Guess who comes out ahead when it’s all said and done? And it’s not even close.
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The author doesn’t have a clue about the reality of corporate America. He assumes 4% raise above inflation every year – most companies don’t adjust for inflation; a 7% yearly raise is considered “excellent”, sometimes we get no raises at all e.g. if the company isn’t doing great or business situation is tougher.
He also uses a vice president salary as a reference salary for an engineer with 30 years experience. Most engineers don’t become vice presidents. Sure, there are places when vice presidents are dime in a dozen, but in these places vice presidents don’t earn as much. Where vice presidents do earn a lot, only very few people can have hopes of becoming one. Vice president is a management position that requries certain business management skills, not just experience and technical excellence.
Anon. First of all, you missed the point of my assumptions.
I start my basis of assumption that if someone is smart enough and has enough drive to make it through 7-11 years of post undergraduate educational training, they will have the drive to make it to the top ranks in their field. I chose VP as a reasonable goal, short of CEO.
Of course it is not a given, I am making the assumption that they will. And something very attainable.
Secondly, the 6 % raise is the effect of promotions up the corporate ladder, not raises within the same level service. For example. Engineer I, makes less than Engineer II, makes less than Quality control manager, makes less than Director, makes less than VP. My 6% raise is based on the assumption that in 2007 a starting engineer makes $62,500. A VP simultaneously makes $200,000. If you want to figure out how to get from one figure to the other over a 30 year life span, without factoring in inflation, the average yearly increase would be 4% without inflation, 6% with.
It was not meant to imply a 6% raise every year. It is the average effect of promotions through 30 years of promotions.
I start my basis of assumption that if someone is smart enough and has enough drive to make it through 7-11 years of post undergraduate educational training, they will have the drive to make it to the top ranks in their field.
This is exactly what I was challenging. I did understand your math, but I don’t see promotions as a given just because someone is good at studying hard and getting excellent grades. Since a vast majority of engineers don’t become VPs, you are essentially saying that a doctor would be one of the best engineers; and then go further and assume that top engineers become VPs. This is hardly a given:
1) The skills and abilities involved in becoming a doctor and a great engineer are different. Being a top engineer requires a lot less in terms of fact memorization and more in term of problem-solving and creativity as well as ability to think logically. Certainly being a doctor may require problem-solving, but a type of problems is different. The thinking pattern could be different as well. Same in terms of creativity – how many patents does an average internist has? How many times a work of an average internist requires that type of creativity?
For example, one of our professor used to give very difficult exams. In some of the problems, if you were to follow the same pattern as explained in the book, you’d never finish the exam in time. Yet, if you just looked at the scheme in a problem and thought for a moment, you could’ve seen that a simple line connecting two components together would solve the problem. This is the type of non-standard thinking that would make a great engineer. I am not sure if the type of thinking required for finding this type of a creative solution is a given for everyone who went through medical school.
2). VPs aren’t necessarily best engineers or experts. Some VPs may be young people with MBAs. Others may be mediocre engineers who are good at management, organization, leadership and company politics. Some could be both good engineers and good leaders, but again, it is not a given. Additionally, someone who likes being an engineer may just not like the management and politics involved in being in an executive position. I’ve actually seen people leave management ladder in my company because they hated it. It is not clear to me that the ability to make it through 7-11 years of post undergraduate education implies great leadership skills.
Why are you comparing the average doctor to a VP of engineering? At best, maybe one of out a 100 engineers would make it to the VP level. What you should be doing is comparing the average doctor to average engineers with 10+ years of experience.
I’m a Ph.D. chemist who’s worked in industry and government contract work. The pay and benefits are decent – but in industry there’s the constant and very real threat of layoffs, and in government work there’s the constant and very real threat of not having your contract renewed, resulting in layoffs.
I don’t believe your model takes the above scenarios into account. Your thought exercise assumes that the engineer stays with one company and has a stellar career. Frankly, this is no longer realistic, though 25 years ago, it might have been.
From my time in industry, most of my raises just barely matched inflation rates. Our site director once admitted that chemical companies get together once a year and decide what salaries will be, and it’s all pegged to inflation. So, industrial chemists, and most likely chemical engineers too, never really get ahead, they just tread water and hope they they don’t get laid off.
So, please go back, re-factor the above information into your model, then let us know the updated results.
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