IT Salary Increases Are Anemic in 2007, Says Dice Survey

Published: February 18, 2008

by Timothy Prickett Morgan

Dice, which is a Web site devoted to helping engineers and other technology experts get a job, recently put out its report casing how well or poorly professionals in the IT sector did in terms of salary and raises during 2007. And the short answer seems to be that, on average, pay raises were not anywhere near the increases that programmers and managers saw in 2006. That doesn't mean that IT personnel are not in high demand, but that companies are being a bit stingy with the cash.

Dice surveyed more than 19,000 IT professionals to create the raw data behind its IT compensation study, which can you can read here. And according to the mathematics performed on those survey results, average salaries in the IT market across all titles and all regions within the United States came to a 1.7 percent increase in 2007 versus 2006, to an average of $74,570. In 2006, the same average IT salary grew by 5.2 percent to $73,308, and compensation for IT contractors rose by nearly 9 percent in 2006, driving up the overall average. In 2007, contractors also helped pull up the average again, with a 3.7 percent growth to $93,017, but the salaries for the pool of full-time IT workers grew by only 1.7 percent to an average of $72,003. (It is not entirely clear what pulled the average down, nullifying the effect of the contract workers, but my guess is that it is part-time IT staff.)

"While technology professionals experienced overall slower salary growth in 2007 than in 2006, the traditional technology hot beds of Silicon Valley, Boston, and Atlanta saw better than average salary growth, and IT managers saw strong salary increases," explained Scot Melland, chairman, chief executive officer, and president of Dice Holdings, the company that owns the Dice.com site. "Technology workers remain among the highest paid employees, especially those with management experience and hard-to-find skills. Additionally, the majority are satisfied with their compensation."

In the statement that Melland released with the IT salary survey results and in an online interview with the Wall Street Journal, Melland said that the unemployment rate in the IT sector remains lower than in the labor market at large. The average annual unemployment rate for the IT sector was 2.1 percent, compared to 4.6 percent in the overall economy, according to the U.S. government's Bureau of Labor Statistics. A report released by the Department of Labor this week indicated that the overall U.S. economy had lost 18,000 jobs in January 2008, the first time there has been a job loss in a month in four and a half years. In December 2007, there were 1.8 million layoffs (the same as in December 2006), 4.6 million new hires in non-farm industries, and a bit over 4 million job openings. New hires and job openings are slowing in the overall economy at this time, but thus far, despite the woes in housing, real estate, and financial services, the aggregate layoffs in the U.S. economy has not seemed to accelerate in a manner consistent with a recession.

In the WSJ interview, Melland said that there are a number of factors that make unemployment low in the IT sector. There is strong demand for technical skills (which has been the case since 2003), but there has also been a tightening supply of tech experts coming in from foreign countries due to visa restrictions implemented since 9/11, and there are fewer math, science, and engineering graduates coming out of U.S. colleges and universities. Project managers and MIS managers have been in particularly high demand, said Melland, because companies are eager to find "people who can manage teams."

Dice said that the number of job postings seeking a project manager have grown by 25 percent between January 2007 and January 2008 in the U.S. and are up 50 percent since January 2006. Project managers are now averaging more than $100,000 a year in salaries, joining IT managers. Project manager salaries rose by 5 percent in 2007, to $101,292, while IT managers (which can be a CEO, CIO, CTO, VPDP, director, strategist, or architect, depending on the company) saw salaries rise by only 1.5 percent to $107,830 in 2007. MIS managers, who are lower-level IT people at big companies or the head IT honcho at smaller companies, saw their salaries rise by 7.8 percent to $88,934.

Averaged over all titles within the IT organization, experience didn't seem to matter that much in terms of raises, but it does, as the Dice survey data shows, yield higher salaries. However, there are exceptions to that generalization. Newbie techies with less than a year of experience saw salaries drop by 2.3 percent to $41,457. IT staff with one or two years of experience averaged $47,648 in salary in 2007, up only 1.5 percent, while those with 11 to 14 years of experience saw salaries rise by 3 percent to $86,426. Those with 15 or more years of IT experience obviously make the most dough, raking in an average of $93,107 in 2007, up 3.3 percent. Predictably, those with higher salaries say they are more satisfied with their IT jobs and those with lower salaries say they are not happy.

And despite what some may say about an IT gender pay gap not existing, Dice still contends that there is one. Salaries for women in IT were flat in 2007, at an average of $67,507, compared to the average for men of $76,582, up 2.4 percent. The gender pay gap therefore increased from 9.7 percent in 2006 to 11.9 percent in 2007.

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