Pay Increase? You're Getting a Pay Increase?

Published: February 15, 2010

by Dan Burger

On the whole, workers in the United States saw their paychecks shrivel last year. Weekly earnings fell 1.6 percent. Maybe in that light, a projected increase in IT salaries of 1.8 percent in 2010 is not so bad. That's the "things could be worse" perspective anyway. Welcome to "Austerity 2010," where even meager wage increases have to be compared with worst-case scenarios that include declines in personal income and loss of employment.

The news of this little bump in pay comes from a new report released by Computer Economics, a research and advisory service that specializes in strategic and financial management of information systems. If you're not surprised by the forecast of higher wages in this economic cold snap, then you might already know the answer to this question: Who's going to benefit the most from the salary increases: the working staff, the middle managers, or the executives?

Take a seat, those of you who did not chose the worker bees. According to the 2010 IT Salary Report, it's the IT workers in the trenches who are in line for the highest pay raises. Managers and IT executives, in that order, will get the smallest bumps. I guess you could call those goose bumps. And it looks like those goose bump raises will remain in place until the recovery warms up a bit more.

In its salary report press announcement, Computer Economics wrote that the raises indicated "IT executives are responding to the need to retain their best workers and boost damaged morale." At the same time, the report mentions that executive management has other means of compensation--incentive pay, for instance--that could make its small bumps in salary much easier to accept. It also acknowledges that as the economy improves, executives and managers are likely to receive compensation at a faster rate than non-management IT workers.

If you've been working longer hours to cover for employees that have been laid-off and are unlikely to return, your less-than-the-pace-of-inflation raise may not be the salve that soothes your bruised morale. Calling it a factor in employee retention seems to ignore the ominous shadow of unemployment as being the chief reason for retention.

If you are an application developer, Computer Economics predicts your morale will be boosted by a 2.1 percent increase in salary, placing you at the head of the table. The developers' group includes application programmers, data analysts, database administrators, business analysts, architects, and others involved in the development of new systems as well as the maintenance of existing systems. No specific information was provided with regard to specific skills that would be rewarded higher than others.

In line for the best raises behind the developers are the operations folks, where salaries are forecast to warm up by 2 percentage points. The operations category includes computer operators, production control analysts, technical support representatives, help desk representatives, technical writers, trainers, and librarians. Network and systems support personnel are also going to beat the overall IT average, but just barely. This group, which includes network administrators, system administrators, storage administrators, security analysts, telecom analysts, and Web masters, among others, should expect a 1.9 percent salary increase on average.

Of course there is a degree of wiggle room in these estimates. Not all application developers, for instance, are playing with a full deck. By that I mean that some developers have stacked their decks with a wider array of skills that make them more valuable than others.

"The biggest issue has to do with skills," says Carol Comeau, who has owned her own IT recruiting business specializing in IBM AS/400 professionals for more than 20 years. "Employers," she says, "want people with more than just the basic skills and employees need to offer their companies more." Comeau, by the way, is also one of the founding members of the OCEAN User Group, which is based in Costa Mesa, California.

From Comeau's West Coast vantage point, she's seen employers looking for highly specialized skills, but not willing to pay any more to get them. "Salaries haven't changed that much in the past four or five years," she says, while also noting the pay rate for contract employees has dropped by about one-third and starting salaries for college graduates entering the IT world has dipped by approximately $10,000 per year.

"Compensation professionals usually make sure that the salary structures move in lock step with inflation in order to ensure that structures represent market rate for jobs," says John Gibbons, the program director for human capital at the Conference Board, a worldwide business research association. "They budget increases in a particular year to reward great performance, allowing earnings to exceed inflation and move people up through the ranges. Salary ranges also represent employers' anticipation of what the job market will require. Projections of near zero percent in real terms mean that employers are making the assumption that the salary market is simply not going to move up, regardless of increases in the cost of living."

The 2010 salary projections from the Conference Board show overall salary increases in the United States will be below 3 percent for the first time in more than two decades, and projected 2010 salary structure adjustments for all categories of employees are not expected to top 2 percent, which is well below the Conference Board's forecasted inflation rate of 2.6 percent.

"U.S. workers will continue to face downward pressure on their salaries and wages," says Linda Barrington, managing director of human capital at the Conference Board. "Without the purse strings loosening on financial rewards, employers are going to have to rely on other ways of engaging employees, especially top performers, in order to keep their companies competitive."

The Conference Board has been conducting surveys for 25 years, and the 2010 forecast for median salary increases is the lowest it has ever recorded.

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