8 ms·

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

57 points by bitcartel 14y ago

paulsutter 14y ago
Two reasons: 1. Tech money isn't made in the wages, and 2. This average wage would be weighted heavily towards sysadmins, not the tech industry
- NateDad 14y ago
  1. You're wrong 2. You're probably right (that the wages include a lot of tech support, not specifically software developers) Anyone who thinks money is made through stock in this industry is going to end up poor.
hayksaakian 14y ago
IT is sadly not at the epicenter of growth in the industry. My understanding is that IT keeps things together, but the "things" are what ultimately moves investors and the money.
- sonabinu 14y ago
  You said it right!
- tekromancr 14y ago
  I think patio11 would agree with you.
patio11 14y ago
"If people get older every year, why are college students always the same age?" Seriously: massive expansion of the field disproportionately among younger workers, who bring the average down, is totally consistent with wages increasing for the vast majority of workers considered individually. There's also some weird effects at the top of the scale. Half of the HN leaderboard is people who you'd consider technologists, but many of them (us?) don't count as it for statistical purposes. This disproportionately excludes from the comparison people who are older, at their peak earning years, and/or those who took advantage of many of the (numerous) options which are a bit more lucrative than System Administrator II at an insurance company.
- mixmastamyk 14y ago
  1) Cloud hosting/SAAS/PAAS 2) Outsourcing.
- phillmv 14y ago
  Eh, I'm not terribly persuaded by that line of reasoning: the article CW links to^1 mentions that the IT field operates at full employment. At 3.7% unemployment you have a huge amount of bargaining power. As you alluded above, I too think the statistic presented mostly captures IT workers 'proper': server administrators and support people. But as a support function, they've basically stopped having major gains in productivity in like 1998. We're not like them. We're princes of the universe who own the means of our production. Instead, I think it's more along the lines of 1) a lot of wealth increase has been captured by the higher skilled workers (some with cause, some without) and, of course, equity owners 2) but mostly, average wealth economy wide has been stagnant for everyone in all jobs except non-executives/equity owners. You can make six figures before you're thirty. No problem. It's very common within my social milieu. -- 1. Obviously a white paper designed to help lobby against increased immigration quotas. As an incumbent, this benefits me but the initial claim that 3.7% unemployment doesn't constitute full-employment is so spurious that it's hard to take any of the rest of it seriously.
  - riffraff 14y ago
    > the IT field operates at full employment. At 3.7% unemployment you have a huge amount of bargaining power. this could also be seen as a market at equilibrium, so the bargaining power is already accounted for.
  - rmc 14y ago
    At 3.7% unemployment you have a huge amount of bargaining power. Yes. People just don't realise it.
tomerv 14y ago
The way I see it, "flat" wages are the default state, and I would expect wages to be flat for many othet areas of employment. It is true that IT has become an increasingly important part of the economy, but wages in the field were always relatively high, and now you have many more employees to share the workload. It's simply that the IT field had become much larger, not more prestigious.
- ijl 14y ago
  Flat wages really aren't, for the reason that labor productivity has historically and consistently increased slightly every year. Some shared split of productivity gains between corporations and employees accounts for great wage increases during the '40s, '50s, and '60s. Why there hasn't been an increase in wages for most workers from the '70s on is an interesting economic and sociological issue.
  - georgemcbay 14y ago
    "Why there hasn't been an increase in wages for most workers from the '70s on is an interesting economic and sociological issue." One that can be summarized thusly: "Top executives are taking all that money for themselves". Average CEO in 1970, $700,000/yr, 25 x worker average. Average CEO in 2012, $13,000,000/yr, 380 x worker average
    - mahyarm 14y ago
      Aren't managers & executives the new knights & lords?
    - guard-of-terra 14y ago
      Which is interesting because I believe traditionally when calculating production costs, you added materials required to produce an item and a hourly salary of workers making an item divided by the number of items they can make in an hour. You could throw in marketing and advertising bugdet too. The management salaries weren't the part of the calculation. They were considered constant and therefore insignificant in the mass production. But now, when your CEO makes 380x worker average, and the rest of the apparatchiks make the same combined, and you have 250 workers - then it is no longer wise to "optimise" worker salaries at all because they are by far not the biggest expense! That's capitalism turned upside down. And I know it because I see how people are able to account for recurring costs but put a blind eye on development and management costs. P. S. Maybe it tells us it's CEO/traditional management who need to be disrupted now. In some areas you can imagine a worker's cooperative paying 1.5x average salary to workers, outsourcing their management cheap, and still being insanely competitive thanks to no apparat spendings.
digitalWestie 14y ago
Wages in many industries have been stagnant for a while now.
gojomo 14y ago
The underlying data is from the EPI, a left/labor/economic-protectionist advocacy think tank whose choice of figures/methods/spin will always emphasize a 'workers need rescuing' narrative. In this case, the aim of the cited report is to advance EPI's conclusion: "Now is not the time to increase the number of H-1B visas and STEM green cards". EPI concerns themselves with the very broad category "computer and mathematical occupations, workers with at least a bachelor’s degree". If you dig into the underlying BLS report (http://www.bls.gov/oes/current/oes150000.htm http://www.bls.gov/oes/current/oes150000.htm), this category includes "Actuaries" and "Mathematicians", and includes 11% of all workers in the 'Insurance Carriers' industry. Still, a rise in real wages over the past 11 years, when many other occupations are flat or declining, isn't that bad... especially if the composition of this category has grown to include more young workers and career-changers. Sometimes expanded demand, if filled with more marginally-qualified workers, brings down average wages, because workers are not uniform interchangeable cogs. (Consider similarly: English is spoken worldwide more than ever before, but the vocabulary/skill of the average English speaker has likely gone down, because so often it is a second language.)
fleitz 14y ago
Because most companies run IT as a cost center rather than a profit center. There is no money in IT but lots in 'tech'.
wladimir 14y ago
They're flat at a time in which many others are losing their jobs, to be re-hired at lower wages, or unable to find jobs at all. Comparatively speaking we're still off very well.
batgaijin 14y ago
Slashdot, asking questions when they know the answers: http://apple.slashdot.org/story/12/04/22/1525212/apple-and-google-face-salary-fixing-lawsuit http://apple.slashdot.org/story/12/04/22/1525212/apple-and-g...
jeffdavis 14y ago
I find it amazing when people ask questions about the price of something without even considering supply and demand.
- randomdata 14y ago
  Supply and demand is really the only consideration. However, I think that is implied. You could rephrase it: If tech is so important, why is IT demand not rising faster than supply?
- Radim 14y ago
  Uhm... asking serious questions about the price of something is supply and demand.
rodh 14y ago
What always surprises me with these posts is the amount that developers make in San Francisco. Or possibly in the US as a whole. I work in London for £31k ($50k), doing computer vision computer graphics (GLSL) and the occasional ML development. Mostly in C++ or Python. My rent for a 1 bedroom apartment is £1000/month ($1.6k/month) (the cost of which I thankfully share with my girlfriend). Honestly, it's a constant struggle just getting by. Looking at the salaries offered on the job market, I don't think I'm the only one. Yet the demand appears to be high. I've seen job posts up for months on end on Linkedin. Every Hacker News meetup I've been to, almost everyone presenting is desperate for new hires. How have we ended up with such a huge difference with respect to SF? I'm sure other jobs would be much more closely matched across the pond.
- wladimir 14y ago
  Indeed, London and surroundings are abnormally expensive to live in. This was one of the reasons for me to forego working there when I had the chance, even though I would gave gotten a slightly more interesting job and higher pay. So I stayed in the Netherlands, where living is still somewhat affordable. I also wonder about the high difference in pay comparing SF to anywhere else. It's interesting how much geography still pays a big role in a supposedly 'flat' interconnected world, especially in job types that could easily be done remotely. I guess the 'flat' world is a myth up there with other modern myths such as 'meritocracy' :-) I always imagined the future as moving somewhere where land is cheap, buy a house with plot of land, and then work remotely. No commuting, no busy office crap. But it's still very hard to do, even programmer jobs seem to all (well, mostly) require sitting your ass on a chair at a specific place. Usually in a city where it's expensive to live.
  - steelcm 14y ago
    London house prices are crazy expensive. My current flat costs me 2,000 GBP (~3,200 USD) pcm, and it's not event central London! There does seem to be a propensity for "bums on seats" management style, and although I agree with the value of face-to-face communication there must be some middle ground which is beneficial for everyone. I guess it's hard to pay for an employee that you never see (even if you do see their work).
bhntr3 14y ago
Without a graph, I'm not entirely convinced of the conclusion. 2000 was a crazy boom year for tech. I wouldn't be surprised if it took 12 years for wages to return to dotcom era levels.
akurilin 14y ago
Aren't there simply enough people in the field to make most IT workers (I include both programmers and "system administrators" in this category) completely interchangeable? As long as the majority of the workforce, the bottom of the pyramid, is readily replaceable by a steady stream of college grads, there won't be much need for salary increase. Becoming irreplaceable, my guess is, is where the cash is.
ww520 14y ago
The closer you are to the money, the more pay you get. Money in term of how the company makes its money. IT is often far away from the money and get lower pay.
nianticbot 14y ago
where does the big data and data scientist fit into this .. if you believe it, some such as McKinsey & Co say "The United States alone faces a shortage of 140,000 to 190,000 people with analytical expertise and 1.5 million managers and analysts with the skills to understand and make decisions based on the analysis of big data. " http://www.mckinsey.com/Features/Big_Data http://www.mckinsey.com/Features/Big_Data
skilesare 14y ago
After a few years in IT you realized that you're stealing from yourself by earning a wage. Quit and become a contractor. You will make 3 x market at least.

57 points by bitcartel 14y ago

Two reasons: 1. Tech money isn't made in the wages, and 2. This average wage would be weighted heavily towards sysadmins, not the tech industry

NateDad 14y ago
1. You're wrong 2. You're probably right (that the wages include a lot of tech support, not specifically software developers) Anyone who thinks money is made through stock in this industry is going to end up poor.

hayksaakian 14y ago

IT is sadly not at the epicenter of growth in the industry. My understanding is that IT keeps things together, but the "things" are what ultimately moves investors and the money.

sonabinu 14y ago
You said it right!
tekromancr 14y ago
I think patio11 would agree with you.

patio11 14y ago

"If people get older every year, why are college students always the same age?" Seriously: massive expansion of the field disproportionately among younger workers, who bring the average down, is totally consistent with wages increasing for the vast majority of workers considered individually. There's also some weird effects at the top of the scale. Half of the HN leaderboard is people who you'd consider technologists, but many of them (us?) don't count as it for statistical purposes. This disproportionately excludes from the comparison people who are older, at their peak earning years, and/or those who took advantage of many of the (numerous) options which are a bit more lucrative than System Administrator II at an insurance company.

mixmastamyk 14y ago
1) Cloud hosting/SAAS/PAAS 2) Outsourcing.
phillmv 14y ago
Eh, I'm not terribly persuaded by that line of reasoning: the article CW links to^1 mentions that the IT field operates at full employment. At 3.7% unemployment you have a huge amount of bargaining power. As you alluded above, I too think the statistic presented mostly captures IT workers 'proper': server administrators and support people. But as a support function, they've basically stopped having major gains in productivity in like 1998. We're not like them. We're princes of the universe who own the means of our production. Instead, I think it's more along the lines of 1) a lot of wealth increase has been captured by the higher skilled workers (some with cause, some without) and, of course, equity owners 2) but mostly, average wealth economy wide has been stagnant for everyone in all jobs except non-executives/equity owners. You can make six figures before you're thirty. No problem. It's very common within my social milieu. -- 1. Obviously a white paper designed to help lobby against increased immigration quotas. As an incumbent, this benefits me but the initial claim that 3.7% unemployment doesn't constitute full-employment is so spurious that it's hard to take any of the rest of it seriously.
- riffraff 14y ago
  > the IT field operates at full employment. At 3.7% unemployment you have a huge amount of bargaining power. this could also be seen as a market at equilibrium, so the bargaining power is already accounted for.
- rmc 14y ago
  At 3.7% unemployment you have a huge amount of bargaining power. Yes. People just don't realise it.

tomerv 14y ago

The way I see it, "flat" wages are the default state, and I would expect wages to be flat for many othet areas of employment. It is true that IT has become an increasingly important part of the economy, but wages in the field were always relatively high, and now you have many more employees to share the workload. It's simply that the IT field had become much larger, not more prestigious.

ijl 14y ago
Flat wages really aren't, for the reason that labor productivity has historically and consistently increased slightly every year. Some shared split of productivity gains between corporations and employees accounts for great wage increases during the '40s, '50s, and '60s. Why there hasn't been an increase in wages for most workers from the '70s on is an interesting economic and sociological issue.
- georgemcbay 14y ago
  "Why there hasn't been an increase in wages for most workers from the '70s on is an interesting economic and sociological issue." One that can be summarized thusly: "Top executives are taking all that money for themselves". Average CEO in 1970, $700,000/yr, 25 x worker average. Average CEO in 2012, $13,000,000/yr, 380 x worker average
  - mahyarm 14y ago
    Aren't managers & executives the new knights & lords?
  - guard-of-terra 14y ago
    Which is interesting because I believe traditionally when calculating production costs, you added materials required to produce an item and a hourly salary of workers making an item divided by the number of items they can make in an hour. You could throw in marketing and advertising bugdet too. The management salaries weren't the part of the calculation. They were considered constant and therefore insignificant in the mass production. But now, when your CEO makes 380x worker average, and the rest of the apparatchiks make the same combined, and you have 250 workers - then it is no longer wise to "optimise" worker salaries at all because they are by far not the biggest expense! That's capitalism turned upside down. And I know it because I see how people are able to account for recurring costs but put a blind eye on development and management costs. P. S. Maybe it tells us it's CEO/traditional management who need to be disrupted now. In some areas you can imagine a worker's cooperative paying 1.5x average salary to workers, outsourcing their management cheap, and still being insanely competitive thanks to no apparat spendings.

digitalWestie 14y ago

Wages in many industries have been stagnant for a while now.

gojomo 14y ago

The underlying data is from the EPI, a left/labor/economic-protectionist advocacy think tank whose choice of figures/methods/spin will always emphasize a 'workers need rescuing' narrative. In this case, the aim of the cited report is to advance EPI's conclusion: "Now is not the time to increase the number of H-1B visas and STEM green cards". EPI concerns themselves with the very broad category "computer and mathematical occupations, workers with at least a bachelor’s degree". If you dig into the underlying BLS report (http://www.bls.gov/oes/current/oes150000.htm http://www.bls.gov/oes/current/oes150000.htm), this category includes "Actuaries" and "Mathematicians", and includes 11% of all workers in the 'Insurance Carriers' industry. Still, a rise in real wages over the past 11 years, when many other occupations are flat or declining, isn't that bad... especially if the composition of this category has grown to include more young workers and career-changers. Sometimes expanded demand, if filled with more marginally-qualified workers, brings down average wages, because workers are not uniform interchangeable cogs. (Consider similarly: English is spoken worldwide more than ever before, but the vocabulary/skill of the average English speaker has likely gone down, because so often it is a second language.)

fleitz 14y ago

Because most companies run IT as a cost center rather than a profit center. There is no money in IT but lots in 'tech'.

wladimir 14y ago

They're flat at a time in which many others are losing their jobs, to be re-hired at lower wages, or unable to find jobs at all. Comparatively speaking we're still off very well.

batgaijin 14y ago

Slashdot, asking questions when they know the answers: http://apple.slashdot.org/story/12/04/22/1525212/apple-and-google-face-salary-fixing-lawsuit http://apple.slashdot.org/story/12/04/22/1525212/apple-and-g...

jeffdavis 14y ago

I find it amazing when people ask questions about the price of something without even considering supply and demand.

randomdata 14y ago
Supply and demand is really the only consideration. However, I think that is implied. You could rephrase it: If tech is so important, why is IT demand not rising faster than supply?
Radim 14y ago
Uhm... asking serious questions about the price of something is supply and demand.

rodh 14y ago

What always surprises me with these posts is the amount that developers make in San Francisco. Or possibly in the US as a whole. I work in London for £31k ($50k), doing computer vision computer graphics (GLSL) and the occasional ML development. Mostly in C++ or Python. My rent for a 1 bedroom apartment is £1000/month ($1.6k/month) (the cost of which I thankfully share with my girlfriend). Honestly, it's a constant struggle just getting by. Looking at the salaries offered on the job market, I don't think I'm the only one. Yet the demand appears to be high. I've seen job posts up for months on end on Linkedin. Every Hacker News meetup I've been to, almost everyone presenting is desperate for new hires. How have we ended up with such a huge difference with respect to SF? I'm sure other jobs would be much more closely matched across the pond.

wladimir 14y ago
Indeed, London and surroundings are abnormally expensive to live in. This was one of the reasons for me to forego working there when I had the chance, even though I would gave gotten a slightly more interesting job and higher pay. So I stayed in the Netherlands, where living is still somewhat affordable. I also wonder about the high difference in pay comparing SF to anywhere else. It's interesting how much geography still pays a big role in a supposedly 'flat' interconnected world, especially in job types that could easily be done remotely. I guess the 'flat' world is a myth up there with other modern myths such as 'meritocracy' :-) I always imagined the future as moving somewhere where land is cheap, buy a house with plot of land, and then work remotely. No commuting, no busy office crap. But it's still very hard to do, even programmer jobs seem to all (well, mostly) require sitting your ass on a chair at a specific place. Usually in a city where it's expensive to live.
- steelcm 14y ago
  London house prices are crazy expensive. My current flat costs me 2,000 GBP (~3,200 USD) pcm, and it's not event central London! There does seem to be a propensity for "bums on seats" management style, and although I agree with the value of face-to-face communication there must be some middle ground which is beneficial for everyone. I guess it's hard to pay for an employee that you never see (even if you do see their work).

bhntr3 14y ago

Without a graph, I'm not entirely convinced of the conclusion. 2000 was a crazy boom year for tech. I wouldn't be surprised if it took 12 years for wages to return to dotcom era levels.

akurilin 14y ago

Aren't there simply enough people in the field to make most IT workers (I include both programmers and "system administrators" in this category) completely interchangeable? As long as the majority of the workforce, the bottom of the pyramid, is readily replaceable by a steady stream of college grads, there won't be much need for salary increase. Becoming irreplaceable, my guess is, is where the cash is.

ww520 14y ago

The closer you are to the money, the more pay you get. Money in term of how the company makes its money. IT is often far away from the money and get lower pay.

nianticbot 14y ago

where does the big data and data scientist fit into this .. if you believe it, some such as McKinsey & Co say "The United States alone faces a shortage of 140,000 to 190,000 people with analytical expertise and 1.5 million managers and analysts with the skills to understand and make decisions based on the analysis of big data. " http://www.mckinsey.com/Features/Big_Data http://www.mckinsey.com/Features/Big_Data

skilesare 14y ago

After a few years in IT you realized that you're stealing from yourself by earning a wage. Quit and become a contractor. You will make 3 x market at least.