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Motivation

Imagine that you are a recent graduate of an ABET-accredited engineering program in the United States. You have taken and passed the Fundamentals of Engineering exam and you are hunting for your first job as an engineer. You send out applications, sit for interviews and have the good fortune to receive two offers of employment. Both positions are interesting and offer reasonable compensation, benefits and responsibilities at established companies; however, only one of the two positions represents qualifying experience for the purpose of becoming a licensed Professional Engineer (PE).

Problem:

What is the dollar value of that qualifying experience?

In other words, how can the applicant calculate the value of progress toward PE licensure as part of the "total compensation" the job offers, as is commonly done for benefits such as employer-subsidized health insurance, relocation assistance or gym memberships, so as to make a more informed decision about which offer to accept?

Discussion

For a position to represent "qualifying engineering experience," The National Society of Professional Engineers specifies that it must involve:

  1. A major branch of engineering
  2. Supervision by one or more qualified engineers
  3. The development of "technical skill and initiative in the application of engineering principles and sound judgment in reviewing such applications by others"
  4. A reasonably well-rounded experience in that branch of engineering
  5. Work of increasing complexity and responsibility

I myself interviewed for two positions at the same organization, with the same title, shortly after finishing my undergraduate degree. One of the positions was supervised directly by a PE and the other was not, nor did it involve work that would be reviewed at some point by a PE—it was made very clear during the interviews whether or not each job represented qualifying experience toward a PE.

In other cases, a recent graduate may entertain offers from both traditional engineering firms and companies that operate in related, but not strictly engineering, fields. For example, Accenture recruits engineering graduates at my alma mater for non-engineering positions. Some engineering graduates have a background that qualifies them for software development positions. Others may have the option of pursuing positions in R&D or pure research.

The best answers will thoroughly justify their analysis and cite references for any statistics used. I wouldn't discount a novel "back of the napkin" approach, though.

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    $\begingroup$ N.B. It should go without saying that there are many reasons to actually pursue a PE license, including but not limited to professional satisfaction and personal pride, that are not quantifiable. $\endgroup$
    – Air
    Feb 25 '15 at 18:29
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    $\begingroup$ You're quite the Homo economicus! $\endgroup$ Feb 25 '15 at 21:06
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    $\begingroup$ Ha! If that were true, I would have a self-answer prepared! $\endgroup$
    – Air
    Feb 25 '15 at 21:18
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From what I was able to find (see reference 1 and reference 2), it appears that a licensed PE is paid on average approximately $5,000 per year more than a non-licensed engineer. Note that the amount holds up even with different organizations performing the salary survey.

From reference 2:

Based on 2010 survey findings from the National Society of Professional Engineers (NSPE), licensed engineers make an annual median salary of \$99,000, while those with no license or professional certification earn \$94,000 a year. More recently, according to a 2012 report from the American Society of Civil Engineers and the American Society of Mechanical Engineers, engineers with a PE license earn a median income of \$100,000, compared with the \$95,500 for unlicensed engineering professionals.

Plugging those numbers into a present value spreadsheet, I came up with a present value of approximately \$33k in favor of taking the role leading towards a PE. See assumptions below

Also note that your question pertains to a recent college graduate. The present value would be less for someone who earns their PE license later on in their career.

Money obviously isn't the only reason to become a Professional Engineer (see other reasons 1 and other reasons 2). But the economics of earning your PE are certainly attractive.

Those additional references cite career development and enhanced job security in the sense of it being easier to find another job should you become unemployed. It's pretty difficult to assign a readily agreed upon value to those intangibles, but most would agree that they have some amount of value to them. Even if you're having a hard time seeing how a PE license would lead to a greater salary, one of the references points out that having a PE may lead towards a role with greater responsibility. More job responsibility often correlates with an increase in salary.


My assumptions:
* Work for 40 years (eg. N = 40)
* No additional income for first 4 years (recognizing typical 4 years of work experience requirements)
* Assumed an average of \$5000 additional per year of employment and that the salary differential remains consistent across all of the years of employment
* Discount rate of 10% (conservative given historical market rate of 6 or 7%)
* A 7% discount rate would yield ~\$49.5k and a 5% rate would yield \$68k

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  • $\begingroup$ Interesting to see how little extra you get for PE. The difference you quote would tie up with my expectations for chartered engineer in the UK, but with a greater need for PE in the US (where you need to be PE to sign off drawings) I would have expected the difference to be greater. $\endgroup$
    – AndyT
    Feb 26 '15 at 9:11
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    $\begingroup$ It might be more meaningful to try to compare numbers in specializations that require PEs. Electrical and mechanical can go either way (require or not) which might explain the low differential, but civil is going to be much higher because a PE is required to advance. These differences might be skewing the industry averages. $\endgroup$
    – hazzey
    Feb 26 '15 at 16:29
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    $\begingroup$ I am interested to see more complex and/or more general analyses than this, but I like it as a straightforward/naive example. Will do one myself if I ever get a chunk of time to sit down and work at it. $\endgroup$
    – Air
    Feb 26 '15 at 18:43
  • $\begingroup$ @hazzey - Thanks, that explains why the numbers weren't what I expected. $\endgroup$
    – AndyT
    Feb 27 '15 at 13:18
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Trying to put a dollar value on something like that is missing the point.

The first question you should be asking yourself is whether you want to, and you think it's appropriate for your career objectives, to become a PE. If you're a civil or structural engineer, then that is pretty much mandatory. In other engineering fields it may be irrelevant. For example, I've been a electrical engineer for 35 years and don't have a PE license. It just not something the that matters for the kind of things I do and who I do them for.

So forget about monetary value. Do you want to be a PE or not? If so, then you can consider activities that get you there as part of your education. Did you get your engineering degree in the first place because you did the monetary analysis and decided you'd make more money that way as apposed to being, say, an auto mechanic? No, of course not. Or at least I hope not. If you did, bail out now, you'll never be more than a mediocre engineer.

Becoming a PE is part of your overall engineering education. If you decide that's the direction you want to go in, because you have an aptitude, interest, and passion in the field, then take the job that fulfills that goal. If you don't intend to become a PE, then take either job based on other criteria, like which one you have the best chance of learning from or being mentored by someone that you get along with and likes doing such things. Money should NOT be much of a consideration this early in your career.

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    $\begingroup$ Sorry, but you are answering the question, "Should I become a PE?" which is explicitly not what I am asking. $\endgroup$
    – Air
    Feb 25 '15 at 19:34
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    $\begingroup$ While I appreciate your perspective, and I agree with some of it, I don't think it would be credible to claim that a significant number of graduates, usually in their early twenties, know where they're going to end up in 5-10 years, or even where they want to end up. And for many of them, money is one very immediate concern. I'm not suggesting anyone use this as the only factor in choosing their first job, but I will claim that in some situations such an analysis could be the determining factor in an otherwise difficult choice. $\endgroup$
    – Air
    Feb 25 '15 at 19:43
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    $\begingroup$ @Air: I'm not telling you whether you should be a PE or not. What I'm saying is decide that, then take a job accordingly. Sure, you have to pay the bills, but the first job out of school is still a good part of your education, and optimizing for that the first few years out of school is better than optimizing for money. I know you were looking for a costing analisys, but my answer is you shouldn't be doing one in the first place. I understand the downvote, but I'm sticking to what I said. $\endgroup$ Feb 25 '15 at 19:55
  • $\begingroup$ I'd interject that many of us have little option but to optimize for money. Bills keep coming, whether you want them to or not. Further, not all goals are career-oriented. I left grad school because I needed more money, because I wanted to have a family and needed to support them. (Of course, in my case, I was also miserable in grad school, so I was lucky to avoid the conflict.) There are a lot of possible variations. I'm a PE, not because it got me more money or career advancement. I did it because I do very well on standardized tests, and it was my last chance for that skill to matter! $\endgroup$ Mar 2 '15 at 14:40

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