1989 salary survey: salaries slide, bennies bashed.

89 Salary Survey: Salaries slide, bennies bashed

As this is being written, the stock market is making new highs, business is generally good, and third-quarter profits look fairly solid, even occasionally impressive. The man or woman on the street, Mr/Ms Average Guy/Gal, feels pretty good and continues to spend, while boosting savings a little, from 3% to 5%. Sure, there are plenty of things to worry about long term, but the short term is not causing much lost sleep.

Meanwhile, Mr/Ms Composite ME is not feeling as complacent. Returns from our annual salary-survey mailing show salaries for manufacturing engineers inched minutely higher this year. The composite ME earned $43,651 in '89 versus $43,575 last year, but with sampling error, the reality could be a percent or two higher or lower. Certainly, you're on a plateau. Meanwhile, 46% of you either took a cut in medical-insurance coverage or saw an increase in out-of-pocket cost that wiped out your raise.

The conclusion is that ME salaries are not going anywhere fast, nor will they soon. At the same time, benefit packages are getting squeezed by the effects of competitive pressures on manufacturing everywhere. To take some measure of this effect, this year we added a table in our survey for respondents to categories the extent to which each of 14 benefit categories where changed in the past two years, and state how they felt about those changes.

This created a mountain of minutia: things like the number of canceled dental plans in Montana or how many seniors in aerospace plants are chagrined over a lost parking space. To cram some of these data in for you stat freaks (and presuming most of you have been with us in past survey years), we'll skip the detailed analyses of things like salary differences due to education, experience, company size, etc, and let you fondle the numbers for yourselves.

Some anomolies, though

Among the more curious, head-scratching results: * Although raises averaged 5.5% (up from 4.9% last year), the actual increases over our 1988 survey numbers were much smaller for everyone: Junior MEs increased only 1.6%, MEs 3.7%, Senior MEs 4.5%, ME supervisors 0.6%, and ME managers only 1.3%. If you are each getting the increases you claim, why hasn't the composite shown a year-to-year increase of anything near that magnitude? * The $2700 pay difference between those with bachelor degrees and these seeking a masters is obviously an age difference, not a pay cut for those seeking higher education. The $50s and up strata for those with masters degrees proves that this extra effort will pay off. * Experience pays off for some. One fourth of those with top-bracket salaries (above $60,000) did so without benefit of a bachelors's degree. * Despite a variety of individual ire at one or two recent cutbacks, the overall consensus on your total benefit package was remarkably benign. Asked to rate your total benefit package, 12% felt it was generous, 40% checked adequate, 28% said typical of this industry, 18% voted for substandard, and only 1% claimed it was abominable. Predictably, benefit-package satisfaction increased linearly with job category. * The company giveth, the company taketh away: Greatest incidences of benefit cancellations were profit sharing (experienced by 4.5%), travel for training (2.5%), and retirement (2.4%). Least incident (all a minuscule 0.2%) were cancellations of medical, office space, and access to computer. (Because business travel is such a pain, some said they were ecstatic when it was canceled.) * Then there were those who have never enjoyed certain benefits: profit sharing was unknown to 29.3%, followed by parking privileges, 14.1%; dental coverage, 11.4%, inhouse training, 8.9%; travel for training, 8.6%; and secretarial help, 7.6%. At the tail end of the never-had list was medical coverage, unknown to only 0.3%. * There are strong implications that monetary rewards for job longevity or company performance are doing as much harm to morale as benefit. While 31% are pleased with their retirement packages, an equal number are upset with recent cutbacks. Similarly, 28% are pleased with their profit sharing plans versus 37% who are upset. In both of these benefit categories, nearly one in six are very upset, so for management to mention either of these topics to these employees will only make them hotter under the collar. * Greatest area of benefit satisfaction - by a huge margin - was access to computers. One half of you are pleased with your gift of this new tool, while only one in eight feel left out by slow computerization of their engineering tasks. * Obviously, some companies are compensating for the loss of major percs by doling our minor improvements in relatively inexpensive ones. It was amazing (amusing?) to see how many of you rated your major bennies negatively, yet responded with enthusiasm to an improvement in your parking space. (Maybe this means a lot more in those huge companies with massive lots.)

Major medical

And now for some specific quotes from survey respondants. Keep in mind that over 80% did not feel the need to speak out - we heard only from those with something to get off their chests.

A common complaint is that employee contributions to hospitalization are increasing rapidly, not only in dollars, but in percent of actual premiums. Says a young Wisconsin ME: "Our medical coverage cost increased while benefits were cut. Upper management is covering their profit numbers, not properly rewarding those who go the extra mile, and unaware or indifferent to our deteriorating morale problems!"

Predicts a senior project engineer: "It's only a matter of time before health insurance will require more of my money. With salaries flat relative to inflation, this will represent a pay cut."

Mildly upset about cuts in medical coverage, an IE from South Carolina says: "I realize the company's position on benefits is mandated by exterior forces, but the health-care industry could help by being more cost effective."

A Michigan junior ME reports his corporation is self-insured: "But the deductibles, paperwork, and coverage are a real nuisance!"

A Pennsylvania engineering manager explains that his small company's limit on its own contributions to health insurance is forcing employees to an HMO option.

Complains an ME in North Carolina: "Medical insurance is one of the greatest benefits we have. Ours has been cut to the point where you're told when you can or cannot go to the doctor. This must be changed!"

But a die designer (who almost died) at a 300-employee Michigan firm loves his medical plan (and the bonuses that boosted his low 30s base salary to over 40): "This company funds (100%) and administrates its own medical/dental package, and the results have been outstanding. In the past six years, I've had three major surgeries and lengthy recoveries. All bills were paid by the plan (no deductibles) plus I received full salary (except for bonus pay for hours not worked). At 55, I really appreciate this plan, which also covers my wife, and I pray that the economy does not force any change."

Bonuses blues

Bonuses work both ways, many are finding out. Says a chief engineer, at a small NY plant: "Our company has kept base salaries low and supplemented this with large sales-related bonuses. Now, that sales are low - and my bonus reflects this - my bottom line is less than my counterparts elsewhere. I feel this is not fair because I have no control over the economy that affects sales."

A Wisconsin project engineer is also dissatisfied: "Our bonus plan is a joke - just deferred salary. We need a profit-sharing plan with 100% participation."

A young tool & die design engineer agrees, feeling profit sharing would be a valuable incentive plan: "Our company has lost several key people due to lack of pay increases. If a good profit-sharing plan were in effect, employee retention would not be as much of a problem."

Vanishing retirement

Some retirement plans have taken a beating. An engineer in Minnesota feels short changed: "For retirement, our company sets aside 3% of our salary per year (payable in a lump sum on retirement or termination); i.e., one year's wages every 33 years!"

A Pennysylvania ME reports a common strategy: "Our pension package was canceled and converted into an annuity. It was replaced by an ESOP."

Adds one ME manager: "Our greatest change this year was the elimination of all medical coverage upon retirement. Everyone was very upset!"

Reports an Indiana ME: "Our retirement package is poor and has performed poorly as well, leaving many employees with very little retirement benefit."

A veteran ME manager in Connecticut was a couple years from retirement when his company was taken over: "I lost 25% of my retirement pension."

Complains a senior ME earning an upper 30s salary in Alabama: "After working for this company (now under its third owner) for 30 years, my retirement benefit would be under $150/month. That stinks!"

"Who need's retirement?" asks a plant engineer who's very cautious about believing in his company's retirement plan. "I need more time off now. Money is not that important."

Trade bucks for bennies?

An ME manager with a salary near $50,000/yr wonders: "I changed companies a year and a half ago for more salary and less benefits. I have not decided whether this move was very wise or not."

Says an ME manager with a salary in the mid-30s: "Our benefits and working conditions are above average, but our salaries are abominable. I'm making efforts to move on."

A Georgia ME manager: "Although our benefit package is substandard, it's typical of this industry. We lose many people to the local defense plant due to poor benefits. Yet, compared to other countries I have visited, our salaries more than make up the difference in benefits."

An ME earning a low-30s salary at a large defense plant in Texas: "The pay is not great here, but the benefits, especially medical, help make up the difference."

White-collar blues

Some MEs are wondering whether they chose the right color careers.(*) An ME in Wisconsin is upset at benefit differences between salaried and hourly at his plant: "Company business is on the decline and benefits have followed this trend. Union benefits, though, are superior to salaried, and I have found this to be the case in most companies where I've worked (with the exception of GM). Yet, management always tries to impress us with the advantages of being salaried!"

(*)A recent article in the local newspaper (bragging that Ohio assembles 12.5% of the US's auto output) listed annual payrolls and employment at various auto plants. Dividing the two yielded these average salaries: all Ohio auto assembly plan's $40,190; Ford's Lorain assembly plant, $43,928; and Ford's Walton Hills stamping plant, $53,250. Seven of eight of these people are hourly. (Our average ME salary in Ohio: $41,525.) A senior quality engineer for a large agricultural-equipment firm in Iowa agrees: "Our company has increased wages and pension benefits for hourly employees in the last two union contracts with no salary or pension increases for salaried people. Our company is more concerned with the bottom line than employee morale or the future of the product line and facility. Virtually every salaried employee can tell you how many days to their earliest retirement, yet very few will be able to retire then, due to lesser benefits than hourly employees."

Warns a process-development engineer for a computer firm in California, alarmed at the trend toward hiring temporary employees to avoid the benefit package and overhead of regulars: "If this continues, I believe we are going to see more employees seeking unions at companies without them."

Laments an underpaid 20-yr veteran ME in Pennsylvania: "If I had to start my working life over, this time I would listen to my father and become a plumber."

Young and learning fast

A young degreed ME earning less than $30,000 at a large printing-press company in New England feels companies don't appreciate their young engineers: "They act like they don't want you to stay. After you start, they compress your salary and tell you they're paying you what you're worth. I know darned well I can get more at another company because I've been looking for work. I'm looking forward to your December issue - it will definitely be food for thought."

A young New York ME with nine years experience and salary finally in the 40s: "Until this position, I had felt unfairly compensated, and this move (a year ago) brought me up to what I feel is a competitive wage. This year, a part of each employee's salary will be tied to company performance. The percentage varies from 5% to 50% or more (at my level, it's 17%). It is paid quarterly, but considered part of your base salary and not a bonus." (But if it disappears, he'll be back in the 30s again.)

Warns a manager of young MEs at a very large Michigan auto plant: "I believe starting salaries, which continue to climb, have overvalued raw, young talent in relation to more experienced employees. Keeping some equity within a work group, based on each member's contribution, is very tough for a manager. Experienced employees are continually `capped off' or `mid-pointed' while newcomers get distorted salaries. Eventually, both our expectations in the newcomers and the morale of the group in general take a beating."

An applications engineer in Tennessee agrees" "It's been going on for years - new people are brought in at higher rates than those already here, with no adjustments made for those in place. One must change jobs to get that increase."

Seniority's no defense

Seniority no longer equals security, particularly in the defense industry. An ME at a large defense plant in Minnesota reports many recent job cutbacks and layoffs, even for many with over 25 years service: "It's not the young help going," he says.

A manager of value engineering for a large aerospace firm in Washington state with a salary in the mid-sixties says he had to provide his own PC, and a production engineer for a large defense firm in Minnesota has decided to leave his company and start his own business: "I was passed over for promotions because I wasn't rated E2 long enough, despite a rating of outstanding by my supervisor. I'm taking this financial risk and throwing away 12 years because I don't believe I am adequately compensated for my performance. I produced over $800,000 in cost reductions last year alone."

A senior designer, a high-school grad, upper-20s salary, 15 years with a large metalworking-equipment maker in Ohio: "Once you reach age 50 you must walk the straight and narrow and hope you don't screw up in a major way. you of your job because you won't have anything to say about it if they do. There's no early-retirement safety net for us."

Reports a production engineer for a large defense firm in Indiana: "The general trend here is a company sliding backwards. Our bookings are less and we're in trouble trying to adequately support those we do have. This may be typical of the electronics defense companies of today, but I still feel that upper management has let us down and is not doing their best to lead us to the front line of companies competing for what dollars are available. The pay, benefits, and leadership here give me a bad feeling."

Big-company blues

Neither is their safety in bigness. One senior project engineer in Texas is worried about the down-sizing of management at his large company and resulting disappearance of a ladder up: "It limits one's potential for growth and creates an increased risk of job plateauing."

A senior project engineer in Texas: "One of the benefits of working for a Fortune-50 company should be advancement. Our company is currently down-sizing management and forcing ex-managers back into the technical side, which is disastrous. The company is openly talking about job plateauing, which is very upsetting to someone with 30 years to retirement!"

An ME project manager in a large-but-shrinking California defense plant: "Our company is in a workforce-and cost-reduction mode. Incentives are being offered for early retirement and nonperformers are being laid off."

Says a Michigan senior ME, noting major cutbacks in training funding and office space: "The current merit system will breed mediocrity and cause good young engineers to seek employment elsewhere. As far as I'm concerned, GM's benefit package is no longer an industry leader! Any comments by top management on this are just lip service!"

Buyout blues

From a distraught senior ME in North Carolina: "If there is hell on earth, it is working for a powerhouse corporation for over ten years, and then seeing it crumble under a leveraged buyout in less than three years. Death to corporate raiders!" A Texas director of quality assurance agrees: "LBOs are tearing up American industry."

A Connecticut ME explains why his small metalworking-equipment company has experienced severe cutbacks in their benefit package: The results of two leveraged buyouts in the past five years. Adds a tool and die engineer in Ohio: "My salary is now equal to what it was four years ago - before all employees took a pay cut to buy the company with an ESOP. Instead of pay, we're accumulating shares of stock."

A senior project engineer with a masters degree at a Massachusetts ceramic manufacturer: "During my four years with this company, it has been restructured four times. Loyalty is gone; most employees are disenchanted and bitter. The high performers are either looking elsewhere or have already jumped ship."

Other reasons for low pay

Acknowledging his low-30s salary is on the low end of the pay scale, a project engineer at a small Minnesota machine-tool company is upbeat, nonetheless: "The diversity of my job keeps things interesting, and this is a low-stress work environment. Basically, the small company is worth the lower pay."

Table : Salary effect of supervision:

Supervise no MEs                    $38,728
Supervise three or more             $53,372

Effect of plant size:

Under 200 employees

Average salary                      $40,531
Medical cutbacks                     42.5%
Retirement cutbacks                  33.6%
Benefit package is substandard       23.4%

Over 2000 employees

Average salary                      $49,413
Medical cutbacks                     39.7%
Retirement cutbacks                  11.6%
Benefit package is substandard       12.4%

A CAD/CAM manager for a small aerospace supplier in Indiana: "It's difficult to improve benefits when your firm is one of a handful of businesses doing well in a locally depressed economy. Without competition for jobs, there's no incentive to bring salaries and benefits in line with this industry on a national level."

Some say it goes with the territory. A Georgia ME: "I believe our benefit package as a whole is below the national industrial average because our plant's in the South." And Iowans feel neglected too, says an Iowa QC manager: "Our state is becoming known for its low wages, and new businesses are moving in to take advantage of this. For those here already, it becomes difficult to get better wages and benefits."

Management pays itself

too much

CEO salaries have often shocked those less fortunate. A veteran ME for a very large South Carolina company is miffed: "Upper management continues to reward themselves with major salary increases and special bennies at the expense of lower management and hourly employee benefits. At the same time, they complain about the adversarial system rampant in this country. Who's perpetuating it? Corporate America is courting disaster, and we will all share in it."

An ME at a large plant in New Jersey is also perturbed: "I'm greatly annoyed when our yearly pay adjustment is pushed back a half year, but the VPs continue to have their salaries increased."

Pleased as punch

As usual, some of you are much more fortunate - well pleased with your company's progress and the effect this has on your pay and working conditions. A 35-yr veteran ME has enjoyed the past six years at his present employer, a mid-sized consumer-products maker in Pennsylvania: "This corporation is people oriented, and I would like to spend the rest of my career with them."

From an appreciative IE in appliances in Illinois: "Our new boss has given us more freedom. He doesn't want `Yes' people - there is room to disagree. This has been a very good situation for the past 14 months."

Although a 40-yr veteran ME manager would like his large New York company to spend more time explaining changes in benefits - exactly what's lost or gained - he remains very pleased: "This company has been great to me and my family. I wish I could contribute to this corporation more, even after retirement. That's how great they have been!"

An advanced ME with 45 years experience was glad to see his company lift their mandatory retirement requirement: "They recognize service toward pension for employees hired after age 60 and credit is acquired for years worked past 65."

An ME for an agricultural-equipment firm in Iowa: "This company does an excellent job in providing a creative and free environment."

A Kansas ME manager for an agricultural firm sounds optimistic: "There appears to be continual movement toward `pay for performance' and increasing management/employee expectations for timely results."

A California ME loves every aspect of his benefit package: "This is an extremely good company."

Table : PERCENT WHO HAD CHANGES IN BENEFITS

                          Percent Who Had    Percent Who Had
                            Improvements        Cutbacks
Benefit                   Major     Minor    Minor     Major
Medical                   4.0        10.7    34.0       11.6
Dental                    4.9        11.1    14.6        3.2
Life insurance            2.5        11.7     6.6        2.6
Business travel           2.0         8.9    13.3        5.8
Travel for training       3.0         8.8    11.2        8.4
In-house training         7.2        15.3     8.5        4.4
Training reimbursement    2.4         7.1     6.6        2.1
Retirement                6.6        18.6     9.6        6.3
Profit sharing            8.3        17.2     8.0        5.8
Office space              9.1        13.4     9.7        4.7
Secretarial help          2.6         9.6    13.2        8.6
Parking privileges        3.2         5.8     4.6        2.4
Computer access          24.2        21.4     4.4        1.5
Tech-book access          3.5         8.3     1.0        0.5
         YOUR NET REACTION TO BENEFIT CHANGES
                          Percent Pleased     Percent Upset
Benefit                   Very     Mildly    Mildly  Greatly
Medical                   8.6        17.7    36.3       10.9
Dental                    9.3        19.9    22.0        5.9
Life insurance            6.7        21.5     9.6        2.5
Business travel           6.6        13.6    11.0        3.9
Travel for training       7.5        13.2    17.0        8.8
In-house training         8.8        18.3    15.4        9.0
Training reimbursement    7.8        16.0     9.3        4.8
Retirement               10.2        20.9    16.6       14.8
Profit sharing           10.4        17.4    21.3       15.8
Office space              9.6        16.8    13.0        5.3
Secretarial help          5.8        11.8    19.1        8.6
Parking privileges        4.1        10.8     6.4        3.4
Computer access           25.8       22.6     9.6        4.7
Tech-book access          12.3       18.9     2.0        1.0

Table : SALARY AND BENEFITS BY REGION

                                    Sample   Rank of Benefit
State              Salary             Size     Satisfaction
MI                $49,581             8.2%         5
CA                $49,526             6.3%         3
CT/MA             $48,204             5.4%        11
NJ/MD             $45,867             3.3%         9
IN                $45,200             4.4%        13
TX/AR             $45,062             5.3%         2
IA/MO             $44,000             4.4%         6
NY                $43,024             4.7%         7
MN                $42,533             3.3%         1
PA                $42,211             6.3%         8
IL                $41,730             9.9%        10
OH                $41,525             8.9%        12
GA/FL             $41,448             3.2%        14
NC/SC             $40,750             3.6%        16
TN/KY             $40,182             3.7%         4
WI                $37,797             6.5%        15
          SALARY AND BENEFIT DIFFERENCES BY INDUSTRY
                                       Rank of Benefit Satisfaction
Industry                    Salary   Total Pack   Medical   Retire
Automotive                 $46,353        3          7        7
Aerospace                  $45,505        2          6        9
Computer/electronic        $44,098        4          2        2
Metalworking equip         $43,978        8          8        5
Misc industrial            $42,884        5          5        4
Defense                    $42,600        7          4        1
Consumer products          $42,497        4          3        6
Agricultural/off highway   $41,390        1          1        3
Appliance                  $40,571        9          9        8