by Meridith Levinson

IT Pay: The Good News and the Bad News

Oct 29, 2010

IT pay rates declined during the third quarter of 2010, but tech wages should soon surge as corporate shareholders demand growth

After inching up during the first two quarters of 2010, IT pay for temporary workers took a tumble during the third quarter, according to staffing firm Yoh’s Index of Technology Wages. Average hourly rates for temporary IT workers fell 7.8 percent, from $32.33 during the third quarter of 2009 to $29.81 in the third quarter of this year.

Because companies hire temporary staff before bringing on permanent, full-time employees when emerging from a recession, pay rates for temporary tech workers provide an indication of employers’ attitudes toward hiring and how they value the skills they’re seeking.

Yoh analysts believe the decline in IT pay rates are primarily driven by two major factors. The first is wage capitulation, or the willingness of job seekers to accept job offers at lower salaries or pay rates than they’d ordinarily like because they don’t expect better offers in the near future. The second factor concerns the projects companies are working on. Yoh notes that demand for high-level programmers and engineers fell during the third quarter as companies focused on maintenance projects, such as improving call centers and help desks, that require less skilled—and thus less expensive—workers than strategic projects aimed at driving growth. 

That’s the bad news about IT pay. Here’s the good news:

There are parts of the U.S. where IT pay rates remain relatively strong, according to Yoh’s data. In Microsoft country (the Pacific Northwest), wages for highly skilled temporary tech workers led the nation at an average of $59.12 per hour. Tech wages in the New York metro area run a close second, at an average of $56.09 per hour.

The other bit of good news concerns the mountain of cash many companies are sitting on. Yoh President Lori Schultz believes that when those companies’ shareholders begin pressuring them for greater profits, they’ll have to invest some of that cash in strategic, revenue- and profit-generating projects that will require more skilled workers who demand higher pay, which will in turn drive up tech wages.

To develop its Index of Technology Wages, Yoh studies more than 20,000 paychecks of 5,000 technology workers that it staffs on short- and long-term projects with clients in the aviation, engineering, IT, manufacturing scientific, telecommunications and utility industries. Yoh gathers this pay data 13 times a year in four week cycles. The job titles Yoh evaluates for pay include database administrators, hardware designers, java developers, network administrators, project managers, SAS programmers, SAP consultants, mechanical engineers, civil engineers and clinical research associates.