When the Covid-19 virus was declared a pandemic last year, most tech companies transitioned into remote working. After realizing that it will be a more permanent solution, many employees decide to relocate outside expensive tech hubs. Companies didn’t know how to react to the situation and are still figuring out how to have a remote team. This is what has happened to salaries.
Tech salaries are way above the national average, and they were steadily increasing each year. But this changed with the Covid-19 pandemic and all the uncertainty that it brought. Tech salaries only grew 0,08% during 2020, which is very different from 7% to 10% in previous years. The only professionals who actually saw reductions in salaries were IT middle managers, only 0.07%.
For example, if you are a software engineer in a manager position, you can make around $130,000 to $140,000 per year. A 0.07% reduction leaves you with a salary of $121,000 at least. IT still offers great salaries with all the benefits that come from working in the tech industry. And if the reduction was due to the professionals relocating to cheaper cities, the money will go a long way.
A reason for this stagnation could be that tech professionals were afraid of asking for a raise. Part of the reason salaries go up is because the industry suffers from a shortage of qualified workers, and employees feel like they can ask for more money according to what they feel they are worth. During the pandemic, fewer employees felt comfortable asking for more because they were grateful to still have a job.
Overall, tech salaries have not been impacted in a negative way yet. The only thing we can say is that they have stalled during 2020, but that will probably change this year. Tech salaries will probably continue to grow as they were doing in previous years now that we can see an end to the pandemic with the new vaccines.
The tech industry is famous for having a hard time retaining top talent. Most tech professionals are from younger generations that like to hop from one position to the next. The days were a person stays more than ten years at a company are in the past. Professionals nowadays like to change jobs often.
It is more common in the tech industry when a computer scientist or data scientist can be a manager after three or five years of experience. Something that the pandemic changed was retention. People knew that it was harder to find a new job during the pandemic, so they stay put waiting for a better time.
With almost every company in the sector currently working remotely, starting a new position would have been challenging. Imagine having to work with a new team without never having met them in person? Thus, it translated into fewer people moving around and fewer open positions, contributing to salary stagnation.
Jobs Because of Remote Work
Another thing that changed during the pandemic was the number of jobs created because of the increase in remote working. Having completely remote teams generates different tech needs in terms of systems, networks, and other infrastructure. Tech professionals like network and system engineers, cybersecurity engineers, and computer support specialists saw growth in job opportunities. Because of the high demand, their salaries weren’t impacted at all.
What Are Companies Doing?
Each company is implementing its own policies for remote working. According to Business Insider, Google will allow its employees to work remotely until September this year, and it’s planning a strategy for employees that want to work remotely full-time. And after September, Google will offer its employees a blended modality where they can go to the office a few days a week.
Amazon will allow its employees to work remotely until June this year, and it could extend depending on the pandemic situation. Indeed also said their whole team would continue remotely until July, and they will offer more permanent arrangements for the employees that wanted it. How this increase in remote working will impact salaries is still unclear.
What happened during 2020 was that salaries didn’t grow as expected from previous years. But overall, tech salaries haven’t gone down on average. The pandemic allowed tech companies to retain their employees longer and increased the demand for professions needed to manage remote teams.