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?

 

[GregLocock]

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

 

[JTMcC]

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.

 

[GregLocock]

"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

 

[JTMcC]

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.

 

[GregLocock]

"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

 

[JTMcC]

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.

 

[MedicineEng]

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

 

[ludikris]

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-

 

[CanEngJohn]

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.

 

[ludikris]

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-

 

[IRstuff]

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

 

[QCE]

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

 

[ludikris]

QCE-

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

E-

 

[Iskit4iam]

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).

 

[PSE]

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&quot 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,

 

[Iskit4iam]

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.

 

[JTMcC]

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.