avnet Electronics Marketing Americas, headquartered in Phoenix, a distributor of semiconductor and other electronic components.

The latest figures from the National Electronic Distributors Association survey showed that FAEs at its member companies received a mean wage of nearly $107 000 in 2004. The lowest FAE salary was $79 400, while the peak earner in the survey made $136 400. Those figures from the Alpharetta, Ga.�based association represented a rise from an average of $96 900 in 2000.

Since many FAEs work closely with sales staffs, many also get significant bonuses. ”Their base salary is on par with product engineers', but they also get bonuses for design wins and bookings,” says Marc Couture, application engineering manager at Mercury Computer Systems' Defense Business Unit, in Chelmsford, Mass.

There are still a few companies where engineers can bank on getting a bonus. AdaCore, a New York City company that specializes in safety-critical certified software for the aerospace industry, uses bonuses to retain its highly specialized, seasoned staff. ”We give engineers an extra month's salary once a year,” says CEO Robert Dewar.

Stock options died along with the delusion that Internet business plans didn't need profits

But at most companies, extras are now more of a surprise than an expectation. Watson Wyatt's Patchel notes that companies typically give bonuses only when programs are finished on time or when profits are high. And bonuses are handed out selectively, he adds.

While bonuses are given sparingly, they are still commonplace today compared with stock awards, Patchel adds. The days when most engineers could routinely expect to get stock or stock options died along with the delusion that Internet business plans somehow didn't need profits.

”We want to give equity to people who are improving the bottom line. We've set a high bar, and it's getting higher,” Finger says.

That's a common approach. ”Star players continue to get some form of equity grant, but folks who are good utility players probably won't,” Patchel says.

In some fields, such as defense, equity has never been a part of most engineers' pay plan. After his roller-coaster ride during the dot-com era, Wright notes that at his new company ”there was no discussion of stock whatsoever.” But he draws comfort from a feeling that ”this is a company I can rely on for the future.”

About the Author

Terry Costlow writes from Chicago, where he follows many different technologies. He frequently covers engineering career issues and the impact of technology on society.

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