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Where the Salaries went this year…

30 Sep

Everyone’s talking about money these days.  How much the salaries have dropped and how much companies have dropped in what they’re offering prospective hires.

And the fact is – companies are offering less… for re-hires and we’d expect that.  The economy has tanked, and after all a company’s gotta make a profit.  Or… is that actually the real picture?  Good question.  Here’s some actual numbers for what’s been reported in for the IT sector anyway when it comes to what I do (and no… I do not make anywhere near what Salary.com reports and never have.  In fact I think I know 3 people in the business who make even close to the middle of that … and they’re some major names.  The reason why Salary.com’s numbers are inflated is they take into account benefits and stock options and so on… many of which really don’t exist anymore, but Salary.com is counting them as part of the salary.  Thinking that having 800 shares of Lucrative technologies stock is worth $42k of salary is laughable since I think they’re offering a lot of stocks for them out there in boxes of cereal as a free prize.  But that’s why Salary.com’s numbers are so high.)

imageIf you look at the chart below from Indeed you’re looking at actual salaries reported over the last year.  It shows the period of the worst of the economic crisis – and that’s pretty clear.  The #’s dropped to the floor – and anyone who could get a job at that time basically took whatever they could get.  Then an odd thing starts happening just recently – the totals start to trend up. 

And they trend up almost as sharply as they dropped off.  The reason for this isn’t because the economy got better, or because employers suddenly had an epiphany that they were really underpaying… or that suddenly half the overseas and outsourced workers getting 1/4 of the wages here dropped out of the running.

It’s because well qualified, well skilled employees couldn’t afford to live off the salaries being offered  – and they started actually saying “I’d love to take the job but I’m already in the poor house with my mortgage, my car payments, the fact that I have an insurance bill that’s insane… so the answer is no.”. 

Bottom line – is people in the IT industry hit their bottom line.  Companies began to realize that if anyone was paying what they should have been paying for these jobs – then the employees they have were flooding out to the smaller shops which were willing to drop the dollars for rock stars.  Fortune 100 and 500 companies had to start playing match the dollar figure.  Let’s face it – working for Microsoft is cool and all but it’s not as cool if working there costs you your house.

So the players began to do what they do best… which is get in play.  That’s where we’re at now.  I’m seeing more and more offers coming across the table here at close to my old wage of a year and a half ago.  Which is good – because taking a 20%-25% cut in pay was killing me and everyone else I knew.  We’re not back to where we were and I really don’t think we ever will – but we’re getting to where we can survive without selling everything we have just to do the job we love.

imageI mentioned that Salary.com’s numbers were inflated – because of the fact that they’re including bonuses and other incentives.  This scales regardless of the size of the company.   Basically – the salary increases, based on the size of the company.  Mom & Pop shops paying the least – and megacorps  with 15,000 employees or more paying the most.  But… if the salaries themselves that get into your paycheck each month (see the Indeed.com numbers) don’t scale based on pay then where does that money go?  Why is it that the money you make as an employee from a Mom & Pop matches relatively closely to a MegaCorp according to Indeed but Salary.com says the MegaCorp pays you more?

Technically it does.  Just… you don’t see the money because it’s in bonuses or it’s in other “incentives”.  Just so we’re all on the same page here … I did check the bonuses offered, etc., and yes Megacorps do offer more perks.  But not that many.  There is one perk they offer (which due to their size they can offer this) that Mom & Pops can’t.  It’s insurance.  The bigger the company – often the more they pay on the employee’s plan.

Insurance offerings in most imageof the better IT firms offer great health care that they match in whole or in part.  So if you factor that in – you can see the difference between the totals above from Indeed – and the totals from Salary.com.

In the 10% category you’re seeing a difference between a company that provides basic health care – as you scale up to around the 75% scale you’re seeing health care benefits that are paid almost in full across the board.   So as the healthcare debate heats up you can see why so many insurance companies are fighting a public option.  They stand to lose billions.  Not just from IT but also from every other industry because these numbers tend to track pretty closely with other occupations.  Where the company pays more health care – the salary goes up.  But the employee never actually sees that money – the health care providers do.

Imagine half your salary – one way or another going to Health Care companies.  Think about that.  I did some number crunching.  Over my life I’ll pay out not one – but at least 3 million dollars in health care insurance.  I’m hospital phobic (seriously) – you can’t get me near an emergency room unless I’m dying… but I’ll pay millions.  As we all will – unless something is done to curb these costs.   Over 75% of the cost of healthcare in America is not the actual care of the patients.  Its for administrative costs… which is basically the filing of paperwork.  Endless paperwork (another phobia of mine) – which often leads to coverage denials.  So essentially you’re paying someone to refuse you service you just paid for.  That’s insane.  

If the economy is to improve, the cost of health care has got to be reined in.  It’s killing the small businesses – it’s killing the larger businesses – and it’s killing the people that work for them.  Just… my thoughts for what their worth.  My research is hardly scientific and there’s most likely a few holes in it I’m sure.  But based on what I’m seeing there’s something to it.

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Posted by on September 30, 2009 in Uncategorized

 

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