February 19, 2012

Impact on Starting Pay From Regional Pay Variations and Schools Reputation within Major

I've been working on a series of posts about how starting salaries vary across universities for various majors.   First I presented all the data I found.   Then I stated that I thought major choice mattered more than university choice.  Most recently I made the observation that highly ranked universities often didn't relate to higher salaries.

At the end of the last article I made a couple points.   The U.S.News rankings are university wide rankings and schools have different reputations in specific fields of study.  For example Purdue is ranked #62 among national universities but they are ranked much higher at #11 for engineering schools.  If you're looking at engineering degree holders then looking at the U.S.News best Engineering schools ranking list would matter more than the general national ranking of the university.

Second major factor to consider is that pay rates vary considerably based on location.    Pay is going to be higher in an expensive state or city versus a low cost area.   You would expect that graduates of California schools would likely end up having higher wages since most of the alumni would end up working in California.  On the other hand students of Kansas schools may end up with lower average wages if more of them ultimately work in Kansas.

To examine the impact that these two factors have I'm going to look at civil engineering specifically as a case.

Impact from ranking for Engineering

Here is the civil engineering information sorted by the ranking for engineering schools :

engr rank us rank school Civil engr
6 23 Carnegie Mellon $51,000
8 45 Texas, Austin $57,454
11     62 Purdue $52,850
24     71 Va Tech $50,000
27 43 U. Washington $51,016
100 143 Kansas St $48,985
102 111 S. Carolina $49,917

There seems to be a little more correlation between the rankings of the engineering schools and the starting salaries, but its still not that strong.   The top school in engineering ranking still gets lower salary than three of the schools below them.  However the 3 lowest paid schools are in the bottom half ranked schools and the 2 highest paid are in the top half.

Starting Salary versus Average Local Wages

Lets look at the starting salaries versus the average wage for the civil engineers in the state.  I got the average wage for civil engineers from BLS state level wage data.

school Civil engr state avg
Texas, Austin $57,454 $89,110
Va Tech $50,000 $82,340
U. Washington $51,016 $80,430
Carnegie Mellon $51,000 $76,190
Kansas St $48,985 $75,540
S. Carolina $49,917 $75,090
Purdue $52,850 $71,720

There is some correspondence between the average wages for civil engineers and the starting pay.   In Texas for instance they have a relatively high starting pay of $89,110 and the U. Texas starting salaries are also quite high at $57,454.    High wages in the state of Texas for Civil engineers might at least partially explain why U. Texas grads have such high pay.

Engineering ranking versus Starting salary as % of Average salary

We can normalize for the variation in regional wages by looking at the starting salary as a percent of the average wage for civil engineers in the state.    Lets look at the schools sorted by engineering school rankings and see how the % of wages compares:

engr rank school Civil engr state avg %
6 Carnegie Mellon $51,000 $76,190 67%
8 Texas, Austin $57,454 $89,110 64%
11 Purdue $52,850 $71,720 74%
24 Va Tech $50,000 $82,340 61%
27 U. Washington $51,016 $80,430 63%
100 Kansas St $48,985 $75,540 65%
102 S. Carolina $49,917 $75,090 66%

If you look at it this way, Purdue actually fares the best in starting wages versus average salary.    Theres still not much of a correlation.    The school with the highest and lowest starting wage versus average local wage are both in the middle.

For Civil Engineering at least I still don't see much of any solid correlation between university rankings even when looking specifically at the reputation of the engineering school itself and when controlling for the average wages in the area.

I ran all the same numbers for Chemical Engineering as well and heres the result from them.

engr # school start state mean %
       6 Carnegie Mellon $66,800 $91,260 73%
       8 Texas, Austin $72,234 $105,200 69%
     11 Purdue $61,299 $82,370 74%
     24 Va Tech $65,000 $86,390 75%
     27 U. Washington $57,280 $92,840 62%
   100 Kansas St $67,344 $93,650 72%
   102 S. Carolina $67,350 $90,150 75%

Again I don't see strong correlation between engineering school ranks and the starting wages even when normalized to state average wages.

It certainly makes more sense to look at the reputation of a school for the specific field of study than to look at the national level university rankings.   But even there it doesn't seem to show a strong correlation between starting wages and school rankings.  

The average pay for a state can certainly impact starting wages.   You would assume there would be a relationship between the two.  I think we can see that to some degree in for some places like Texas where state average wages are the highest and the starting wages for U. Texas grads are also higher.

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