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If Tech Is So Important, Why Are It Wages Flat?

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graph showing stagnation


Despite the fact of technology's increasingly important role in the economy, IT wages remain persistently flat. The still sluggish U.S. economy gets most of the blame for this wage stagnation, but factors such as outsourcing and automation also contribute to the problem, according to analysts. IT salaries have not kept pace with inflation. For example, in 2000, the average hourly wage was $37.27 in computer and math occupations for workers with at least a bachelor's degree. In 2011, it was $39.24, adjusted for inflation. In real terms, IT wages overall have gone up by $1.97 an hour in just over 10 years, based on a survey the Census Bureau conducted for the Bureau of Labor Statistics. These government statistics are largely supported by similar findings in the private sector.

Companies are making more use of contracted labor, allowing organizations to staff up temporarily during periods of high demand and essentially run virtual just-in-time talent supply chains. There is a correlation between the wages paid to temporary professional workers and the salaries of full-time employees, because historically temporary demand increases have preceded an increase in permanent employee demand. However, this recovery period has been so sluggish that the industry has not seen the correlation between an increase in contracted labor indicating that an increase in permanent jobs is imminent. Moreover, the globalization of markets for goods and services is helping restrain wages across many sectors: by some estimates, 30% of IT organizations are offshoring some app development work.

Against this backdrop of flat IT wages, there is still a debate of whether or not the United States is experiencing an IT skills shortage. Companies are citing their own difficulties in recruiting workers as well as statistics indicating that there is a shortfall in the number of U.S. students who are graduating with degrees in computer science. In a recent report, Microsoft says that the U.S. economy each year is producing 120,000 additional computing jobs that require at least a bachelor's degree, but only about 40,000 computer science bachelor's degrees are awarded annually. Yet, less than one-fourth to less than one-half of workers in computing occupations will have a computer science degree. If there was a shortage of skilled workers, it should show up in employment statistics. As of 2011, the unemployment rate of college-educated STEM workers was still 3.4%, more than double the 1.4% rate it stood at immediately preceding the recession that began in late 2007.

From Computerworld
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