If Tech Is So Important, Why Are IT Wages Flat?

dcblogs writes "Despite the fact that technology plays an increasingly important role in the economy, IT wages remain persistently flat. This may be tech's inconvenient truth. In 2000, the average hourly wage was $37.27 in computer and math occupations for workers with at least a bachelor's degree. In 2011, it was $39.24, adjusted for inflation, according to a new report by the Economic Policy Institute. That translates to an average wage increase of less than a half percent a year. In real terms, IT wages overall have gone up by $1.97 an hour in just over 10 years, according to the EPI. Data from professional staffing firm Yoh shows wages in decline. In its latest measure for week 12 of 2012, the hourly wages were $31.45 and in 2010, for the same week, at $31.78. The worker who earned $31.78 in 2010 would need to make $33.71 today to stay even with inflation. Wages vary by skill and this data is broad. The unemployment rate for tech has been in the 3-4% range, but EPI says full employment has been historically around 2%."

Comments

tech is a fairly broad category

[Trepidity]

If you're a competent programmer and live in the SF Bay Area, wages are definitely not flat, to the point of absurdity. There are kids just coming out of college making $80k or more as a starting salary, and quickly rising up to $120k+ within only a few years of experience.

Re:tech is a fairly broad category

[Trepidity]

I hear this a lot, but as someone who lived a good life for a few years in the Bay Area on a grad-student stipend, I don't really believe it, at least if you don't have kids. I don't understand how single people could make $80k and feel they can't handle the cost of living, unless it's due to social factors (all their friends make more, so they're spending a shit-ton of money on bars, restaurants, and other entertainment).

Re:tech is a fairly broad category

[bzipitidoo]

10 years ago I was making $80k/year in the Monterey area. You certainly can live on that, if you stay the hell out of a house. I rented an apartment for $900 per month. Cheapest house I saw was half a million for a tiny, run down 1950s house with 2 bed, 1 bath. I could have had something for "only" $300k in Salinas, about 20 miles away. But something else to think about is the lack of job security. And sure enough, that job ended in a total train wreck. I could have entered into a brutal mortgage, only to have to sell a year later. Sales commission of something like 5%, plus property taxes (I never did find out how bad that was), and most of all the fact that in the first years of a mortgage one does not make much headway on the principal, means I could have easily forked over $50k or more for the privilege of living in a house in California for 1 year. The only thing that would have saved the situation was that houses were still bubbling up at that time. But suppose I had bought a house, and the bubble had burst during the year I was there, and I go underwater on the mortgage? Despite making $80k, I would have lost money on the deal, and would have been better off if I'd been unemployed rather than take that job in California.

If you're thinking only a dummy would have bought a house, remember at that time it was inconceivable that a house could turn into a bad investment like that. Many people advised me in all seriousness to buy a house. A few of these were my bosses, who leaned on me to commit to a major buy so that in their eyes I would be a more "reliable" employee. That's all part of the management theory of "hold gun to employee's head". I would work harder, because if things blew up I would lose my home. Well, to use a car analogy, pulling off a miracle by making the car able to go 300 mph does not help if the management can't figure out which road to take. And if I also had car payments, a student loan, and a family to support, what would have happened? I can imagine the student loan administrator hammering on me to make payments since I was employed, ratcheting up the rate perhaps even as the house was drowning me.

So, yeah, $80k per year is not enough to bail you out if you in all innocence pursue the American Dream and it turns into a nightmare. The American Dream wasn't supposed to be a trap.

Re:tech is a fairly broad category

[bonehead]

They think it's a bargain because they are getting more hours, meanwhile less is getting done and it's getting done in the worst possible way.

It seems that particular idiotic management mentality will never die.

I had a position a while back where I took over for someone who had the companies entire infrastructure thoroughly messed up. He meant well, just didn't have the slightest clue what he was doing. It took me about 2 weeks to put things in order and automate a large number of tasks. At that point, I could get my job done easily in 4 to 6 hours a day.

When it came time for my 6 month review, it was mediocre at best, without the pay increase that I had been expecting. My predecessor was held up as a shining example of what they were looking for, since he was hard at work all day, and frequently stayed 2 or 3 hours late in the evening. No mention was made of the fact that their systems were now running smoothly and that the only reason the guy put in so many hours was that it took him that long to come up with even band-aid solutions.

Needless to say, I moved on to a much better environment shortly thereafter.

This is the same mentality that prevents telecommuting from being offered even when it would be a great deal for all parties. It's all about being able to "see" you work, with no regard given to the quality of the product of that work.

Because income growth is shifting.

[Anonymous Coward]

Income growth has been shifting since the late 1990s from middle class to upper-middle and wealthy class.

In fact in many sectors, incomes have been shrinking for those in lower management and below. Meanwhile, incomes of upper management (i.e. CEOs, University administrative staff) - basically people who really don't work or anything productive - have been sky rocketing.

IT is very important... but as a CEO I don't want to pay a lot for it.

Re:If cleaning toilets is so important...

[fermion]

Exactly. Wages have to due with such things as barriers to entry, need and ability to supervise, as well as skill set. Importance of job seldom has anything to do with it. For example, executive officers are not necessarily paid well because they have important jobs, but because they they are dishonest, cannot be effectively supervised, and so they are paid high amounts to not screw the firm.

Cleaning staff, however, can be easily supervised, intimidated, and if they do not do a good job the repercussions are limited. There is also a low barrier to such a job.

What I think has happened, particularly in the past 10 years, is that software used to track IT resources has become very sophisticated. It has made it possible for the real software development to be executed by the average person. It has also allowed automated supervision IT staff. More business rules are encoded in the management packages.. In the 80's and 90's one had to have trust that the person who was working IT. Now the tools are there to not only check on the developer daily, but automated difficult tasks.

So just like any other industry, automation has made highly skilled workers redundant. We no longer need a tailor to make our clothes. Anybody off the street can cook your food. Modern check out registers means that we no longer need have trust in our cashiers. And since so much IT is simply clicking icons and plugging things into other things, with measures taken to insure they cannot be plugged in wrong, there is really no reason a semi-literate person off the street can't be successful with minimal training.

Lots of reasons

[ErichTheRed]

One very important point that you may have missed is this -- tech IS very important. Even organizations who don't care about IT beyond basic file and print have a stake in making sure things they use work well. But, IT is one of those fields where you can still cover over massive, huge, big balls of fail with money to the right vendor or cheap labor. Because of this, companies don't like to pay for competent help, or if they do, they squeeze every last nickel out of it that they can because they feel it's a waste.

Also, "tech" is too broad. The desktop support guy changing toner cartridges, the help desk person changing passwords and the systems architect trying to make sure everything doesn't come crashing to a halt when you put it in the same room have very different jobs, skills and responsibilities. On the simple break-fix support/part-swapper side, the work is getting easier and more automated. This means that you can hire fewer people, and those that you do hire don't need to have as much specialist knowledge. I'm a systems engineer, dealing with Intel server boxes every day -- the vendors have resorted to putting an extra "Don't pull this drive out!" light on hard disks so that part swappers don't pull a second drive out of a failed disk array and cause data loss. Even though the failed drive has a big blinky red light on it. That tells me that customers have complained about this happening enough...so you can draw your own conclusions about skill sets. On the higher end, you just run into wage pressure, companies trying to get away with as little as they can.

I think part of the reason for flat wages across the board is just the overall impression that "computers are simple" now, so why do we need to pay these geniuses to run them? Anyone in corporate IT is keenly aware of the "consumerization" trend, where everyone expects all systems to be as seamlessly integrated as their iPad, no matter how complex.

So at least in "big corporate IT," there are a few things putting wage pressure on:

• Automation - just like all the other office jobs, anything that isn't absolutely essential is being turned into an automatic process.
• Ready supply of cheaper labor - ...and the lack of understanding that cheap labor may not always be the best way to spend money, especially if you have to pay a consultant 5x that amount later on to clean up the mess.
• Lack of standards and understanding - IT is still seen as a magic box, and any attempts at standardizing things (_cough_ITIL_cough_) have just made things worse and completely pigeonholed a lot of IT employees.
• Vast difference in skill sets - It is still very difficult to tell whether or not the person you hire is a complete dud based on the interview. I think that a lot of organizations pay less simply because they don't know whether they're actually getting competent help.
• CapEx vs OpEx - In the old model, you kept employees on staff for a long time, trained them and they learned the business inside and out. Now, accounting makes it cheaper to just hire the people you need, when you need them, and pay them out of the operating expense budget.

Things like this make IT a very difficult field to work in. I'm not stupid enough to call myself a rock star IT god, but I certainly feel I'm competent and do a good job. Fortunately, I have an employer who appreciates that (for now) and I do OK. The other class of people who are making serious coin in the IT "racket" are the nomadic consultants. How many places have you worked where these guys seem to parachute in out of the sky when a very narrow specialist problem needs to be solved, charge hundreds an hour for months, and are off to the next place requiring that same specialty just as quick as they came in? I know a lot of these guys personally (can't do the lifestyle if you're married or have any sort of ties to any one place or thing) and they're definitely not hurting. For those of us tied down by one thing

Re:Rich Get Richer

[Anonymous Coward]

How to tell if someone is trying to trick you: when they use 'wages' as a measurement instead of 'total compensation.'

I'm not saying the situation is great, but if someone shows you numbers like that, you know they aren't being honest.