When the Bureau of Labor Statistics released its jobs report for March, everyone noticed the so-called “headline numbers,” which were 196,000 new jobs and an unemployment rate holding steady at 3.8%.
But buried deep in every jobs report is a sentence describing wage growth. In the April 2019 report, this sentence read, “Over the past 12 months, average hourly earnings have increased by 3.2%.”
That’s an average of earnings for all private, nonfarm employees, so it’s a pretty broad base. While some would tout 3.2% as strong wage growth, it’s a good idea to compare it to the inflation rate for last year, which was 2.5%. That means most workers kept their head above water but didn’t necessarily get ahead.
The BLS doesn’t break down wage growth by sector, so there is no indication of IT wages over the past 12 months.
But a 3% gain was the projection for the IT industry a year ago by Computer Economics, Inc., a firm specializing in research and advisory services on the strategic and financial management of information technology. That organization is projecting the same level of growth for 2019 as well.
If you’re wondering how wage growth can be so slow at a time when there are more job openings than there are workers to fill them, well, you’re not alone.
The Computer Economics 2019 IT Salary Report lists several factors that could be holding compensation down, based on interviews it conducted with executives at 123 IT organizations. Those factors include:
The changing mix of IT staff, as cloud transformation is creating uncertainty among organizations about exactly what skills they will need as the IT department evolves. Infrastructure jobs, especially data center support roles, are becoming less important, while business-facing or so-called soft skills are in more demand. The uncertainty means organizations may be conservative about competing for talent when they are not sure what talent they actually need.
Reports of a possible recession. Some economic indicators point to a possible recession in 2019. Workers are less likely to leave jobs for new ones right before a recession, as new hires are often the first laid off if downsizing is required. And organizations are less likely to be aggressive in grabbing new talent if they may have to lay them off as early as next year.
The business side is not allowing IT to grow, because of economic worries or because of pressures on the bottom line. Either way, business leaders are not providing the budget for IT to grow staff as much as they would like.
The report also notes that, for a growing number of IT workers, benefits such as the flexibility to work remotely are becoming just as important, and even more important, than salary or hourly rate. One of our Account Managers has also said that remote work and the culture of an employer’s workplace are becoming very important to more candidates.
“Even stuff like dress code is becoming important to a lot of people,” she noted.
It was just a couple years ago that everyone in the IT industry was predicting that the lack of skilled candidate for jobs would cause salaries and hourly rates to skyrocket. Except for highly specialized skill sets like cybersecurity, analytics, pega developers, and whatever the next hot thing is, that prediction fell flat, and the current outlook is no big change in pay.
So companies, especially the smart ones, are looking for ways to make their workplace more attractive. Flexible hours, remote working opportunities, access to technical training, and even dress code, are becoming part of the offer.
That’s because the reality for candidates and companies continues to be that there are far more IT opportunities than skilled people to fill them, and multiple companies are often competing for the same candidate. If more money is no longer the biggest issue, everyone needs to decide what’s important to them.