TechWeb

IT Pros Get Meager Raises As Median Pay Hits $80,000, Our Survey Finds

Apr 24, 2009 (08:04 PM EDT)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=217100176


Mike Beller, former CIO, Steve & Barry's -- Photo by Sacha Lecca
Beller's courting retailers, now as a consultant
Photo by Sacha Lecca
It's long been true that there isn't one monolithic IT job market, but this recession is causing more fragmentation than usual, our annual U.S. IT Salary Survey shows. Skills have always separated the highest paid from the lowest. This year, salaries and raises reveal sharper shifts based on the industries and regions in which IT pros work.

Around Detroit, Los Angeles, and New York, the typical IT staffer didn't get any raise, while in Washington the median increase was a solid 2.9%. In investment banking, the typical IT manager in our survey makes $12,000 less this year, as bonuses shrink. In biotech, IT pay is growing.

Such disparities are among the most dramatic findings of our survey, which is based on responses from 12,410 IT professionals in the United States. Across the country, IT staffers report a median increase in total compensation--salary and cash bonuses--of just 0.7%, with IT managers receiving a 1.6% increase. Last year, raises were almost 3% and 4%, respectively. Median compensation reported by IT staffers is $80,000; for IT managers, it's $105,000.

IT pros are less secure about their jobs--understandably, with IT unemployment at its highest level since 2004. Thirteen percent of IT managers characterize their jobs as "insecure," compared with only 8% last year. Only 37% consider their positions to be very secure, compared with more than half last year.

Those struggling to find work can relate to Mike Beller, who was CIO at clothing retailer Steve & Barry's until the once fast-growing chain went out of business in January, eliminating about 130 IT jobs. Beller wants to stay around New York City for family reasons, and he was six interviews into landing a job--a new position that an apparel company was creating to combine the CIO and COO roles. Then the company abruptly halted all hiring, including the new executive role. "The company froze with indecision, not knowing what's happening in the market and where the economy is going," Beller says.

Beller's next move is typical of how paramount industry knowledge has become in addition to IT skills. With the job market stalled, Beller and other retail executives started a consulting business, Lightship Partners, that focuses on quick-return projects such as analyzing data to help retailers improve merchandising or finding savings through business process outsourcing (see story, "How Retailer Steve & Barry's Failure Rippled Through IT Careers").

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It might not feel like it to Beller and others out of work or worried about their jobs, but the reality is that, even with stingy raises and rising unemployment, things could be worse. Just ask someone in another profession. "There's no absolute safe place, but IT is a good place to be--perhaps the best place to be right now," says David Van De Voort, a principal at human resources consulting firm Mercer.

Strong tech skills still can pull a good paycheck. The top-paying staff functions include data mining, integration, security, ERP, and Web infrastructure, all of which have median compensation of more than $90,000. By title, IT architects top the list again this year, the only staff job with median pay above $100,000.

Experts can say IT is a safer profession than most, but the economy is again testing IT pros' faith in this career path. A year ago, fewer than half of respondents to our survey described the IT career path as less promising than it was five years ago. Today, 60% of staff and 56% of managers take that dim view. Even so, about nine out of 10 regard their own career paths as being as secure or more secure than most other professions.

In the last recession, many tech pros were forced to retrain away from programming and support tasks to ones tied more closely to business functions and industry knowledge. That approach presents its own challenges in this downturn, as people feel more tightly tied to industries that are getting clobbered. IT pros are again having to prove their resilience.




'Right People In The Right Jobs'
The economic downturn hasn't affected the kind of skills that companies put a premium on; the ranking of compensation by functions and job titles in our survey remains fairly stable. There continues to be a premium on skills around architecture, data mining, integration, infrastructure, and security, with the lowest salaries going to general IT, training, and support.

To Bob Davies, a senior security analyst at Key Bank, IT work, especially in security, feels relatively secure, despite the turmoil in the financial services sector. Still, a few months ago, in an effort to make himself more valuable to his employer, he attended a one-week program to prepare for his CISSP certification as a way of boosting his security credentials. The company paid for it, but it meant months of studying, and he's not done yet, since he didn't pass on the first attempt. "It's an exercise in discipline," he says.

Anecdotally, companies seem a bit more anxious to hold onto seasoned business technology talent, perhaps realizing from the last round of layoffs five or six years ago that such expertise isn't easily replaced or outsourced. For the most part, though, money isn't part of any retention formula. Just 17% say increasing pay is part of their companies' retention efforts this year, compared with 35% last year.

David Kline, CIO at Discovery Communications, which owns the Discovery Channel and other media, has been on a mission for two years to get his IT staff to the right size and skill mix. With 240 full-time staff and 60 contractors inside and outside the United States, Kline's insisting that his people take company-paid training where needed--such as improving Java skills, as the company moves in that direction--and to make their IT work customer and business-process focused. People who can't or won't make the transition will be let go. "We're more aggressive about this," he says. "We want to make sure we've got the right people in the right jobs."

Jeff Weissler, head of IT governance and control at a large U.S. insurance company, says it's a goal in his IT group "to not cut people." The company has about 800 IT employees, mostly in the United States, with some developers in India. Its IT budget is down about 8% from 2008, with some projects put on hold, certain software and hardware purchases avoided, and IT contracts and licenses renegotiated where possible. Most people who leave aren't being replaced, except for specialty areas. Employees did get raises--though 1% to 2% instead of last year's 3% to 5% range.

charrt: Industry Matters -- Total compensation (in $ thousands)
Insurance and financial services companies have been among the most aggressive offshore outsourcers, and fears that trend would lead to U.S. job losses "weren't overblown five years ago," says Weissler. But now companies have a better sense of where they're willing to take the risk of handing their IT over to vendors. While respondents see outsourcing hurting the U.S. IT profession overall--61% say there are fewer jobs available--most don't think it has hurt them personally. Seven of 10 say outsourcing has had no impact on their careers; 14% say they have expanded responsibilities.

It's the economy that's the big worry for IT pros. One-third say their pay has been frozen or cut as a result of the economy, though an equal number say there's been no impact. Van De Voort says some companies are being more careful about letting experienced IT talent get away because--if the economy picks up or they want to cut costs through focused IT projects--they can't afford the lead time to bring new hires up to speed on company and industry practices.

Biotech Reigns
What industries are looking good? Perhaps surprisingly, the federal government's competitive, particularly with staff salaries. The median total compensation of $96,000 for government IT staff tops all but the IT vendor and investment/securities industries, and it ties biotech. For managers, it's a different story because there's less bonus potential. The median total compensation for federal IT managers is $115,000, putting them in the middle of the pack and well short of top pay such as biotech and pharmaceuticals' $140,000 median. State government, however, pays well below the industry median: $64,000 for staff and $85,000 for managers.

Health care is often assumed to be a recession-resistant growth industry, but the median pay is right around the norm for all industries: $77,000 for staff and $102,000 for managers. And it's not immune to economic downturns, as people put off elective procedures or can't pay bills as they lose their health insurance along with their jobs. Health care IT, however, should get some lift from about $20 billion in federal stimulus spending earmarked for electronic health initiatives over the next several years.

Bernie Lubitz isn't feeling that gain. As director of telecommunication technology, he's part of a 31-person IT organization at Martin Memorial Health System in Florida that has been moving to electronic medical records. This year will bring more work and no raise, as Martin Memorial has instituted a salary freeze amid declining admissions and a rise in unpaid services. Still, Lubitz and his colleagues feel like the added project work around digitized records provides a bit more job security.

chart: How's Your Job Security?




Geographic Differences
Looking at major U.S. cities, IT pay trends track what's happening in the leading industries in those regional economies. And it appears that IT staff are hit somewhat harder than managers.

In the New York, New Jersey, and Long Island area, center of the U.S. investment industry plus retail banking giants, median base pay increases were 1.7% for managers and nonexistent (0%) for staff. Detroit and Los Angeles show no raises for the typical manager or staffer. Two years ago, IT managers in those cities enjoyed median base pay raises of about 4% and 5%, respectively.

The D.C. and Baltimore area continues to be a bastion of strong IT pay--in good times and, now, bad. Its median 3% base pay increase for managers and staffers tops all regions. Two years ago, the nation's capital had the highest median staff raise and the third largest for managers. One of the biggest drop-offs is in the Seattle area, where the median pay hike for managers fell from 5% in last year's survey to 1.7% this year. That could reflect layoffs at Microsoft and other local tech companies.

In terms of base pay, the San Francisco area remains tops, with a median salary of $129,000 for managers and $95,000 for staff. Detroit was the lowest for staff, at $74,000, and Minneapolis for managers, at $97,000. That gives Minneapolis the distinction of being the only metro area where the median manager base is less than six figures.

For IT execs like Barbara Burkey, that's not cause to move away. Burkey is the former IT director and CIO of a small American Express division. In December, the company folded the division and let many of its IT directors go, Burkey among them. American Express made a similar move to downsize in the wake of Sept. 11, 2001, but most IT directors were rehired within two years. Burkey's not so sure the jobs will be brought back this time.

Burkey plans to stay in Minnesota, as she's helping care for elderly parents. In the interim, she's trying to land senior-level consulting projects, while looking for another IT leadership position.

Career Jitters Return

chart: Management Base Pay Increases
(click image for full view)
The recession hasn't dramatically damaged how IT pros view their career prospects or changed what they're looking for in their jobs. But it has caused some to doubt, once again, whether they'd recommend IT as a career choice to others.

Staff and managers cite "job stability" slightly more often than last year as being among the factors that matter most in their jobs, but it's still less than half who cite it as a key factor. Likewise, financial stability of employers rose in importance this year, but less than a fourth cite it. Challenge and responsibility remain important for staff and managers, cited by about half of survey respondents. Working on innovative IT has risen in importance since the last recession, and it held steady this year, at 37% for managers and 31% for staff.

Bryce Morrow, CTO at the Beck Group, an architecture and construction firm, says his 12-member IT team isn't doing cutting-edge new projects, but they're just as busy as during better economic times on projects such as converting legacy system applications to Web apps and giving workers better project management capabilities at job sites.

Pay raises are on hold at the Beck Group for the second year now, and bonuses will depend on company performance. Such profit-sharing bonuses are in place at just over 40% of companies, while around two-thirds of IT pros get bonuses based on personal performance. Even with salaries frozen, Morrow thinks morale is holding up. "Everyone feels blessed to have a good job and come into the office today," he says. The numbers back up that sentiment--there isn't much simmering dissatisfaction over paychecks or other aspects of the IT job. About two-thirds of IT pros are satisfied or very satisfied with their jobs, including the pay, while just 11% are dissatisfied.

Yet there is a disconnect. A majority of IT people feel fairly secure in their jobs and satisfied with their pay and responsibility. Yet, only 33% think it's as promising a career as it was five years ago--10 percentage points lower than in 2008.

IT's no picnic, in that tech pros need to manage their careers closely to make sure their expertise and, increasingly, their industry knowledge remain relevant. Yet John Challenger, CEO at outplacement firm Challenger, Gray, & Christmas, says that, even as companies delay purchases of new software and hardware, they're trying to hold on to their people. "The IT profession is a lot less vulnerable that it was even a decade ago," he says. "It has become much more of a core and less discretionary part of business."

chart: Course Correction: Median total cash compensation (in $ thousands)
(click image for larger view)