If tech is so important, why are IT wages flat?

Unemployment for IT is well below national rates, but wages are barely moving

WASHINGTON - Despite information technology's ever increasing role in the economy, IT wages remain persistently flat. This may be tech's inconvenient truth.

A still sluggish U.S. economy gets most of the blame for this wage stagnation, but outsourcing and automation all have a role, say analysts.

"IT salaries have not really kept pace with inflation," said Victor Janulaitis, the CEO of Janco Associates, which reports on IT wage compensation.

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, according to a new report by the Economic Policy Institute.

[See related: In a symbolic shift, IBM's India workforce likely exceeds U.S.]

That translates to an average wage increase of less than a half percent a year. In real terms, IT wages overall have gone up by $1.97 an hour in just over 10 years, according to the EPI. It gathered data from the Current Population Survey, a monthly survey of households conducted by the Census Bureau for the Bureau of Labor Statistics.

But here's another data point. Yoh Services, a professional staffing firm for skilled IT workers, keeps a running index of hourly technology wages. In its latest measure for week 12 of 2012, the hourly wages were $31.45 and in 2010, for the same week, at $31.78.

The worker who earned $31.78 in 2010 would need to make $33.71 today to stay even with inflation, according to the government's Consumer Price Index Inflation Calculator. Yoh has data going back over 10 years, and in most years hourly wages have run in the $30 to $32 dollar range.

Joel Capperella, vice president of marketing for Yoh, said companies are making more use of contracted labor, allowing organizations to source during periods of high demand, "and run virtual just-in-time talent supply chains."

Capperella said there is a correlation between temporary professional wages and salaried wage workers "because historically temporary demand increases have preceded an increase in permanent employee demand," he said.

"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," said Capperella.

Analysts say high-demand skills will have rising wages. Capperella, for instance, said the supply of IT pros that also know the agile development methodology is very low compared to the demand, and those workers will "command a very high hourly and salary rate."

John Longwell, vice president of research at Computer Economics, said that "it would be fair to say that the globalization of markets for goods and services is helping restrain wages across many sectors, including the IT sector."

But Longwell also cautions against overstating the impact of IT offshoring.

Longwell estimates that "maybe 30% of IT organizations are offshoring some -- and only some -- app development work," he said. "This is substantial, and offshoring is certainly having an impact on programmers," he said.

Low inflation, sluggish economic growth, and improving productivity "are important factors in restraining U.S. wages in general, including IT wages," said Longwell.

The EPI report was written as a counterpoint to Microsoft's report ( report PDF) urging Congress to make more work visas available.

Microsoft is proposing that companies pay the government $10,000 for H-1B visas in a new 20,000 annual visa pool for STEM (Science, Technology, Engineering and Math) grads. It also asked for setting aside 20,000 green cards annually at $15,000 each.

The company argues that there remains a skill shortage, and it cites shortfalls in computer science degree production nationally, as well as its own experience. Microsoft says, in its report, that the U.S. economy is producing 120,000 additional computing jobs that will require at least a bachelor's degree, but there are only about 40,000 bachelor degrees awarded annually.

That looks like a clear gap, but EPI report author Daniel Costa, an attorney and immigration policy analyst at the policy research firm, said that 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 and Microsoft argues that it does. It points to an unemployment rate of 3.4% for people in computer-related occupations. It cites the problem it is has to fill its own job openings to make the point.

But the EPI report argues that for computer-related workers, particularly those with college degrees, the actual full-employment unemployment rate is closer to 2%.

"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," wrote Costa.

Contrary to Microsoft's claim, Costa wrote that "there are too many educated, experienced STEM workers who are trying to find a job; there is not a shortage of them."

Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed. His e-mail address is pthibodeau@computerworld.com.

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Copyright © 2012 IDG Communications, Inc.

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