man with a beard

Somewhere in the US right now, someone is advertising for a Java developer.

This position has been unfilled for about six months and the hiring manager, the human resource department and even some people in the C-suite are on the brink of a breakdown as the stalled projects and unfinished IT tasks mount.

"Oh well," these people will reason to themselves, "with a 3 percent unemployment rate in the tech industry, what else could we expect?"

Well, the hiring manager could have expected a few more inquiries if one of the requirements hadn't been 20 years of experience — not the easiest requirement to fill when Java hasn’t been around that long.

And HR definitely could have gotten more traffic from the recruiters it contacted if it hadn't set the salary according to what it believed is reasonable in other seemingly related industries, such as payroll management.

As for the C-Suite folks, they could have helped by realizing that the labor market is shifting to one more favorable to workers and in the case of most tech jobs, has always been at close to full employment.

And so it goes in the ongoing fight for IT talent. For many companies, this is a battle lost long before anyone gets to the staging area — simply because they have unrealistic expectations of what salaries IT talent can actually command.

Salaries Aren't Soaring

This is not a trend expected to change in the New Year, based on the responses from a recent survey of 500 IT executives taken in October by the Hanover, Md.-based IT staffing service provider TEKsystems.

The majority, or 69 percent, expect average salary increases in IT of up to 5 percent, with only 4 percent expecting salaries to increase by 6 percent or more. Close to a quarter, or 23 percent, expect salaries to remain the same.

This is impossible to imagine that these executives are unable to make the connection that a highly-skilled IT worker should command a high salary and indeed, responses do point to an understanding that these positions will require higher salaries.

But what to make of this metric?

From 2013 to 2016, IT leaders have consistently agreed that programmers, security experts and developers are among the most difficult positions to fill. However, from 2014 to 2016, the percentage of IT leaders who expect to pay higher salaries for these skills decreased from an average of 67 percent in 2014 to 53 percent in 2015 to 50 percent for 2016.

As TEKsystems itself noted “While these roles are clearly still in high demand and salary increases are expected, the percentage of IT leaders who expect salary increases for these roles has declined over time.” In other words they want to snag a highly-skilled programmer or high-in-demand security expert with a mediocre salary.

Right. Good luck with that.

Crazily enough, IT execs know something is askew. The survey noted that for the first time in four years, respondents’ confidence in being able to meet their organization’s IT needs has declined.

The survey itself suggests this is due to the increasing decentralization of technology purchases, with business units such as marketing or sales going rogue with technology purchases. But that too, one might extrapolate, could also indicative of a lack of core IT talent.

A Certain Mindset

It is economics 101: if demand is stronger than supply, the price of supple is going to rise.

Executives just don’t want to recognize that, Jason Hayman, market research manager at TEKsystems, told CMSWire.

“I think a lot of people are still used to their recession-era thinking, where wages are stuck and companies are better able to dictate the terms,” he said.

Of course many companies do price IT skills correctly, Hayman said — but a sizeable minority of companies do not. By his rough reckoning some 25 percent to 30 percent of posted salaries of open IT job positions are below market.

"Folks just can't or don't want to wrap their heads around what are actually the going salaries."

It is not just wishful thinking on the part of executives who, at least in this one instance, look back on the recession fondly because they had the upper hand in the labor market. There are multiple other reasons why companies so often misprice tech salaries, according to Hayman.

Sometimes the salaries are set in HR, who will compare an IT worker with, say, a seemingly comparable position to set a salary. "They will look at Java Developer and compare it to what a junior accountant might be paid," he said.

Sometimes a job goes unfilled because of unrealistic expectations about what the position should entail, such as the 20 years of experience with Java – which is a real example, Hayman said.

Sometimes companies think they have a bigger hand than they actually do in a local market. "Perhaps they think that because they are one of a handful of large financial institutions in a certain city, they have better pricing power with wages," Hayman said. "But what they might not realize is that IT skills transfer almost effortlessly from one industry to the next."

Then there are those companies that think because they are King of the XYZ widget makers an IT worker would be willing to work at a below market salary simply for the clout. This almost never proves to be the case with IT, Hayman said. The exception: "If your name is Facebook, Microsoft or Apple, then, yes, you could probably get a data scientist PhD on a budget. Everyone else, though, should give up that fantasy right now."

And, in fact, even Apple is having trouble recruiting for certain positions.;

(Come back Monday for Part 2 of this article. We'll look at the tech positions that are in so much demand that these lucky folks can almost set their own salaries.)

Title image by Ryan McGuire