The big leap
Our 15th annual Salary Survey saw readers' earnings jump nearly 7.0 percent in a single year.
By James A. Cooke -- Logistics Management, 4/1/1999
Credit the booming economy for the spike recorded in logistics earnings this year. Thanks to the low unemployment rate and a tight labor market, the average annual wage in our salary survey jumped from $60,458 last year to the current $66,600. That 6.75-percent increase was the second-largest ever recorded in the 15 years this magazine has been conducting annual surveys. The only bigger salary jump came way back in 1993 when the average pay rose 10.0 percent. (See Figure 1.)
But the economy isn't the whole story behind the salary surge. As noted last year, companies are recognizing and rewarding logistics managers who hold the supply chain's reins. Individuals with responsibility for the supply chain reported receiving an average $96,100 a year in compensation, which encompasses salary, bonus, and commissions. That was significantly more than their counterparts who oversee other logistics-related functions earned.
Wide Range of Responses
For this year's survey, Cahners Research tallied responses from 1,216 readers to our questionnaire on compensation and careers. Although 27.0 percent said they had responded to our survey last year, the overwhelming number of replies came from newcomers.
When asked their job title, 21.0 percent of those respondents described themselves as a vice president/general manager or corporate divisional manager. Another 18.0 percent of those surveyed called themselves logistics managers, while 20.0 percent said they were traffic managers and another 12.0 percent warehouse managers. Other titles reported by respondents included operations manager, private-fleet manager, and purchasing manager.
The survey respondents handled a wide range of job functions. Nearly one-third of those polled--or 31.0 percent--described their chief assignment as traffic or transportation. Another 30.0 percent said their primary job involved distribution and logistics. In third place were individuals working in purchasing, with 16.0 percent. Another 7.0 percent either gave their job function as warehousing or import/export operations, and 6.0 percent said supply chain management was their main area of responsibility. Other functions mentioned included planning, inventory control, fleet operations, computer systems, and materials handling.
Responses to the salary survey came from managers working in a variety of industries as well. Most of the respondents--nearly 17.0 percent--worked in transportation services. The second-largest industry group came from the food-and-beverages sector, with 13.0 percent. Next was retail trade, which accounted for 12.0 percent of the responses tallied.
Reader responses also poured in from all over the United States with the largest percentage--5.5 percent--coming from the Chicago metropolitan area. Los Angeles and Orange County, Calif., accounted for another 4.0 percent of the responses. Detroit contributed 3.7 percent of the responses, California's Bay Area another 3.2 percent, and Northern New Jersey 2.9 percent.
The profile of the salary-survey respondent has remained remarkably similar over the years. The typical respondent traditionally has been a male in his 40s, with a college diploma. This year was no exception. Men provided 85.0 percent of all responses. On average, the typical respondent had 16 years of industry experience and had logged six years in his current job. Some 65 percent held a college degree. In addition, a third said knowledge of information technology was essential to the performance of their jobs.
There was one notable change from last year's profile, however. Managers this year said they were supervising larger staffs than they had in some time. This year, survey respondents reported that the average number of employees reporting directly to them was 13 vs. 10 in 1998. (See Figure 2.)
Interestingly, the growth in staff size reverses a downward trend recorded throughout the '90s. In the early years of the survey, the typical respondent supervised 16 or 17 people on average. In recent years, the number of direct reports had fallen to 10. The increased staffs may indicate that companies are starting to beef up their distribution departments. Next year's survey should provide further data on whether staffs are increasing or this year's number was just a one-year statistical blip.
Increases Across the Board
The upward push in logistics salaries appears to stem from a tight labor market in 1998. (In fact, the U.S. Labor Department reported that overall employment costs rose 3.4 percent in 1998, the largest jump since 1993.) Paycheck hikes are clearly evident when you compare 1999 salaries by job titles with those reported the previous year. Pay for every title in our survey--from VP/general manager to assistant traffic manager--showed wage gains. (See Figure 3.)
Interestingly, a comparison of job titles between this year's and last year's survey showed the largest raises were given not to executives with the top titles like general manager, but for second-rung positions in the distribution chain of command. For instance, our survey found that warehouse managers' annual salaries went from $47,403 last year to $54,000--a 13.9-percent pay hike. The annual pay for logistics managers rose from $63,017 to $70,400--a 11.7-percent hike. The pay for vice presidents, on the other hand, rose a modest 5.0 percent.
When the individuals responding to the 1999 survey were asked to give their salary increase percentage over last year, however, it was vice presidents and corporate division managers who reported the highest gains. Both titles--vice president/general manager and corporate division manager--saw their salaries rise by 9.0 percent on average. Logistics managers, on the other hand, reported a more modest increase of 6.5 percent and warehouse managers almost 6.0 percent.
Why the discrepancy? It should be noted that almost three-quarters of this year's respondents did not participate in our survey last year. The different makeup of this year's pool of respondents may well explain the variance.
The High Rollers
As you might expect, the highest-paid individuals in the logistics profession were the ones with the top titles. Half of all vice presidents and general managers had incomes that exceeded $100,000. In addition, almost one-quarter of division managers and 12.0 percent of logistics managers said they made more than $100,000 last year.
The number of individuals in the $100K club--executives whose salaries exceeded $100,000--was also on the upswing. Back in April 1995, only 5.0 percent of the survey respondents grossed more than $100,000 annually. This year, 13.0 percent of those surveyed reported incomes between $100,000 and $299,000. Another 16.0 percent said their compensation ranged between $75,000 and $99,000.
As noted last year, individuals overseeing corporate supply chain strategy also are pulling down big bucks for their efforts. Some 38 percent of those respondents who called supply chain management their primary job function reported compensation above $100,000. Those who cited planning as their key job function came in second, with 20.0 percent reporting membership in the $100K club. Some 17.0 percent of those who called distribution their main job function also belonged to that elite group. Finally, 14.0 percent of those whose job function involved computer systems had incomes in the $100,000-or-higher earnings bracket. (See Figure 4 for a look at average salaries by primary job function.)
On-the-job experience also correlated strongly with high income. Some 16.0 percent of those making $100,000 or more a year had spent more than 30 years in the logistics field. But most members of the $100K club--38.0 percent--had 20 to 29 years of experience. Those with 15 to 19 years of experience accounted for 20.0 percent of respondents in the top salary bracket.
The high rollers in logistics also work for big companies and hold college diplomas. More than half of those in the $100K-plus group work for companies that spend more than $20 million a year on freight. Some 45.0 percent hold college degrees, while another 36.0 percent have either an MBA or another graduate degree.
Contributing Factors
The level of schooling, job experience, and company size make a big difference in overall compensation as well. Take education for starters. As in the past, our survey found quite a disparity between those with a high-school degree and those who had earned a college degree. Individuals with a high-school degree earned $52,874 a year on average . But those with a college diploma earned $67,870--or about $15,000 more. MBA holders received $86,520, while those with other graduate degrees earned $73,893. (See Figure 5.)
As a general rule, we've found that the more companies spend on freight transportation, the better they pay. But this year, our survey found that higher transportation dollar expenditures did not always equate with higher personal income. Indeed, this year, companies that spent between $100 million and $500 million in freight paid the highest average salary: $89,739. Respondents working for companies spending between $500 million and $1 billion on transportation actually reported a lower average managerial salary of $74,298, and those spending more than $1 billion had an average salary of $83,349. At the level below $100 million in freight expenditures, salaries dropped incrementally with the budgets.
Once again, our survey found that some industries offered better financial rewards than others. This year, textiles and apparel topped the list as the best-paying industry for logistics executives. Managers in that industry segment earned $78,129 a year on average. Second place was claimed by transportation services, which ranked number one last year. Distribution executives in that industry reported an average salary of $75,895, about a $4,000 increase over last year's figure. The paper industry recorded the third-highest average salary at $74,687. (See Figure 6.)
As for low-paying industries, our survey found the instruments field, which pays an average salary of $55,857 to logistics managers, to be the lowest of the low. Ironically, the instruments field topped our industry salary list back in 1995. The second-lowest-paying industry this year was fabricated metal products, which had that same dubious distinction in the 1988 survey. Logistics managers in the fabricated metals field received only $57,736 on average.
Pay levels also vary widely from region to region ... and sometimes between different parts of the same state. The average salary in Lehigh Valley, Pa., for instance, amounts to $57,219, while a distribution manager at the other end of the state--in Pittsburgh--earns $79,222.
The high-paying metro areas in this year's survey came as something of a surprise. In the past, the highest average salaries came from the New York or Los Angeles areas. This year, the metro area with the highest average salaries was Louisville, Ky., with $101,000. In second place was Greensboro, N.C., with $97,375, and Memphis, Tenn., was ranked third with $97,431. It should be noted that those averages are based on a limited number of responses. (See Figure 7.)
Gender and Experience Gaps
No salary survey would be complete without a gender comparison. As has been the case in the past, men hold a salary edge over their female counterparts. In this year's survey, a male logistics executive earned $69,300. A woman, by contrast, averaged only $50,100. Widening that gap a bit, men reported a 6.9-percent increase over last year's salary, in comparison to 6.1 percent for women.
It should be noted that there are other factors that help to explain the gender gap in earnings. Men have 16.5 years of experience in the logistics field on average, compared with 12 years for women. Male distribution executives also supervise 14 workers, compared with 6 direct reports for women managers. Finally, 64.7 percent of male logistics executives hold a college diploma or higher, compared with 54.9 percent of women. (See Figure 8.)
One other finding in our survey concerned job mobility in a booming economy. Although individuals who had spent 30 years or more in their present job earned the highest average salary--$87,215--there wasn't necessarily a strong correlation between salaries and terms of service. In fact, an individual with one year of service made $68,451 on average. That amount was more than the salary earned by individuals who had spent two to five years in their present jobs ($67,650), more than individuals on the job 6 to 10 years ($64,955), and more than individuals on the job 11 to 14 years ($62,166).
In fact, a person who had been on the job less than one year made more than someone working in the same job for 15 to 19 years ($61,912). Individuals who had been in the same job for 20 to 24 years earned only a little more, receiving $68,775 in compensation. But the real kicker was that individuals who had spent 25 to 29 years in the same job earned the lowest of all, with $55,083 in compensation. (See Figure 9.)
Those individuals with one year of service who reported the high salaries, however, did hold more traditional top titles and had more education on average. Twenty-two percent of those in the one-year-or-less job category were logistics managers. Another 13.0 percent held positions as vice presidents, and another 11.0 percent the title of corporate/division manager.
It also should be noted that almost three-quarters of these individuals who had been on the job one year or less had a college degree or higher. In fact, 22.0 percent said they had earned an MBA degree.
Flying High
Certainly, the strong economy helped push up pay levels for distribution executives this year. In addition, corporate recognition of the importance of supply chain management drove up the salaries of executives who worked in that area. If the economy remains bullish and more companies embrace supply chain management, this year's record jump in pay levels could even become the norm.
Profile of the Logistics Reader
Salary 66,600
Increase over 1998 6.75%
Years of experience 16
Years with company 10
Years in current job 6
Number of subordinates 13
Age 43
Figure 2. With the exception of salary, the profile of the average Logistics reader has remained fairly consistent over the 15 years the survey has been conducted.
Salaries by Job Title
1999 1998
VP/General manager $109,800 $104,722
Corporate/Division manager $84,200 $83,207
Logistics manager $70,400 $63,017
Other titles $66,900 $59,674
Operations manager $61,600 $55,934
Private-fleet manager $58,900 $56,122
Purchasing manager $55,600 $50,788
Warehouse manager $54,000 $47,403
Traffic manager $51,500 $50,772
Assistant traffic manager $49,600 $45,118
Figure 3. The pay for vice presidents and general managers is double that of a traffic manager.
Gender Differences
Men Women
Average salary $69,300 $50,100
Increase over last year 6.9% 6.1%
Number of direct reports 14 6
Years of experience 16.5 12.0
Years with company 10.0 10.0
Years in present job 5.7 5.3
Have college degree or higher 64.7 54.9
Age 44 41
Figure 8. Men still outpace women in terms of salary, although factors besides gender come into play.
View All On-Demand Webcasts