Are Engineers Underpaid? 7 Discussion Points

Are engineers underpaid? No. Engineers work in a free market and are paid based on their skill set. The onus falls on the engineer.

To point out, I hear this type of talk in almost every profession. Even in the National Basketball Association (NBA).

Non-superstar NBA players constantly harp about their low pay. They mention how short their careers are, and how Uncle Sam takes half their paycheck. In 2019, the rookie minimum salary was $893,310. Yet, these players still voiced their displeasure.

The point is, context and perspective are important. To understand engineer pay, we will discuss the 7 following subjects:

  1. Subject matter difficulty does not dictate salary
  2. The variance of skillsets and abilities among engineers
  3. The different types of engineering work
  4. Engineering labor market
  5. Artificial control over the engineering labor market
  6. The impact of the modern standard of living on engineering salaries
  7. Future of the engineering profession

Engineers are underpaid compared to who?

To answer, “are engineers underpaid,” we need to first define the comparison group. Are we comparing engineers to doctors, pro athletes, dentists, entertainers…

With each comparison, we must equally evaluate every variable on both sides. For example, let’s compare the average salaries of senior engineers with medical doctors in San Francisco.

Type of workAverage salary
Mechanical engineer$129,000
Electrical engineer$130,000
Civil engineer$135,000
Software engineer$140,000
Primary care$261,000
Dermatologist$439,000
Anesthesiologist$492,000
Cardiologist$539,000

Clearly, medical doctors have a salary edge on paper. But this table doesn’t tell the entire story.

Doctors don’t earn the big bucks until their mid-thirties. Plus, they have a mountain of student loan debt to pay off.

While an engineer can start earning a decent salary at the age of 21. They also can invest their money for almost 15 years before a doctor. Compound interest works wonders, and engineers don’t have much student loan debt.

Now, I’m not saying on average engineers will earn more than doctors in their lifetime. But my point is, the comparison is more nuanced than you’d think.

#1 Subject matter difficulty does not dictate salary

math chalkboard with geometry algebra calculus

No one would argue against engineering being a difficult major. A difficult major doesn’t equate to higher pay though.

In fact, there are many lower-paying jobs than engineering, which are more difficult. For example, construction work, working manual labor in the blistering heat.

Due to the low barrier of entry for construction work, the supply of workers is high. This allows employers to not pay top dollar to attract employees.

Similarly, tens of thousands of engineers with the same skill set graduate every year. In return, engineering is no longer a high-end exclusive club.

I know many engineers would adamantly disagree with me, after surviving engineering school. They’d argue they’re entitled to a high-paying job after the rigors of school. But the market doesn’t care for your feelings, nor what you perceive to be difficult work.

Now, highly skilled engineers are a completely different story. They do get paid the big bucks, because their talent is rare. Only the highest bidder can attract their services.

#2 The variance of skillsets and abilities among engineers

In the NBA, every player can do something unique, including the last man on the bench. It’s why NBA players demand the pay they receive.

But in engineering, it’s a different story. Many engineers graduate with subpar skills. For one,  engineering work experience always trumps classroom learning. Also though, many don’t have a passion for the work.

To make matters worse, the low-level work has become nearly automated through software. This leaves unskilled and unmotivated engineers fighting for the scraps. And having a diploma reading “engineer” won’t save you.

On the flip side, there are creative engineers who designed the Golden Gate Bridge. Also, the brilliant NASA engineers who sent man to the moon. Engineers of this caliber are rare.

The point is, engineers aren’t all created equal in skillsets and motivation. I have friends who earn over $500,000 as employees, all because of their tenacity. After graduation, they crafted specialized skills, which set them apart from their peers.

#3 The different types of engineering work

first launch of the spacex falcon heavy rocket
The first launch of the Space X Falcon Heavy rocket (Photo Credit: Bill Jelen)

Just because a job has “engineering” in the title, it doesn’t mean you’ll flex your mind much. You may only be a glorified paper pusher, or just counting bolts all day.

I know many engineers who never do any technical work. I even have engineering buddies, who tell me a kid in high school can do their jobs.

So why would an employer pay big money for this level of work? They wouldn’t!

And as long as engineers apply for these jobs, an employer will choose them over a high school kid. It goes without saying, not all engineering jobs are equal. Some are amazingly cool, while others you’d be embarrassed to tell your family about.

Similarly, it’s why many NBA players demand trades all the time. A role player on one team may be the leading scorer on another team. In return, the money follows.

#4 Engineering labor market

Engineers operate in the free market. And in the free market, you’re paid what you’re worth.

If a position demands $40,000 per year, then you’ll be paid $40,000. The market doesn’t care what you think or feel. To better understand, I’ll go over a burger-flipping business example.

Say I offer to employ you to flip burgers for $10 per hour. But, you want $20 per hour, or you’ll turn down my offer.

If you reject my offer, I’ll search for someone equally qualified who will accept $10 per hour. If I can’t find anyone to accept my offer, it means my wage is too low. People can make more money doing the same work at another burger-flipping business.

So, I need to raise my hourly wage until someone bites. But, if I do find a string of people who will work for $10 per hour, it means you’re overvaluing your skillset.

In short, there’s complete freedom in the marketplace. I’m not forcing anyone to work for me. It’s the job seeker’s choice to work for me or not.

But, every person needs to provide more value than they cost to a business. Otherwise, most jobs wouldn’t exist

Engineers in the free market

Engineers aren’t forced to line up for these “so-called” underpaid engineering jobs. These engineers make this decision willingly.

Clearly, some people don’t think these engineering jobs are underpaid. In fact, this is why a $40k-per-year engineering job has so much competition.

Now, one person can argue this issue exists because not enough regulations exist. Companies are exploiting the oversupply of engineers.

At the same time, I can argue engineers take these jobs as they’ll do anything to get by. Maybe it beats the salary they made in the country they immigrated from, by a mile. Or, they don’t mind a lower standard of living with roommates.

These people, probably don’t consider themselves underpaid.

#5 Artificial control over the engineering labor market

The American Medical Association (AMA), artificially controls the medical doctor labor market. They limit the number of accredited medical schools and residency spots.

Naturally, salaries increase because of low supply and high demand. To point out, I’m 100% for regulations to limit supply, as long as healthcare quality remains high. I don’t want an amateur doctor to cut me open on the operating table.

Gatekeeper of the engineering profession

Engineers who design bridges can kill magnitudes more people than incompetent doctors.

Yet, the engineering profession doesn’t have a similar AMA gatekeeper. There’s only the NCEES, an organization focused on advancing professional licensure for engineers. They are not on par with the AMA though, in controlling the number of graduating engineers.

The NCEES does try to control engineer headcount through licensure. There are dilemmas though, like if “engineer” should be a protected title.

In short, in engineering, university acceptance rates are not very restrictive. Meaning students with watered-down skills can become working engineers. Thus, the pay naturally drops due to the increased supply with the free market we discussed.

School Medical School Acceptance RateEngineering Undergrad Acceptance RateEngineering Graduate Acceptance Rate
Stanford University2.3%5%13%
University of Arizona2.3%83%51%
Virginia Tech2.3%72%22%
UCLA 2.4%12%27%
Brown University2.8%9%28%
University of North Carolina3.6%52%18%
Harvard University4.1%4%9%
John Hopkins University7%12%35%

Engineers emulating medical doctors

One way to steal a page from the AMA is to increase the education requirement for engineers.

The NCEES heard loud and clear. They unsuccessfully tried to add a Master’s degree requirement for P.E. licensure. Like other professions, this would raise the bar of admissions through added education. In return, reduce engineer supply and kick up demand.

But, beyond padding some people’s pockets, is it logically the best decision? I say no, because some lines of engineering don’t need advanced courses. Also, the quality of engineering work isn’t suffering today.

Then there’s the issue of poor classroom teaching. Major changes are required in engineering education.

Furthermore, unionization in engineering isn’t the answer either. In the end, engineers should level themselves up to become higher in demand like specialized doctors.

#6 The impact of the modern standard of living on engineering salaries

Our modern standard of living depends on low engineering labor costs.

Your favorite products may seem expensive today. Think of video games, TVs, and kitchen appliances.  They’d instantly become unaffordable though if the pay of all engineers doubled.

This is basic economics. A company determines a product’s price by adding together the following costs:

  • Material
  • Labor
  • Manufacturing

Where labor is a large percentage of the cost. And maybe this is why a force similar to the AMA can’t control the engineering profession.

As a result, the onus falls on engineers to drive up their own value in the labor market.

#7 Future of the engineering profession

white cyborg finger about touch human finger

Engineering isn’t safe from wage deflation. Salaries in engineering hinge on the basic supply and demand curve. And the future isn’t bright for engineers who aren’t willing to bust their asses.

Below are four variables, engineers need to keep an eye out for in the future.

A heavy push of kids toward STEM fields

The education system heavily pushes STEM fields to kids. This surge in interest is flooding the market with engineers. Naturally, the supply increases, and demand drops.

What’s more, there’s not a shortage of engineers in most fields today. The supply is only increasing, while further saturating the field.

One caveat though, many of the kids lack interest in STEM fields. This leads to lower-skilled workers, who are greater in abundance.

Globalization fueling greater immigration and issuance of H1B visas

Before you only competed with people in your own backyard. Today, you compete with people from across the globe. This further increases competition for every engineering position.

Even more, more companies outsource to reduce overhead costs. It’s a surefire way to increase profit margins. Especially, with the proliferation of remote work. It becomes indistinguishable to have a remote worker in Los Angeles versus India.

The rise of automation and AI

Automation and AI will over time kill low-level engineering work. This is engineering work, which doesn’t require any of the following:

  • High levels of creativity
  • Interactions in the physical world
  • High levels of communication

Not to say the above-bulleted work won’t ever become automated, but just not anytime soon.

Over time though, the work of three highly-skilled engineers will reduce to one. Today, software is slowly but surely supplanting humans in the workforce.

The point is, your competition isn’t only humans. Machines will soon march in large numbers alongside you, hunting for jobs.

Democratization of information 

Knowledge is no longer tucked away, hidden in the ivory towers. Decades ago, you had to pay tuition to gain access to knowledge.

But today, with an internet connection, knowledge is literally at your fingertips. EVERYTHING I learned in school, you can now better learn online.

This means you need to go the extra mile to better your skills. Otherwise, you’ll get lost among the tens of thousands of people who share your same knowledge base.

As a result, you’ll quickly find yourself “underpaid,” as your skills are high in supply.

What to do if you think you’re an underpaid engineer?

It’s not all doom and gloom for engineers. Unless you’re complacent and think you deserve more pay just because you’re an “engineer.”

To be clear, there’s no limit to how much money you can make as an engineer. The key is to either improve your skills or start your own business. YOU alone dictate your financial compensation.

You can’t expect a high salary though, by just earning a piece of paper. A diploma!

How to improve as an engineer

To level up, check out my following articles:

With improved skills, you can more easily switch jobs too. Switching jobs is the best way to quickly increase your salary.

Keep in mind though, your market value isn’t determined by how much your current employer pays you. Rather, it’s determined by how much other employers will pay you to leave your job.

Then one level up if you’re brave enough, is to start your own business. You can scale your revenue without a pay ceiling.

“Are engineers underpaid?” wrap up

In the end, every person is responsible for their own career.

You choose if you want to continue working somewhere you’re underpaid. You also choose if you want to change your circumstances.

I find many engineers want job security above everything, given they’re risk-averse. Naturally then, it’s easier to complain than to find a better-paying job or start a business.

So, I don’t believe engineers are underpaid. If you’re willing to work hard and smart, there’s no ceiling to compensation. Because demand always exists for exceptional engineers!

Do you think engineers are underpaid?  Why do you think doctor salaries are greater than engineer salaries?

SUBSCRIBE TO ENGINEER CALCS NEWSLETTER

Get daily articles and news delivered to your email inbox

Leave a Comment