How Does Three Percent Sound?
December 8, 2014 Dan Burger
IT salaries are nudging their way upward and the outlook for hiring IT workers is somewhat improved as we get ready to turn the page on another calendar year. The Computer Economics 2015 IT Salary Report anticipates wages for Joe and Jane IT Worker will rise above the rate of inflation to the tune of 3 percent in the coming year, a modest increase that signals wage growth in these low-inflation times.
The study shows that even at the 25th percentile, organizations are planning to give their IT workers a 2 percent raise. Most organizations are increasing pay rates as the jobs market improves and as the recovery broadens its base, says John Longwell, vice president at Computer Economics. These are salary benchmarks.
“It is useful for the IT executive who is preparing a budget for a CEO and saying. ‘I would like a 3 percent increase in my salaries because this is what we need to pay to be competitive.'”
Variations will occur based on geography, industry, and more specific skill sets.
“The reality is local market conditions are going to determine that a company in Iowa is paying less than the company in California. Inflation rates vary from one location to another,” Longwell says. “But an improving economy typically leads to higher wages, which leads to organizations making plans to retain key workers.”
The Computer Economics forecast assumes the economy and organization’s ability to raise prices will improve in 2015. As a point of comparison to the overall employment picture, the U.S. Labor Department’s Bureau of Labor Statistics reported total cost of employment for all civilian workers rose 2.2 percent for the 12 months ended in September. That was slightly ahead of a 1.7 percent rise in the Consumer Price Index during that time.
As the job market improvement continues–Computer Economics forecasts it will be in line with the improvement in 2014–the employee turnover rate increases. This is a measurement of voluntary turnover–people moving to another company because that company is paying more money.
“Turnover is indicative of a strong job market and rising wages,” Longwell says. “As that occurs, companies have more trouble hanging on to their workers. As the turnover rate rises, companies have to do more to hang on to their people.
“When times are bad and people are not getting pay raises and there is not a lot of job mobility, that is a good time for strong companies to shop for employees. It’s like when the housing market is bad. That’s a good time to buy, but few people have money available so the number of home sales will be small. Sales rise when the market rises.”
Longwell says he believes companies are beginning to replace contingency workers with full-time people and that those that shop early will get the best deals because in the future employees will get harder to find and will cost more.
The full Consumer Economics report estimates 2015 wages for 69 IT job functions for more than 400 U.S. metropolitan areas. The report is based on a study that draws information from the company’s annual salary survey of IT organizations in the U.S., its IT spending outlook survey for 2015, its annual IT spending and staffing benchmarks study, and the U.S. Department of Labor’s Bureau of Labor Statistics compensation data.
For further information visit www.computereconomics.com.