The Four Hundred

It may not seem like it some days, but there are worse jobs than being a member of an IT organization--at least as far as salaries and salary increases are concerned. Nate Viall & Associates is putting the finishing touches on its third-quarter salary survey for OS/400 managers and programmers, and like other surveys in recent quarters, salary increases are shrinking. No one likes to hear that, of course, but the salary increases are still considerably larger than the inflation rate, which is all some people get.

Viall has a vast storehouse of salary information for the System/3X, AS/400, and iSeries market that dates back some 17 years. The current situation with OS/400 salaries is a little different from past recessions, and as far as his numbers show, it is not nearly as bad as the recession that hit in the early 1990s. This is good news. The OS/400 ecosystem--meaning OS/400 shops and vendors of products and services for the OS/400 platform--was never really a full participant in the whole dot-com bubble, and it has not been hit as hard in many ways.

According to Viall's numbers, the Consumer Price Index, one of the U.S. government's gauges for inflation, was up 53 percent in 2002, compared with a baseline 1988 level. That year is magical for OS/400 shops, since 1988 is when the AS/400 was first launched. If you look at the salaries of managers and programmers at OS/400 shops over the same time period, they have increased by more than 100 percent--93 percent for managers and 106 percent for developers--growing about twice as fast as the index. Even in this poor economy, this is still generally true.

A bit of history: In the aftermath of the AS/400 launch, the number of people who were acquainted with the System/38 and its Control Program Facility (CPF) operating system--and who were therefore at least somewhat knowledgeable about OS/400, which is an offshoot of CPF--were quickly snapped up as the AS/400 machine sold like hotcakes. Salaries escalated considerably over the next few years, but when the recession hit in 1990, 1991, and 1992, companies locked down their IT budgets, adopted Unix and other alternatives, consolidated data centers like crazy, and either fired IT personnel or cut their salaries. People accepted salary cuts to preserve their jobs, and those who had salary cuts were probably given more responsibilities. OS/400 manager and programmer salaries actually contracted (very slightly) during this time, and plenty of people, particularly in the Northeast, lost their jobs. The dot-com boom started picking up speed in 1995, and the effects elevated OS/400 salaries a bit. In 1997 and 1998, salaries flattened for managers, but programmers continued upward in many cases. In 1998, the Y2K and dot-com booms were underway, and OS/400 professionals could command salary increases, on average, of 6 to 10 percent per year, which was almost twice the index growth rate at the time. OS/400 salary growth rates have been shrinking for a while, and Viall's preliminary data for the third quarter of 2002, which should be available in the first week of December, shows that OS/400 managers (across all titles, geographies, and business types) are seeing salary increases of about 2.9 percent, compared to 12 months ago, and that technical staff (including tech support staff, system administrators, and all levels of programmers, across all titles, geographies, and business types) are seeing increases of about 2.3 percent, compared with a year ago.

More good news: Viall says that, among those participating in his surveys, very few OS/400 IT personnel have had their salaries cut in this recession. Those few people who report salary decreases had been laid off and then reentered the workforce at a lower salary. This would seem to indicate that even though it is bad out there in the U.S. economy, it is not as bad as the early 1990s. But the layoffs are a concern because of the high-profile nature of big layoffs among IT suppliers. According to government statistics, somewhere between 4 and 6 percent of the IT workforce has been laid off in the past two years (including dot-com failures). That's a big hit, but Viall says that iSeries and AS/400 shops have not been hit as hard.

But there is another phenomenon underway at OS/400 shops, and very likely the IT world at large, that is probably not going to make managers and programmers at OS/400 shops very happy. During the boom years of the late 1990s, companies had very little choice but to let OS/400 salaries float to market levels; otherwise they risked losing key people. With the boom times gone, now human resources managers are increasingly trying to pull IT managers and programmers back into the organizational hierarchy and set their pay levels and raises to those of other managers and workers outside of the IT area. This means that IT staff are in a position of having to argue why they should be placed in a higher classification as they are pulled back into formal compensation plans. The problem is that, with a formal compensation plan, and predicable cost-of-living raises based on the index, it is harder to argue for more money as you increase your skills or the quality of your work. The outside market does affect such salaries under formal compensation plans, but it is not as immediate an effect as when, back in the roaring 1990s, IT managers and programmers could just readily jump to a new job if they were unhappy with their pay and were not truly under the formal compensation plans. Overlapping employee grade levels and a large number of grade levels--Viall says he has seen companies with 15 to 30 different salary grade levels in their IT organizations as they -develop these formal compensation plans--are difficult to manage and can create dissension among employees. Then again, so did the boom years, when new hires could command more money than established workers at many companies. A lot of people were upset about that, too.

We'll give you the rundown on OS/400 salaries for managers and programmers as soon as the numbers are available from Nate Viall & Associates. In the meantime, you can get OS/400 salary information as you plan your IT budget or your own career at www.nateviall.com.