IT Salaries Rise by 5.2 in 2006, Dice Survey Says

Published: January 29, 2007

by Timothy Prickett Morgan

The online technology and engineering career site Dice has just completed a Web-based poll of over 19,000 information technology professionals in the United States, and based on the data it gathered, Dice surmises that salaries across all titles and levels of experience rose by an average of 5.2 percent in 2006. Salaries are on the rise, say the analysts at Dice, in part because the market for IT professionals is tightening.

The tightening of the IT labor pool was cited as a trend by a report put out in November 2006 by PricewaterhouseCoopers, called Technology Executive Connection--Successful Strategies for Talent Management. PwC said that competition for top IT talent has never been as fierce as it is now--which is a bit hard to believe for those of us who remember the dot-com boom. But some tightening in the IT labor pool is almost certainly taking place. Many participants in the IT compensation area--particularly the headhunters who fill empty positions at companies, but also the human resource directors who are trying to fill them--have said that a lack of training of entry IT personnel over the past seven years (when the economies went into recession) and the retirement of aging and experienced IT staff members (particularly key managers and programmers) would ultimately result in a double-whammy effect on data centers, resulting in too few people to fill too many positions. To retain key people, companies have to raise salary or provide other compensation and benefits. And this seems to be what is going on.

"By offering competitive salary and benefit plans, companies are more likely to attract and retain new employees, which will help fill the growing gap in available talent," said Scot Melland, president and chief executive officer of Dice Holdings, the company that runs the Dice site. "The survey also found that higher salaries often correlate with higher job satisfaction, which underscores the importance of regularly reviewing compensation."

According to the 2006 IT salary survey results from Dice, the average IT salary rose by 5.2 percent to $73,308. IT workers in the banking, financial services, and insurance businesses had a higher average salary in 2006, at $82,504 (up 8 percent), compared to a low of $63,830 for IT workers at retail and e-commerce companies (up 14 percent). IT workers at government and defense companies were in the middle of the pack, at an average salary of $75,086 (up 9 percent), with those in manufacturing and medical/pharmaceutical industries earning a little less and those in IT firms and telecom companies earning a little more. Across these industries, women in the IT field reported earning from 7.1 percent to 11.5 percent less than men, with those working at computer hardware makers reporting the smallest pay gap and those in the medical industry reporting the largest gap.

As you might expect, those with the highest salaries reported the most satisfaction with their jobs, with 39 percent of those polled reporting they were somewhat satisfied (and with an average salary of $80,046) and 14 percent saying they were very satisfied (with an average salary of $91,234). About 21 percent of those polled said they were somewhat dissatisfied with their jobs (and earned an average salary of $62,845), while another 11 percent said they were very dissatisfied and had an average salary of only $50,180.

As is perfectly logical, pay scales with experience, and the Dice survey found that employees with less than a year in the IT field were getting an average salary of $42,414, compared to an average of $55,922 for those with three to five years of experience and an average of $90,125 for those with more than 15 years of experience. One indication of a tightening IT labor pool is that entry-level salaries rose by 13 percent from 2005 to 2006 in the Dice surveys for those years, and salaries for those with one to two years of experience rose by 14 percent. But salaries for those with more than 10 years of experience only rose by 4 percent. The newbies are getting bigger pay raises, and that is because entry salaries must be on the rise.

The average IT executive--who bears the title chief information officer, chief technology officer, vice president, or director of IT--had a salary of $108,578, according to the Dice survey, an increase of 4 percent. Project managers did about the same in 2006, with a 4 percent pay raise to an average pay of $96,475. MIS manager pay actually declined a few hundred bucks to $82,510, but database developer salaries grew by 8 percent to $79,911, systems developer salaries rose by 8 percent to $78,476, and application developer salaries increase by 6 percent to $78,037. Developers working on client/server applications reported their salaries fell by nearly $700 (again, this is an average) to $74,602. Database administrators are still pretty highly compensated compared to programmers, with the average salary in the U.S. rising by 5 percent to $85,441. Security analysts, which are becoming a scarce commodity, saw their pay increase by an average of 6 percent to $79,412.

Silicon Valley is still the place to get the highest pay in the IT sector, with an average salary of $90,310, up 6 percent. Boston came in second, with an average IT salary of $80,308 (up only 1 percent), followed by New York City, with an average salary of $80,006 (up 5 percent) and Salaries in the Washington/Baltimore metro area, in Seattle, in Los Angeles, and in San Diego were essentially the same as in New York--from a few bucks to a few hundred bucks lower--but had increased at between 8 and 10 percent from last year's levels. Salaries in Philadelphia and Dallas/Fort Worth were lower than in New York and Boston--several thousand dollars lower per year. But, then again, the cost of living is lower in these areas, too.

Demand for employees who understand ERP systems, Sarbanes-Oxley compliance, and customer relationship management software seems to be strong, and these skills can command the highest salaries--in excess of $90,000. Java and SOAP programmers and Oracle and Sybase database experts also command high salaries.

You can see the full 2006 Dice salary report by clicking here.

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