Are Tech Jobs Paying Less?

When Cisco CEO John Chambers announced he received US$1 in salary during the past year, the move was seen as largely symbolic. He still received millions of stock options, after all. But thousands of technology workers who have seen their salaries stop climbing — and in some cases fall in real-dollar terms — during the past two years could certainly relate.

The classic law of supply and demand has caught up to technology workers. Not only are fewer jobs available, but there has been a noticeable erosion of salary gains made during the technology boom.

Going Down?

According to outplacement firm Challenger, Gray & Christmas, 75 percent of top-earning workers reported taking a pay cut if they changed jobs in the second quarter of 2002.

“Employers are in no rush to hire, and apparently they are secure enough to believe they can find the talent they need for a lot less money,” CEO John A. Challenger told the E-Commerce Times. “It’s the type of trend that can really hamper an economic recovery.”

Not all workers have seen their pay fall, however. In fact, the majority of salaries have held steady or continued to inch up over the past two years, following rapid increases in the late 1990s.

The Bureau of National Affairs has predicted that this year’s overall pay increase will be in the 4 percent range, up slightly from last year, with technical workers being the biggest gainers.

Cruelest Cut

One reason the rapid gains made during the tech boom are still reflected in many salaries, Challenger said, is that corporations consider pay cuts as a last resort, since they can have devastating effects on worker productivity.

But workers still may feel less well off than in the boom years, particularly because once-glittering perks, such as stock options and programs that let employees buy stock at discounted prices, no longer have as much value.

For some workers, such perks made up as much as 30 percent of overall compensation packages, Allan Hoffman, technology jobs expert at Monster.com, told the E-Commerce Times. “Some employees considered those benefits, even though they were speculative, as part of their pay,” he said.

Breaking It Down

Whether or not a job pays as well today as it did in, say, mid-1999 depends on a number of factors, according to Hoffman, including where a job is located and how deep a worker’s skills are.

For instance, Silicon Valley, Boston and Washington, D.C., where large number of unemployed skilled technical workers are concentrated, may see steeper salary drops as companies recognize that they can lower the bar and still attract qualified workers.

“There is much more differentiation now,” Hoffman said. “Web marketing, Web design — those saw big gains in employment and pay but have come down the most.”

Nitty Gritty

The Monster.com and HotJobs career sites show a range of salaries for very similar jobs. For example, a job in Irvine, California, for a Web developer with rich media experience had a posted salary of $35,000 to $45,000, while a Las Vegas, Nevada, Webmaster gig advertised a flat rate of $25 per hour.

Both salary figures are probably a little lower than the jobs would have fetched two years ago, Hoffman said. On the other hand, an information architect position in Connecticut seeking a person with four to five years’ experience had a top salary range of $70,000, and a system administrator job in Houston, Texas, was paying up to $60,000. Both of those salaries have been the going rate in their respective fields for some time.

Future Perfect?

In general, less-glamorous jobs, such as back-end network operations and programming, have retained more of their gains, Hoffman noted. He added that software design skills, particularly in the security sector, are also still in high demand.

Challenger said that given the length of the slowdown, a strong economic upturn probably will have to occur before employers start to pay incoming workers significantly more. “Chances are they’ll play it conservative for some time,” he said.

6 Comments

  • Tech Jobs Pay Less? heck ya, IT Jobs is a dead-end career choice. After 7 years in IT working for such companies as HP and Microsoft this degreed, bilingual, certificates up the wahzoo "professional" can’t find a 35+k per year job in several major metropolitan cities. Absolutely Tech Jobs pay less, much less than Firemen, Medical Sonographers, Electricians and Nurses. Anymore proof of this, all you have to do is go to an Army or Air Force recruiter and say, "Hi I have a 4-year degree in IT what are my chances of becoming an officer", he will say, "I really can’t help you nowadays", now go to the same recruiter and say "Hi I have a two-year associates degree (or even a license) in nursing or fire technology what are my chances of becoming an officer" and he will say "what’s your phone number", we have all been seduced with the lie that an IT job is a gateway to a high-paying, stable career because people will always need computers, i don’t think so, babies are born, people get sick, drivers get into accidents, fires happen regardless of the economy, these are the truly high-growth jobs of the future. In a matter of years, jobs inside an office (not just IT but accountants, business analysts and architects) will be sent to places like the Philippines or India, IT people will become the new American Underclass. IT people need to see the writing on the wall, the IT industry is fundamentally changed forever and it’s not going to recover.
    quickmaster,
    apprentice autobody repair technician

    • It’s too bad you don’t see the bigger picture. You seem to blame outsiders for situations that occur to you personally. The market slowdown has been affected by many factors and not just by one particular grudge you have personally against cheap labor being transferred to other countries.

      • My experience with "professional developers" in the U.S. making that kind of money has been me getting ripped off for tens of thousands of dollars, which has had a definite impact on my lifestyle.
        I will gladly send my next dollars to an offshore developer who has the skills as well as the integrity to do the job correctly while also at the very least making an attempt at communicating with me and not down to me.
        Your business is getting what it deserves, and hopefully the shake out will continue until you self-police your industry before you can all get jobs at publix.
        Don’t blame good people in other countries for your less than realistic and less than honorable actions which have damaged people like me for incredible AM ounts of money. Shame.

  • It is easy to blame present circumstances on finite issues, but the truth is prosperity is subject to larger forces.
    First let us assess our vital industry. Never before has the world become so dependent upon and so affluent in processing data. The truth is computer applications can and do serve the world in ways which highly justify the expenditures of the so-called tech industry. For instance, once software exists to perform in three seconds complex assessments across for example an irrigation district, never again is it necessary for several people to make the same calculations manually over several weeks; and ever afterward, the retained data can be processed instantly in many further ways. There is no reasonable doubt how justified the work of developing such applications is.
    Theoretically, this work should free up countless hours, to our benefit. Instead, though the world is hardly saturated with the wares necessary to fully minimize the overhead of managing data, and applications themselves need considerable refinement in terms of both reliability and functionality, "somehow" we find ourselves, despite the need, dispossessed of this needed work.
    At the same time, the need for diversification of the technical background of developers continues to multiply, while the advent of object-oriented programming provides avenues to deliver end product we never could before. Most of our highest-paid professions can hardly compare with the technical industry in demand for diverse, precise wielding of skills. As we know, our work cannot even be functional if we do not know what we are attempting to do perfectly well. Few disciplines require such perfect precision; and yet, even moreso than two years ago, today serviceable technological skillsets require more diverse and more complete skills than ever.
    The truth is that business and consumers are now on the edge. "Somehow" we can no longer afford to advance.
    Why?
    Well, technical people must keep track of everything they wield, so the answer should not be far from persons of such a discipline.
    What happens when you have a circulation which can only be introduced as debt subject to interest, and you must re-borrow what you pay out of the general circulation in terms of interest and principal, from today’s central bank?
    Merely to maintain a circulation, debt continues to escalate by ever greater increments, as we pay interest and principal out of the general circulation, and, to maintain that circulation, must re-borrow the same as a subsequent debt, increased as much as the periodic interest. Debt continues to multiply irreversibly in proportion to the circulation, until…
    It requires little technical skill to understand we are all subject to the limitations imposed by such a system, and that with debt perpetually and irreversibly increased in proportion to any given circulation, ultimately all necessary work cannot be afforded, as the costs of servicing the irreversibly multiplying debt ultimately exceed the finite capacity of commerce and consumer to sustain themselves against the costs of debt.
    The condition of Argentina for instance is not an aberration. It is the consequence of such a system.
    This is the nature of the entire world’s situation — not just the technology industry. The only way to change the progressing course of history is to perfect economy. That is, we must realize that if "money" is to be a medium of exchange, it cannot be an instrument of profit.
    The founding fathers set out to do this. We have failed to finish the job.

  • Today there are thousands of unemployed IT professionals in each major city in the US midwest, plus more layoffs coming. IT positions that used to command a pretty decent wage ($40k+) are now being filled by 2-year tech school grads who think that 30k seems pretty good. H1B visas flooded the market with (admittedly bright) foreign IT workers during the last seven years making the market even tighter. In short: It’s a terrible time for IT job hunting.

  • It used to be that a specialized skill that only "smart" people could do commanded good money. I used to get $50-100/hour for web design work. Now with kids and offshore workers glad to work for $8-10/hour, it has diluted the whole marketplace.
    If you live in your mom’s basement or under a tree, minimum wage sounds pretty good. The rest of us need a real paycheck.
    – Alan Gruskoff

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