PE Licensing

Master's or Equivalent: Economic Impacts

This is the first in a series of four articles prepared by a subcommittee of the NSPE Licensure and Qualifications for Practice Committee examining the various impacts of the additional engineering education initiative. This summary was drafted by Paul D. Schmidt, P.E. Comments are welcome.

One of the concerns frequently raised about the efforts to enact increased education requirements as a pre-requisite for licensure is the cost of the additional education. The current revisions to the NCEES Model Law require those seeking licensure as a Professional Engineer to have either a masters degree or a bachelors degree plus an additional 30 credits of ‘acceptable upper-level undergraduate and and/or graduate-level coursework from approved course providers', starting in 2020.

The costs of a masters or equivalent will depend on how the education is obtained. The full cost of a year and a half at a ‘bricks and mortar' university would average $30,000 to $50,000 and up. There are several options that would reduce the cost. The “+30” alternative can be from different sources. Some companies may provide advanced training that would meet this requirement. Opportunities for distance learning also provide for lower cost, typically less than $20,000 currently, and allow flexibility for people to work while obtaining the education. In addition, some masters programs provide research grants, and teaching and research assistantships that will often pay for full tuition and a stipend.

While there is a cost, there are many benefits to additional education. Many engineers obtain a masters degree for their own professional betterment. This adds to professional development and in many cases increased opportunity, which can lead to increased financial compensation.

The NSPE Licensure and Qualification for Practice Committee (L&QP) performed an evaluation of economic impacts of additional education based on data from the 2008 Engineering Income and Salary Survey published by NSPE, ASCE and ASME. Those interested in the full report can find it here. Based on data in the salary survey, engineers with an MS have an approximately 5.5% higher median income than those with a BS. Throughout a 35 year career this was conservatively estimated to equate to a present value difference of about $75,000. Using less conservative assumptions the difference was $124,000. It is noted that the salary survey data used was based on historical data including licensed and non-licensed engineers, and may not fully represent impacts if all licensed engineers were required to obtain additional education in the future. However, it is believed to be a reasonable indication of the difference in salaries under current conditions.

The costs of additional education will ultimately be passed on through the costs of products and services. The NCEES Engineering Education Task Force in 2009 estimated the economic impact of requiring additional engineering education as a prerequisite for licensure as about 3 to 4 % of the cost of engineering in the US, which is the estimated cost of a better educated engineering workforce.

The Industrial Exemption: What, If Anything, Should The Profession Do?

In many states, engineers who work in industry providing engineering services are exempt from licensure requirements. Of those state licensing boards that responded to a survey by the National Council of Examiners for Engineering and Surveying, 29 licensure jurisdictions exempt employees of industrial or manufacturing firms, and 14 have no such exemption provisions. Of those states with exemptions for industrial employees, many do not enforce licensure requirements on engineers who consult to those industries later in their careers, rather than work as employees. Is a consultant treated as an “employee” and therefore provided the exemption? If so why? In the states that do not have industrial exemptions, licensure requirements for engineers in industry aren’t commonly enforced, in part for fear the legislature would enact an industrial exemption if enforcement were to begin. Such is our system.

A few years ago, Neil A. Norman, P.E., currently a member of the Washington Board of Registration for Professional Engineers and Land Surveyors, prepared an outstanding summary of the genesis of industrial exemptions in the U.S. This treatise makes for interesting reading.

Industries exerted powerful political influence on a state-by-state basis in the 1940s through 1960s to get these exemptions enacted. A friend of mine who worked for a major U.S. manufacturer throughout that period indicated that the external communication at the time stressed the nature of our legal system, product liability law, and a variety of other broad arguments, but this friend indicated that the internal discussion was that their engineers were to work for one employer – the company – and not have to answer separately to an outside authority. That was the bottom line.

An NSPE member recently sent me an opinion piece from “Signal”, a periodical of the broadcast engineering industry. In that article, Chris Imlay, the general counsel of the Society of Broadcast Engineers, provides an interesting perspective on licensure laws and their impact, or lack of impact, on broadcast engineers. This article, which comes from the perspective of practicing engineers who are not licensed and do not wish to be licensed, addresses both potential practice limitations and the use of the title engineer in those states that restrict use of the title engineer to those who are licensed professional engineers.

The industrial exemption is a major reason why only about 20% of engineers in the U.S. go on to become licensed professional engineers (the other 80 % don’t all work in industry, but that is a topic for another day).

So, the above provides some background on the topic. One of the purposes of these NSPE blogs is to get some conversation going. Feel free to comment. Some questions might be:
1.    Is there a problem here? Is the public health, safety and welfare at risk because engineers in industry are not required to be licensed, or does our legal system adequately protect the public otherwise?
2.    What, if anything, should the engineering profession do regarding regulatory requirements pertaining to engineers in exempt industries? This is something that is often discussed within the engineering profession, but no one proposes to actually do anything. Is that the best course?

What do you think?