Tech Workers Lower Pay Expectations
October 15, 2010 12:09 PM
Skilled workers are accepting job offers at lower salaries because of a lack of confidence in future pay going up even as many technology companies are flush with cash.
That was one of the trends uncovered in the latest Yoh Index of Technology Wages, which since 2001 has been benchmarking technical wages in information technology, life sciences, engineering, healthcare, aerospace and defense.
According to the third-quarter index, actual wages declined by 7.8 percent, bringing the index to its lowest level since September 2006. The dip comes after the first two quarters of 2010 showed a slightly improving job market, as expressed by wage rates for skilled employees.
“We see this quarter’s decline as further evidence of a sluggish recovery that continues to impact demand for skilled workers, and has forced job seekers to lower their wage expectations—even for highly skilled positions,” said Lori Schultz, president of Yoh. “This wage capitulation, or the willingness of job seekers to accept a job offer today (comes) because they do not expect tomorrow’s opportunities to hold much in the way of increased pay.”
The third-quarter decline was amplified by a shift away from strategic projects that demand higher-level skill sets toward more commoditized projects focused on lower-level objectives. For instance, demand for high-level programmers and engineering positions fell as companies focused on solidifying their market positions by enhancing call-center services or help-desk capabilities.
Skilled positions in healthcare and clinical research have suffered as organizations work to make sense of healthcare reform and delay investments in skills and people until the regulatory environment takes focus, according to Yoh. Wages were also negatively affected by declining consumer confidence and the upcoming US election.
There were regional pockets of optimism. In the Pacific Northwest, for instance, wage rates for temporary highly skilled workers led the nation at $59.12 an hour. Similarly, the New York Metro area recorded wage rates for temporary highly skilled employees at $56.09 an hour.
Furthermore, the Yoh analysts predict that corporations will have to move more boldly as the economy turns and delayed or mothballed projects come back online. Corporate cash reserves, an indicator of the industry’s pent-up ability to invest when presented with opportunities, are among the highest ever measured for select sectors of the economy.
For instance, many technology companies are flush with cash, which places them at a unique advantage in a labor market where wages of highly skilled workers have been suppressed during an extended economic downturn.
“Ironically, those companies now sit in the enviable position of being able to purchase highly skilled workers at 2008 wages, according to the Yoh Index,” said Schultz. “As shareholder expectations for profits escalate, and those expectations become increasingly difficult to achieve through cost-cutting, growth will be a primary driver of value, which will require highly skilled labor to manage more sophisticated initiatives. “
Temporary labor is expected to play a critical role in the economic reversal, as companies turn to a more agile and flexible workforce to benefit from early opportunities that present themselves in a rebounding economy, she added.
