The DICE Tech Salary Survey was released late in March. I’ve been behind on my reading, so it wasn’t until recently that I got a chance to dig into it.
One of the most surprising data points in it was: “Overall technology salaries in the U.S. were essentially flat year-over-year (-1%), at $92,081 annually from $93,328^ in 2015, with some areas across the country and specific skills areas seeing increases.”
Downward pressure on tech wages? Really?
But then I got to thinking about it. Last year’s election offered starkly different choices in presidential candidates—with starkly different visions for America. That kind of uncertainty is never kind to the economy. Wage stagnation in that context makes sense.
We all know that the stock markets responded very positively after the election outcome was finally known. Responded positively to the candidate who won? Responded positively to the end of the uncertainty? That’s a question for the Monday morning quarterbacks, aka historians, to figure out sometime in the future.
In June, the economy added 220,000 jobs. The job growth for April and May was also adjusted upward, making the average job growth in the second quarter 194,000/month. The unemployment rate went up slightly to 4.4%, indicating that ever more people are returning to the job hunt. Even so, unemployment remains below the magical 5% rate, what the Federal Reserve considers to be the “full employment rate.”
This sounds like great news, doesn’t it? Election uncertainty is behind us. Jobs are being added. What’s not to love?
The New York Times expressed it nicely: “But the hunger for workers and mounting complaints of labor shortages have raised a vexing question: Why isn’t the heightened demand for workers driving up pay?”
Going back to the DICE Tech Salary Survey, here’s another data point that I found interesting. Forty percent of the respondents said that they anticipate changing employers in 2017. And out of that forty percent, sixty-three percent said that they were doing so to seek higher compensation.
My back-of-the-napkin math says that twenty-five percent of the tech workforce is going to be interviewing this year in an attempt to find better pay with a new employer. That is, if the DICE survey respondents are representative of the whole.
If you have made any attempt at recruiting and hiring this year, you are likely to have experienced one or more of the following:
- You find a candidate you like, make an offer, he’s got two or three offers on the table to weigh yours against.
- You find a candidate you like, but by the time you are ready to make an offer, she has already accepted another offer and is no longer available.
- You receive a resume, call the candidate a few days later to schedule an interview, he’s already accepted an offer.
- You make an offer to a candidate at Salary X, and she says she’s expecting Salary X + $10K or $15K. These numbers take your breath away.
Candidates who have experienced wage stagnation have been waiting for this moment. Finally, a great economy for job hunting.
Hiring managers need to recognize this and, in some cases, adjust their approach.
First and foremost: You need to move extremely rapidly in your recruiting process. Don’t operate serially (i.e. one thing after another). Interview all potential candidates concurrently so that if you lose your #1 pick to a rival offer, you aren’t starting at the beginning of the process with your #2 pick.
Next: Have salary expectation conversations earlier in your process so that you don’t waste your time on candidates who exceed your cap. Or increase your cap.
And that then leads to an entirely different train of thought, which is that you should consider reviewing the wages you are currently paying and offering increases to your existing workforce so that they are contented to stay put. For the team members you have, spend time researching salaries so that you know whether or not you are competitive. Overall compensation package still matters (especially with health insurance costs sky rocketing). But don’t lose your team in whole or in part when giving raises this year could make a substantial impact on job satisfaction.
Finally: Savvy managers are looking at candidates not in terms of finding the perfect match, but finding someone who has the right fundamentals—with the idea that he or she can be groomed or developed into the worker that they need.
With the pressures that exist on the labor market, candidates are recognizing that the time is ripe to finally ask for—and get—more money. They are also recognizing a great climate in which to make a career step up.