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Tech Wages Return To Heights Not Seen Since The Bubble

from the double-peak dept

Thu, Apr 12th 2007 7:28pm — Joseph Weisenthal

A new survey from an IT staffing firm indicates that wages for IT workers have hit their highest levels since January 2001, with the average employee now taking in $31.30 per hour. This would seem to dispel the idea that increased use of foreign workers, both through offshoring and the H-1B program, has had a significant impact on the wages of US workers. The takeaway is that when times are good (as they are now and were then), workers are in high demand and can command high salaries. When times are bad, low wages prevail. This would seem pretty obvious, but it's not clear at the time. In 2003, people were blaming outsourcing for the poor wages offered to American tech workers. In 2003, however, the tech economy was still crawling out of a recession. In retrospect, it's easy to say that the weak economy was a far more robust explanation for the low wages than the fact that companies were offshoring their labor. As is always the case, these things go in cycles, so enjoy the boom now, but be prepared for things to take their inevitable turn.

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22 Comments

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dorpus, 12 Apr 2007 @ 7:51pm

I noticed
I have a masters degree in statistics, though the job offers for IT professionals vastly outnumber jobs for statisticians. (Of course, statistician jobs pay a lot better and are a lot more secure.) When I post my resume on job boards, I get bombarded with information about IT jobs even though I specifically ask for statistician jobs.
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dorpus, 12 Apr 2007 @ 7:57pm

The new cannon fodder
I was reading an article yesterday about a new class of day laborers in Japan who spend nights at 24-hour cyber-cafes. (Many of them offer all-night packs for $10-$20, with private rooms and reclining chairs.) They get jobs that pay by the day through the internet and cell phones.

Will getting paid by the day be the norm of the future? Who wants to work in the same office anyway?
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anonymous, 12 Apr 2007 @ 8:47pm

My raise was under 3% the past three years. Most people I know in my company have been getting raises of about 2% to 3%. The average engineer probably makes between $70k and $100k. Our division in the company alone hired about 300 outsourced jobs in India during the same period that we hired about 5 here. You're telling me that these much cheaper salaries and expenses paid to these 300 guys in India is not impacting our hiring or raises or salaries in America? Bullshit.
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- Anonymous Coward, 12 Apr 2007 @ 9:44pm
  
  Re:
  Our division in the company alone hired about 300 outsourced jobs in India during the same period that we hired about 5 here. You're telling me that these much cheaper salaries and expenses paid to these 300 guys in India is not impacting our hiring or raises or salaries in America? Bullshit.
  You very likely would not have a job, were it not for the outsourcing and the hiring of the 300 people in India. That is how capitalism and free-markets work. Don't like it? Move to France! they do exactly what people like you and Lou Dobbs rant about . You cannot hire foreigners, cannot fire anyone, at least not without a mountain of paperwork, nobody allowed to work more than 30 hours a day. Move to socialist paradise dude. "Fair trade" my ass. Better still, move to the workers republic of soviet union...oh wait a minute, that doesn't exist anymore.
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  - Anonymous Coward, 12 Apr 2007 @ 10:24pm
    
    Re: Re:
    ...nobody allowed to work more than 30 hours a day.
    Man, and I thought 24-hour shifts were rough!
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  - Anonymous Coward, 12 Apr 2007 @ 10:29pm
    
    Re: Re:
    That is how capitalism and free-markets work.
    No, that's how a rigged market works. Average CEO's making over 300 times what their workers make is the result.
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  - Louis I. Waddell, 12 Apr 2007 @ 10:33pm
    
    Re: Re:
    Anonymous Coward wrote: "Don't like it? Move to France!"
    
    Not an option. Unlike the US, France doesn't want to import poverty.
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    - Gary, 13 Apr 2007 @ 3:18am
      
      Re: Re: Re:
      or is it 'export riches' to where you got it from in the first place!!
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nope, 12 Apr 2007 @ 8:53pm

Still doesn't justify it.
The current salaries are not relevant. The fact still remains that the supply is artificial, because they are able to dip into global pools. If there is a limited work force in the country, then RAISE THE PAY just like when there is limited oil. I can't buy my milk around the world and I have to deal with whatever supply and demand bring the price of milk to here. Employers should have to do the same. Especially since I simply can't live in America and surive on the $8,000/yr that someone in a cheaper country might be able to.
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- Anonymous Coward, 13 Apr 2007 @ 5:25pm
  
  Re: Still doesn't justify it.
  Umm why should employers have to only choose from local "stock" of employees. You may not be able to buy your milk from around the world but you probably buy a lot of your electronics and clothing from around the world.
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Maggie Leber, 12 Apr 2007 @ 9:06pm

"This would seem to dispel the idea that increased use of foreign workers, both through offshoring and the H-1B program, has had a significant impact on the wages of US workers"

You are suggesting that no wage growth over a six year period is not "a significant impact"? Bearing in mind that USD 1 is now worth about 86 2001 cents? It may be "easy to say", but that doesn't make it true.

I think this effect would be worse but for the fact that many enterprises have already worked through discovering how elusive some of the alleged "savings" supposedly available though offshoring and outsourcing can be.
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Scott, 12 Apr 2007 @ 9:36pm

yeah, that was 6 years ago...
at 7% inflation (oil is up 300%) after 10 years, money is worth 1/2 its value. Wages are FAR lower than they have been historically (and that is never going to change in this industry - get over the hope that it ever will). The sound you actually are hearing is the voice of CEOs driving wages down. Not that that is bad - it's just closer to the truth. Most people who have been in this industry have far less buying power with their wages than they did 10 or 20 years ago. 60k/year now is about $10/hour 15 years ago - people were making more on average than that back then. Ask anyone who is not just out of school a few years for a reality check. Blow off the official "industry" numbers - that's just HR trying to convince you that that crappy 3% annual raise you keep getting is good.
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- dorpass, 13 Apr 2007 @ 10:52am
  
  Re: yeah, that was 6 years ago...
  Scott, leave dumb comments to dorpus, that's what he is here for. 7% inflation? Not even dorpus has an orifice for such a ridiculous statistic. And oil up 300%? Why don't you take a 30 year timeline and see how much oil went up over that time (hint: lower than 300%). So yes, my point is that you can manipulate the data whichever way you want, and you did just that.
  
  A bunch of IT losers also forget that through 2000 the salaries were going up for many workers even when they did not deserve it. Many kids were getting hired straight out of college with salary + bonus + car and they barely knew what to do. And consider how many HIGH SCHOOL kids were getting 60k+ jobs at that time and you can see that something was way wrong with job market pricing. So stop whining about the "good ol' days.
  You had a good ride, you got your share of ridiculous salaries, now you can come back to the real world. I can't believe you whiners complain about 70k-100k salaries while the average FAMILY income in the US is 52k. Stop buying your Starbucks coffee, that will save some money.
  
  Being in a semiconductor industry, my company has a horrendous time hiring new talent ANYWHERE. New college grads come out with such rudimentary knowledge that they are hardly useful for anything but moving boxes. So no, they don't deserve the salaries you claim they should.
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Adam Geffner, 12 Apr 2007 @ 9:46pm

Article isn't seeing whole picture
While I don't dispute the article's findings about the average IT rate going up, I strongly disagree with it not having a negative impact on US IT jobs. Outsourcing has really put the crunch on low & some mid level IT positions such that these folks are getting axed as their company replaces them with outsourced folks OR just aren't hiring any more in general. People who normally would command $40k - $60k are finding their jobs have gone overseas. What has really climbed which has also brought up as a whole the IT sector are the upper IT positions for Consultants, Senior Engineers, etc. These positions have climbed over the past 18 months from averaging $85k - $100k to now $90k - $125k. You will also notice that many companies are continuing to focus on the use of contractors and consultants instead of brining people on board permanentely. Since contractors/consutlants tend to be paid on a higher hourly wage, this has artificially increased the earning average. For high end folks, these are lucrative days, albeit without much job security at any one place. For the rest, your job security has gone to India, the Phillipines, and outsourced IT Tech groups. Adam
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wiredb, 13 Apr 2007 @ 5:17am

cheers to web 2.0
Cheers to Web 2.0 ... With this novelty many applications are redone, being web apps, especially web 2.0.
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Marcus Pope, 13 Apr 2007 @ 6:13am

Does the statistic include salaries of outsourced
Probably not, and the likely set of jobs to be outsourced are the cheaper tech support jobs, not high level IT jobs. Which means it simply shifted the bell curve to the right. Though, we are getting more money at the top these days as well.
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Anonymous Coward, 13 Apr 2007 @ 6:14am

Still Issues
Part of the problem of the burst was the slew of people who simply didnt belong in the IT industry. You'd see all the time someone with 'Java in 21 hours' or something similar. The burst was also coupled with the fact that many of these people chasing money had no clue how truly difficult software could be.

I think the burst took a big bite out of the qualified tech workers too as well. CS degrees have dropped considerably so the pool here in the US for skilled engineers has dropped considerably. It works for me now but as good as it has been I still would not recommend my software career.

Outsourcing is certainly still an issue. My current project is concluding and good chunk of the minor revisions of the product is going overseas. My problem with outsourcing in general is in many situations (take China and its artificially low currency) the trade is far from 'free' but heavily modified. The second is some balance needs to be in place; outsource it all then laid off workers aren't going to spend money on products and revenues won't come in to fund new projects. Do that then our companies and our overseas contractors will not be able to stay in business.
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Lewis Salem, 13 Apr 2007 @ 6:17am

For a true picture....
For a true picture of the wage rates, you would have to include the hourly rates of those jobs that have shipped overseas. Average is not an accurate barometer of how our field is doing because it doesn't take into account when entire divisions get laid off.
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Hardware Service Tech, 13 Apr 2007 @ 8:27am

Thats why I am....
Thats why I chose to work on the hardware side. Until you can overnight a whole system to India for $5.00.
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Instructor (profile), 13 Apr 2007 @ 10:51am

Where'd they find their data?
My salary is about half what it was 6 years ago, and most of the folks I know in this business are in the same boat. Seems to me they didn't check their facts carefully.
I am in the process of transitioning to running my own business(es), because of the rampant age discrimination in software development -- mostly in the form of H1-b abuse.
--
Texas Concealed Handgun Licenses Courses in Plano, TX
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James, 13 Apr 2007 @ 11:12am

This article is correct
Tech salaries are up. But, so is the need for "GOOD" workers not the guy learned Java in "21 days" as someone put it; and certainly not a significant % of overseas workers.

The fact generally is true that if you are a qualified worker and do a good job you will make a decent salary in this industry and you aren't you are either a poor worker or you live in an area where they do not appreciate developers and technical people.

A short while back someone asked me if I thought outsourcing would impact my job/industry and I told them NO, and I still believe that. Poor quality applicants or those "chasing the money" is more of an impact than economy or anything else.
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Jim L. from Yoh, 13 Apr 2007 @ 1:19pm

For more data from tech wage survey
If anyone is interested in seeing the press release that contains all the data referred to in this report, it is here on the Yoh blog:

http://therecruiter.typepad.com/my_weblog/2007/04/more_good_news_.html
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