Hiring Heats Up

Jobs are more plentiful, and wages are inching up slowly

5 min read

By the time George Robison finally got a pink slip from a fading auto industry start-up in Detroit in June 2006, he was already working on Plans B and C in his job hunt. Although the Motor City's woes continue, Robison, who holds a master's degree in alternative fuels, found a job by November. He even got a solid raise.

The employment market for engineers is ”no place for a nervous person,” says Robison, now a software engineer at IAV Automotive Engineering, in Ann Arbor, Mich.

His success in finding a job even during Detroit's downturn underscores a bright outlook for engineers, especially those in popular disciplines. Nobody's expecting a return to the hot markets of the dot-com era, but there's general agreement that demand for engineers is growing.

”It's gotten a lot harder to find talent,” says Amy McKee, senior manager for global staffing at Autodesk, of San Rafael, Calif. ”There's a lot more venture capital money in Silicon Valley. Candidates now have multiple offers.”

AeA, formerly the American Electronics Association, estimates that the United States added 150 000 high-technology jobs in 2006, nearly twice as many as in the previous year, for a two-year increase in total employment of 2 percent. The association estimates that unemployment is now 2.5 percent among computer scientists and less than 2 percent among engineers. That's about as low as the rates get.

Not all engineers can expect to get handfuls of job offers, but they can look forward to raises of 4 to 5 percent, or about 2 points above the current U.S. inflation rate. They're also gaining a bit more job security than many have felt in the past couple of years.

That's true regardless of whether the engineering diploma is yellowed or freshly printed. ”There's a lot more competition for top graduates this year,” says Tom Lucas, director of international human resources at National Instruments, in Austin, Texas. ”RF and analog continue to be key skill sets that are hard to find.” Lucas adds that National Instruments hires mainly new graduates, and now it generally pays them 5 percent more than it did last year.

The typical EE grad can expect to earn US $54 915, according to the National Association of Colleges and Employers, in Bethlehem, Pa. That's significantly higher than the $44 048 and $47 750 their business administration and civil engineering counterparts respectively average, NACE says, but still only 1.6 percent more than new EE grads made, on average, in 2006.

Senior engineers face far more variable prospects, depending on their specialties. Steve Patchel, senior consultant at Watson Wyatt Worldwide, in Santa Clara, Calif., notes that although average wage increases run around 4.5 percent, people in hot fields can expect increases well into the double digits.

The disparity among engineering disciplines is mirrored by the auto industry in Detroit, where struggling automakers that have trimmed personnel find themselves in need of outside talent to stay competitive. As a result, they're turning to engineering service companies such as IAV--Robison's new employer--to do more development.

The service providers, in turn, are scrambling for talent. ”People with experience in controls, rapid prototyping, hybrids, fuel cells, and some other areas can earn well into the $100 000 range, depending on their experience level,” says Cheryl Boland, director of business administration for IAV.

Employers are looking for techies all around the world. In Paderborn, Germany, dSpace plans to hire 100 engineers this year. That's significant growth for this 550-person company, which makes loop testers and other development tools for the aerospace and automotive industries.

Although dSpace is ramping up significantly, the company isn't busting its budget to pull in new hires. ”We're raising salaries by anywhere from 3 to 15 percent,” says Herbert Hanselmann, president of dSpace.

While raises are averaging in the single digits, those engineers who switch jobs often fare much better. Robison had accepted a low base salary in order to seek the brass ring of stock ownership in a hot start-up. ”When I got the job at IAV, I got a significant increase in salary,” he says.

Many observers say EE salaries have been rising fast enough to keep engineers at their desks instead of searching for gains. ”There's much less job hopping. That's why the market is not moving as much,” says Elaine Peacock, rewards manager at Freescale Semiconductor UK in Glasgow.

Bonuses are more flexible than raises, because they allow employers to retain talent without ratcheting up the base salary. Freescale, for example, is holding wage increases to 2 to 4 percent in Europe, about the same level as last year, but the company is getting much more generous with bonuses.

Variable pay has moved a lot during the last two to three years. ”We intend to give more to top performers,” Peacock says.

”We're rolling out a new bonus program. Those who are eligible will see a significant increase,” says Mike Bristow, manager of compensation and benefits at Siemens VDO Automotive of Farmington, Mich.

At most companies, not every engineer will be eligible for bonuses, but many companies are expanding the numbers who get the perk. ”Before, our bonuses were limited. Now we offer them to around 40 percent of our engineers,” IAV's Boland says.

Like others, Bristow notes that bonuses are tied to company performance as well as to individual achievement. ”When we're doing well, the program funds itself. When we're not, it doesn't cost us anything,” he explains.

Funding doesn't appear to be a concern this year. ”Incentive plans are going to pay well this year,” Patchel says. ”Most companies are doing well. It's not quite a seller's market, but we're clearly at a place where engineers are no longer stuck in their present job because there's no place to go.”

Bidding wars for talent have clearly broken out among companies in India and China. Budgets for merit raises--as opposed to cost-of-living adjustments--are rising by ”11 to 19 percent, and they're at double-digit levels in China, too,” says Lucas of National Instruments. In India, new grads typically earn $10 000 to $12 500, he adds. Those rates may inch up since recently enacted tax laws make equity compensation unattractive.

Salaries for more experienced engineers tend to rise quickly. At HCL Technologies, one of India's largest engineering services companies, salaries average about $22 500, says Ramesh Pillai, head of aerospace practice at HCL America, in Frisco, Texas. That's well below the level in developed countries, but then again, the cost of living is lower in India also.

Pillai notes that the high salaries offered by expanding firms are pushing employee retention to the fore. ”We're doing a lot to automate tasks within our company,” he says. ”We want to make sure everything is easy to us so we can cut down on attrition.”

HCL also uses temporary assignments as a technique for retaining key personnel. ”We do a lot of global training, bringing employees to the U.S.,” says Rajan Bedi, director of HCL Global Automotive Business.

Plum jobs are just one form of what economists call ”nonpecuniary remuneration”--compensation that can't be traded on the open market. Many other such perks suggest themselves. During the dot-com expansion, employees wore jeans, guzzled free soda, and brought their dogs to work. Today's job market is good, but it's not that good.

About the Author

TERRY COSTLOW, a technology writer in Chicago, covers engineering careers and the impact of technology on society.

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