What’s An Engineer Worth?

There’s a lot of confusion in the market.

I’m seeing wild bid/ask spreads of 50% for all levels of engineers.

A major international processor budgets $80,000 for an engineer in the U.S. Nine months later, the position remains unfilled, and two more engineers have left.

An engineering/construction firm budgets $80,000 – $90,000. The position is filled by creating a different position worth 50% more.

I have requests to pick up younger engineers who might move for a pay bump, to take their incomes up to $50,000 or $55,000.

Meanwhile, candidates who haven’t even graduated report offers ranging from $55,000 to $70,000. Stranger, the candidates, themselves, are mystified as to why the same people would be offered $55,000 by one company and $70,000 by another.

Supply – Zero

There is, in my opinion, a deep and ominous shortage of engineers in the United States. It comes from a combination of retiring Baby Boomers, years of sick economics, and the grudging decision by the Fortune 500 to focus on opportunities overseas where they are welcomed.

The number of unemployed engineers in the United States is basically a rounding error. Generally speaking, engineers are only unemployed if they are unavailable. Everybody else is cashing checks.

Incoming Supply – Weak

Tragically, U.S. students score poorly in math and science, compared to their counterparts in foreign industrialized nations.

When I’m searching for an engineer with serious technical capabilities, odds are, I’ll be presenting candidates who are not U.S. citizens.

Demand – Strong, Uneven

Energy is bidding up the market. The students who share information about offers they get – ranging from $55,000 to $70,000 – can trace the top offers back to oil companies.

We can question whether the multiple $70,000 bids are just bait to keep people available, but we can agree that high dollar conversations will skew the market, hire or no hire.

Go Green And Go Bust

Fake jobs – created by politicians to entertain TV viewers – are also confusing the market.

Solar companies, battery companies, failing electric cars, and how about that high speed railway? All this pulls talent away from high demand industries, even as government funded start-ups blow up.

Who’s Getting Hired?

Everybody. I can easily find you 70 year old engineers who work on contract, by-passing health insurance issues.

I only post jobs as a courtesy. At best, one in ten applicants is a U.S. citizen.

(By the way, job posting services are under pressure. They now pitch accounts like they’re selling sweaters in a department store. I’m actually getting “Christmas Specials,” offering “50% off” on annual contract prices.)

Increasingly, recruiters source candidates right out of their existing jobs.

Employers who saw no reason to “coddle” employees are surprised when high achievers resign.

Baffled managers then make high dollar counter offers, bidding up the market even further.

Are Grads Worth 40% More?

No. You are seeing the beginnings of raging inflation.

Look at it this way…

Is food up 40%? Yes.

Is health care up 40%? Yes.

Is gas up 40%? Sure. Sometimes 100%.

So, it’s possible that the grad that used to get a $40,000 offer might now get… a $56,000 offer.

The Price Of Admission

But here’s the thing…

Even as I criticize the quality of U.S. education, I am in awe of the price increases schools can command.

For an employer to entice a grad into the industry, it’s necessary to cover the ever-rising cost of living, the $24,000 student loan, and the higher taxes required to cover the higher pay required to offset all this stuff.

Is there any wonder why pay is going up?

The students don’t have much choice in a rigged game like that.

They graduate, the way medical students used to… Highly regulated, deeply in debt, and seriously requiring enormous income just to – hopefully – break even.

The mind-blowing difference today… Med students have lost their income leverage. Everything is high except their pay. Would you like to talk to nurses taking a 20% pay cut from one year to the next? Bye, bye nurses.

The Price Of Projects

All this leads, inevitably to higher project costs.

We haven’t seen it yet, but it is coming.

We will either read stories of bridges falling down, or we will pay up and get engineers who can do it right.

Engineering companies tell me about the crunch between costs and project prices.

I get that. I’m also confident that this will resolve quickly. Project prices will go up.

Successful engineering companies will begin to show their customers how to justify higher prices. They will push benefits, even sharing efficiencies. And they’ll associate low bids with failed projects, causing expensive remedies, legal fees, even government intervention.

These flickers of inflation are a new thing to a lot of people.

In time, price may not be the issue.

The follow up challenge becomes how to get anything – or anybody – at all.

The Price Of Engineers

At the employer level, if the oil companies buy up all the top tier engineers, then the best of the best are already gone.

Below that, you either pay up and get what you can; or you try to hold onto your budget and settle for sub-par talent.

Bottom Line

If you’re an engineering company, you need engineers. Preferably, engineers who get things right.

If your competition doesn’t have engineers, then they shouldn’t be your competition.

They should be suspect.

They will likely be low-bid because they need the money.

And they will be unprepared to do the work they are awarded.

The top engineering firms will educate their customers that cheap is always too expensive.

Bid prices will go up.

And preferred suppliers will reassure their customers with value-added competence that will more than justify their higher prices.