How important is it to have a graduate school degree in the engineering work force?

My experience in software engineering (at least in Silicon Valley) is that a masters degree is usually treated as equivalent to 2-5 years of industry experience, and as such, it can be useful for breaking in to the field when things are tilted toward the employers' side. That's exactly the opposite of the current case (again, at least here in SV), in which there's massive competition for good engineers, and companies are much more willing to invest in career development of junior engineers and new college grads. In fact, the optimal route at the moment seems to be to do an internship or three while working on your undergraduate degree, and assuming you do well in those, you're like to have one or more job offers the moment you graduate.

Of course, internships + college take time, and the economy can shift over a period of two or three years (as happened going in to the Great Recession of 2008, as well as coming back out of it). But having relevant industry experience before you graduate is never a bad thing, and if it happens that the economy sours again before you graduate (which seems very unlikely at the moment), you always have the option to take the masters route and defer your job-hunt until after that.

PhDs are pretty rare in software engineering, and having one can be seen as a negative ("too specialized," "too theoretically focused") as often as a positive. (I have one, but it's not in engineering, and other than helping me get my first job in corporate research in the mid-1990s, I don't think it's had much effect on my engineering career.)

But software engineering is a bit different from other types of engineering, so be careful when extrapolating to other areas. A field like chemical engineering is likely to place much more emphasis on advanced degrees.

You have a couple of responses so far do I’ll add my two cents worth. My engineering career of 35 years was in the industrial chemical field for a medium and large international companies. I was a manager for the last 20 years. During my managing years, I hired dozens of engineers. What we looked for were bachelor degrees for a couple of reasons. They come to the industry two years earlier and we found that the Masters degree in engineering gave us no real advantages. We looked for successful internships that we found more useful than just about anything. I did hire one PHD who turned out to be an excellent engineer despite his PHD. He made a good case downplaying his PHD and showing his systematic hands-on design process and management. If after a few years of work, you could get a Masters in engineering (Specializing) or in business if you want to advance into upper management. I’m a big supporter of entering the workforce and seeing if you like the work before spending money on the wrong, or too much education. Good luck.

I've found that an advanced degree is very useful and rewarding.

If you plan to pursue your career from the technical side, an advanced degree (Masters) will give you a much greater understanding of your field. If you decide to go the business/management route, and MBA will give you the knowledge and exposure your bachelor in engineering didn't. PhDs tend to be very focused and you can get pigeon-holed into a specific technology/job ... but if you really like it and you become the expert in that field, is it so bad?

Money-wise, I've heard and it is my experience that the advanced degree only "pays" if you change companies. On the PhD level, if you are the authority in the field, you can demand a hefty premium.

So, an advanced degree is usually a route to advancement and better pay.