Engineers Win in Market Economy

In a Free Market Economy, Price Is a Reflection of Supply and Demand

Mike BacidoreBy Mike Bacidore, Managing Editor

Global currency fluctuations aside, prices increase when demand exceeds supply. The rising price of oil offers an example. Supply is at capacity, but global demand continues to increase. In case you hadn’t noticed, energy costs are up.

So, why doesn’t the notorious engineer shortage have the same effect on salaries? If the demand for engineers is greater than the number of qualified candidates to fill those jobs, then shouldn’t companies be paying more for them?

Yes. And, according to our annual salary survey, they are.

The average salary of a controls engineer is up more than 8%. That’s the second largest jump since we began tracking what controls engineers are paid at the beginning of the new millennium.

Of course, those individuals who have been in the industry the longest reported higher pay. And compiling degrees translates into more money. But what about the rookies? What about those controls engineers just entering the profession? Our survey data tells us that 15% of rookies are female, quite a remarkable influx of women headed down this career path. But our salary data for rookies was insufficient and therefore skewed, so we turned elsewhere.

New college graduates with degrees in the engineering and computer science fields boasted the highest average starting salaries, according to a the National Association of Colleges and Employers’ Spring 2008 Salary Survey report. Chemical engineering majors top the list at $63,616, with computer engineering, computer science, industrial/manufacturing engineering and aerospace engineering among the five top-paid bachelor’s degrees. “There is competition among employers for many graduates in the technical disciplines,” says Marilyn Mackes, executive director of NACE. “The high salary offers we’re seeing reflect that.”

Starting salaries for individuals with engineering-related degrees increased by about 10% across the board, compared to the previous year, according to NACE’s report. As a reference point, the business disciplines seemed to be feeling the effects of changes in the economy and saw little movement in their average starting salary offers. For example, the current average salary offer to accounting majors—$47,429—is literally just a few dollars higher than the average these grads posted in Spring 2007—$47,421. Business administration and management graduates didn’t fare much better: Their average offer increased 0.3% from $44,048 to $44,195.

So pervasive is the perception of an engineer shortage that ABB held a five-member panel discussion, “Crafting Business Strategy to Address the Problem of Demand Exceeding Supply for Human Capital,” at its Automation World conference in Houston this past April.

Jocelyn Scott, DuPont’s engineering vice president, explained that companies recruiting young engineers on college campuses are addressing the symptoms, but not finding a cure for the problem. “Fighting at the end of the pipeline is useless,” says Scott. “We have to start much earlier to help create people with the interest and skills to go into these technical fields.” Addressing the reported shortage of engineers will require collaboration among industry, government and schools starting at the kindergarten level, she claims.

“This is the problem that keeps me awake at 2:30 a.m., and I don’t like it,” says Veli-Matti Reinikkala, president of ABB Process Automation. “We’re now losing some of our most senior people. In Europe, many people born after World War II are retiring, and those older than 65 are already gone.”

Margaret Walker, Dow’s vice president of energy solutions, technology centers and manufacturing/engineering work processes, expresses frustration in addressing persistent, long-term workforce scarcity issues. “We’ve been talking about this for 20 years, and we never quite get to a solution,” says Reinikkala. “Now there’s a lot of capital being invested, but there’s still a lack of people. I think we need to get back to basics and get the mature audience, the young people and everyone in between excited in these fields again.”

To enhance its own workforce, John Thuestad, president of Alcoa’s primary products division, reports that Alcoa regularly sells itself to its extended communities and operates 30 to 40 apprenticeship programs. “We pay college students to come in and learn about Alcoa, and it also gives us a chance to evaluate them,” says Thuestad.

And according to NACE, new college graduates have an edge over their competition if they’ve participated in an internship or otherwise gained work-related experience.

Approximately 95% of the organizations responding to NACE’s Job Outlook 2008 survey said candidate experience is a factor in their hiring decisions. More than three-quarters are most interested in relevant work experience, but nearly 20% give candidates points for any type of work experience. On the question of how the experience is gained, respondents were split.

“Slightly more than half of employers told us that they didn’t have a preference on how the candidate gets experience, but nearly as many—47%—said they prefer candidates to gain their experience through an internship or cooperative education program,” says Mackes.

In addition, results of a separate NACE study show that employers are placing more emphasis on internship and cooperative education programs to grow their own employees. “Not only does participation in an internship make the student a more attractive candidate, but also it can be an avenue to a job,” says Mackes.

Want More? Read our additional coverage of the panel discussion on the engineer shortage, Panel Seeks Ways to Attract and Retain Workforce.”