As a leader at a company that tracks technology employment trends, I’ve had a front row seat to the ups and downs of the industry over the past few decades. It’s literally my job to keep track of employment trends in the tech industry, and one thing I can tell you is that these are interesting times for both workers and decision makers in the tech industry.
However, be wary of news headlines that only tell one side of the story. The U.S. technology economy is experiencing extraordinary changes, but those changes aren’t always easy to understand.
Engineer salaries are on the rise.some kind of
Maybe you saw a recent Wall Street Journal article looking at $900,000 AI technology jobs. It’s a very easy book to read, but salary trends are not that simple.
When it comes to technician pay, the devil is in the details. Historically, his three technology areas have been significantly undersupplied: artificial intelligence (generative AI and machine learning), cybersecurity, and cloud engineering. Due to limited supply, these professions are already experiencing higher wage increases than other technical occupations, making them the natural focus of today’s tech media coverage.
While there is no question that these hotspots exist in the tech industry, the associated salary spikes in these roles should be seen as an outlier. According to my company’s annual salary survey, average compensation for technical positions rose by about 7% in 2022. This is a huge leap forward for the industry and evidence of a surge in demand post-pandemic. However, apart from certain hotspots, a normalization to typical wage pressures is expected, meaning that salaries across the tech sector are not as favorable as they appear.
Salaries are very sensitive to supply and demand, and the demand for technical jobs has decreased significantly compared to last year. In his August report for CompTIA, three of his four employment statistics for the company trended positive, while the number of job openings (perhaps the most important statistic) declined. The number of job openings in August totaled 204,400, the lowest level in three years and less than one-third of the total number of job openings for the same period in 2022.
Even as unemployment rates across the tech industry improve, the bargaining power of technologists has declined. Pay increases in some situations, but not all.
The technology sector is isolated
The U.S. technology economy operates differently than other sectors. In the first half of 2023, the U.S. lost about 100,000 technology jobs. This situation has only happened three times in the last 20 years. The dot-com bust of 2001, the global financial crisis of 2008, and he the coronavirus pandemic of 2020. It’s shocking that so many technology jobs have been lost recently, as growth in technology is typically upwards.
These trends indicate a technology recession. Although America’s GDP is growing, parts of the economy, including technology, are shrinking significantly. Regardless of the state of the economy as a whole, employers are finding that wages for technical jobs are significantly higher than average wages. So while companies may still be in a position to hire after a tough start to 2023 (and a tough few years), they remain cautious about hiring technology workers.
The U.S. economy may be showing signs of improvement, but the U.S. technology economy still has a lot of work to do to catch up.
Salary is only part of the story
Focusing solely on salary is a bit short-sighted when evaluating technology hiring trends. You need to look at other reasons why employees stay in their current roles.
A recent McKinsey study found that compensation and financial factors ranked fourth, behind considerations such as career development, flexibility, and meaningful connections. Work-life balance and culture are now influencing worker decisions and loyalty. Technology employees want remote and hybrid work options and expect current levels of flexibility to continue.
Gone are the technology workspaces of the past. We know that previous approaches didn’t increase productivity and commuting is pointless today. The technology industry leaders and teams I spoke to recognize that there has been a significant shift in sentiment around hybrid and remote work, and that there is little chance of turning back.
Employers understand that tech workers expect flexibility, but executives are trying to determine whether they have the bargaining power to request office work without making a big splash heading into 2024. There is. Only time will tell if that will be the case.
No, AI is not coming to tech jobs
Another recent study by McKinsey investigated the impact of AI on different working styles of software developers working on code. What is the biggest improvement? documentation. When developers write a line of code, they must document what that line of code does. Although documentation is an important step, it can be tedious and not very fun. As a result, employees may not address it as often or as quickly as they should (if at all).
AI can support this type of documentation work, but this is where AI applications currently take on many of the technical roles. AI is unlikely to change the role of technicians beyond simple support roles for the next five to 10 years. Additionally, AI will not displace jobs or reduce average salaries for technicians. Coding is about solving problems, and AI isn’t ready for that yet.
Some believe that companies will start paying their engineers less because AI steps in to support them, leaving them with less work to do. But that’s not the case. Rather, salaries for technicians are likely to rise as employers require people in these roles to take on more diverse responsibilities.
The technology industry over the past few decades has shown that once engineers have access to new tools, they use those tools every day, become proficient, and assisted levels of output become established as the new norm. I am. We expect the same for AI.
In an industry that evolves as rapidly as technology, it’s important to do your homework. Do your research, talk to your colleagues, and don’t take trending headlines at face value. What you see on the surface may only be part of the story.
Art Zeile is the CEO of Dice..
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