By Michael Domingo
August 2010
In our 2010 salary survey, we find that IT salaries generally remained flat, but some respondents got raises -- giving rise to general optimism about salaries next year.
The recession wreaked havoc with salaries and jobs across all segments of the U.S. workforce, and IT workers were no less immune to the effects. So maybe it's good news that we didn't see a dip in IT salaries among the readership in this 15th Redmond salary survey. Looking at the glass half full, compensation improved by $536 (or 0.63 percent) on 2009's overall average of $83,113, to a 2010 mean of $83,638 (see Chart 1. It's not much, but it's something. "It doesn't surprise me that salaries went up, even though minimally," says Russell Young, a network administrator with a government health care company in Montana. "With the government's big push -- especially in the health-care arena -- to utilize IT more effectively, the skill sets are more in demand than ever." Michael Hensley, a systems administrator with a Redmond, Ore., nonprofit agency, agrees with Redmond reader James A., who notes: "Salaries probably increased because companies are hiring less and trying to get more out of existing employees. Higher salaries improve retention and help keep more productive employees." [To preserve the anonymity of some respondents we cite throughout this article, we refer to them by first name and last initial only. -- Ed.] James A. and Hensley aren't alone in their opinions. There's a similar refrain from many respondents we followed up with in the weeks after the survey. We're seeing corroboration of their observations not just in our own survey, but in recently published, external sources that show salaries in IT have been trending upward, while jobs remain scarce.
An IT salary study just released in June by Janco Associates Inc. shows salaries ticking up slightly but remaining mostly flat: IT executives at large enterprises had a 0.97 percent increase, while those at midsize companies edged lower by 0.75 percent, for a combined 0.21 percent uptick. The Janco study also projects hiring will be weak in the next year.
Data from the U.S. Bureau of Labor also shows IT-based jobs being added between 2008 and 2018 at a pace of 28,660 per year. While those results come out weak in comparison to year-over-year data for computer-based jobs, the Bureau of Labor does consider these numbers to be "better than average" against the general workforce.
2010 doesn't look anything like 2009's banner results, when salaries went up 7.9 percent from the previous year. "I'm running lower than last year at the moment," says Bill O'Reilly, president of Seattle-based TEChange Inc., an IT service provider for small to midsize business (SMBs). "Businesses seem to be in hunker-down mode and, regardless of what the economic indicators say, they're waiting to see what happens this year," O'Reilly explains. Some respondents were luckier than most, mainly due to some companies offering cost-of-living adjustments, or even more. "My salary went up by 3 percent," says Rob Zelinka, director of IT infrastructure at railcar management company TTX in Chicago. "I was elated, and surprised," Zelinka adds. We heard the same story repeated time and again from readers we followed up with. Chart 2 breaks down the numbers by range, and it's not as pretty in comparison to last year's numbers. While those earning between $20,000-$40,000 at the low end and anyone making more than $95,000 saw nice increases year-over-year, those in the $40,000-$75,000 range were poorer than in 2009. Those in the $70,000-$74,999 and $85,000-$95,000 range reported making about 15 percent less than last year, as well.
While it's been a challenging year for compensation, the general feeling among respondents is that they're fairly compensated. This year, we asked respondents to tell us how their salaries measured up to last year. Oddly enough, more than half believe their salaries to be higher, with only 11.7 percent feeling the cut (the rest say their salaries are frozen) -- even though the mean result clearly shows that the gains were balanced out by the negative result of the losses. More than 56 percent of respondents expect such optimism to translate into higher compensation in the next 12 months. "I think the trend will probably continue. If nothing else, I think you'll see cost-of-living increases," says O'Reilly. "How long it will continue is anybody's guess." "A shortage of good-quality IT people will create a vacuum and a demand for higher paid salaries," argues Kevin F., an IT manager in Seattle. "Lower-end jobs will be outsourced, but it's very hard to outsource people who truly align your business with IT."
Nearly 40 percent expect no change whatsoever. Then there's the 5 percent who, like Richard R., a management information systems director with a media company in New York, expect "a continuing drag on salaries" due to the job market and various other factors.
Later With a challenging year in regards to compensation, we didn't expect good news to come from raises. If anything, it was a mixed bag of good and bad news. The bad news on raises first: 40.3 percent of respondents, or 13.5 percent more than a year ago, saw none. "I was actually expecting a raise this year," says Hensley. "The recession was a factor in not receiving a raise." Helmut Schonwalder, an IT support technician at Monterey Peninsula College in California, didn't expect a raise at all, for good reason: "The state is still in the middle of a budget crisis, [so] college employees can't expect much in the form of raises."
So, what's the good news? Only 7.4 percent (or about 18 percent fewer than last year) got a decrease in salary. Even better news: Of those who did get a raise, the average raise, $2,263, turned out to be 44 percent better than last year's result. "I was given one because it's believed I am a key member of the team," says Zelinka in Chicago. And D.Y., an IT specialist working for the federal government in Virginia, sums up his 2 percent raise this way: "I'm just happy to be employed." The results in Chart 3 suggest that raises were fairly similar to a year ago, with most of them below $10,000. We also asked respondents to give us a sense of next year's raises, and what we found was a unexpected: Only 32 percent expect no raise, while only 3 percent believe they'll see a wage decrease. When we see figures like that, we can only think that respondents see good news on the horizon.
Bonuses While raises were better than last year's, bonuses (see Chart 4) went in the opposite direction. More than 54 percent of respondents claimed no bonus this year, which is worse than the year-ago period by 2 points. More than half of all respondents say that bonuses were based on company profitability, or a mix of profitability and personal performance. So, with the recession impacting company profitability, it follows that fewer companies would offer bonuses.