Annual IT Salary Survey Finds Dissatisfaction

BobB writes "A storm seems to be brewing in the IT job market. Pay raises have continued to outpace inflation, and bonuses are downright impressive — 11.6% on average. Yet, as the 2007 Network World Salary Survey finds, dissatisfaction over salary packages is rampant."

Comments

The secret to maintaining a healthy IT job market.

[QuantumG]

Get the head hunters to contact IT geeks every 6 to 8 months and offer absolutely plumb jobs. When you get em on the phone, "refresh their job details" and then tell them that plumb job is gone, but you'll keep an eye out for them.. just what salary range are you looking for? Oh, well, with your skills you should be getting paid a lot more than that.. etc.

European salaries != US salaries

[seti]

What amazes me is the difference between average IT salaries in Europe and the US. Here in Europe, an average 30-year-old IT worker could expect to be making about 3000 euros before taxes every month (i.e. 36,000 a year). Reading that article, I gather the average US IT salary is about $80,000, which is about 56,000.

Can anybody explain this huge difference? Is the cost of living in the US just so much higher than in Europe? Or does IT just pay a lot more in the US?

Re:European salaries != US salaries

[Corgha]

Can anybody explain this huge difference?

This could get political, so please don't take any of these comments as judgments on the personal worth of Americans or Europeans, or about which nations are better that which other ones. There are lots of fine folks on both sides of the pond, and there's more to life than salaries and GDP. I'm just trying to explain the salary difference, since you asked. I'll just throw these possible reasons out there and we'll see what sticks...

According to an article in The Economist earlier this year (sorry, don't have a link), American companies get a higher ROI (usually measured in increased productivity) on investments in IT projects (this actually goes with the company, not the worker, so it's probably down to management, but in any case a higher "R" makes you willing to be a little more free with the "I").

Also, Europeans work significantly fewer hours per year than Americans, on average. Like 15% fewer, according to that linked speech from the President of the European Central Bank. Looking at the yearly salary, then, distorts the figure for how much people are being paid for each unit of labor input (though, even per hour worked, Americans are more productive, so that further raises the value of the labor to the company).

Put another way, according to that same ECB article the US has a 50% higher GDP per capita than Europe (Europe's is two-thirds that of the US), so the output is higher, too. And some of that trickles down (not much, but some).

And, of course, unemployment in America is much lower than in Europe (for August, it was 4.6% in the US vs 9% in, e.g, Germany). If you have twice as many people looking for jobs, well, the employer can offer lower pay and someone will be glad to be earning more than zero.

So, those would make it reasonable for companies in the US to be willing to pay higher salaries.

Plus, it's easier to terminate people without cause in America, which means poor performers with their low salaries (who would otherwise drag down the average) can be taken off your books immediately, without a lengthy process of review and appeal. In some places in Europe, it can take a while to fire someone and may not be possible in borderline cases, and you have to demonstrate cause. Since IT workers often have privileges you don't want them to use during a hostile termination, this sometimes leads to the ludicrous situation of paying someone not to come to work for a few months (and that person is probably not going to get a raise and a bonus and bump up the average, eh?). Of course, despite this, unemployment is lower, anyway, so it's not like the US is cheating by not counting all the $0 salaries, unless maybe you count the huge prison population ;)

Similarly, you have to take into account the large concentrations of American IT workers in places like Silicon Valley. Silicon Valley is a very risky place. The companies that succeed are often flush with cash. But the companies that fail don't pay anybody, and unemployed people don't count into the average. And, of course, the cost of living is high in Silicon Valley.

So, those effects would also tend to raise the average.

Much of this stuff could be explained as the result of the different paths America and Europe have taken with running their societies, specifically with how much risk they are willing to tolerate. But, like I said, there's more to life than high salaries. And those American salaries are getting lower in real terms by the day as Americans' purchasing power is eroded by the falling dollar. So, enjoy your vacation days and social services and don't fret too much about it. ;)

Re:inflation

[Aeron65432]

Actually virtual all economists agree that the inflationary rate is overstated by around 1%. It ignores increases in quality, tech innovation, and the substitution effect. (if prices at grocery stores rise, more people will go to Walmart for their groceries yet this is not counted) It's also acknowledged by most groups in the Federal Reserve.

Chances are if your wages are really increasing by that percentage, your spending or consumption is up (did you buy that iPhone..?). Inflation has recently been around 2.5-3%, realistically around 2%...so if you're exceeding that in salary increases, it's probably not due to inflation.

Wish I was paid like this in the UK

[damburger]

I graduated with a degree in Computer Science in 2002, and have had awful trouble finding a well paid job. Most of the jobs advertised were web development, which were always badly paid (my first job out of university paid barely above minimum wage). These jobs usually ended before 6 months, once I'd completed a couple of projects for them and before they would be legally required to give me redundancy pay.

There were a couple of good job openings (I was once approached by a recruitment agency to apply for a job with Google in Dublin) but of course seeing as I was not the only desperate compsci grad in the West Midlands competition for them was pretty fierce and I didn't get them.

I was trapped in web development, but I was pretty good at it. I constantly taught myself new technologies as I developed sites, worked on projects in my spare time to expand my skills, and had a good eye for front end design from a job I had in the print industry. Despite this I was never paid more than £12k a year for web development. My current job is pays £14k, doing office admin work for the police, and that is the most I've ever been paid for anything.

Then it seemed to be looking up. I'd gone for a support job at a large US company, and at the interview they had been so impressed with my aptitude scores and my general IT knowledge they recommended me for a better paying job (£20k) with their programming department. Sadly, I fell foul of their Gestapo-like HR department, who decided not to give me the job because, during one of the interviews over the phone to a woman in Texas, I didn't sound 'positive enough'. I'm not sure how positive a man from Yorkshire is supposed to sound to a Texan over a transatlantic phone line, but there you go.

This is why I'm now starting a Physics degree. Fuck the IT industry, it's not worth it. I slaved away for cockle-picking money, and when my talents were finally recognised I was rejected because of some idiotic HR impression of me, rather than the evidence of my aptitude tests. Hopefully, physics is a field where people are rewarded for their knowledge and intelligence rather than whatever smarmy 'people skills' HR are after. Perhaps I'm being Naive, but it can't be much worse than being in the IT industry.

Re:inflation

[Aeron65432]

Slashing interest rates to record lows (sub-1%) is going to create a subprime mortgage crisis. Anyone can see that coming, people will get easy mortgages fast and not be prepared for the adjustable rate rising. Many economists predicted a crisis, some didn't think it would be very bad. Frankly, this downtown is a necessary correction.

Inflation is probably not outpacing your salary, all those reasons inflation is overstated are rock solid. Compare your spending and consumption with last year. If your taxes increased (property taxes often do) factor that in. Unless your salary remained constant or you took a pay cut, it is impossible for inflation alone to account for a decline in real income, probably taxes and new purchases.