This year, workers across industries in the US have learned to be wary of lay-offs, furloughs, and salary changes. The tech industry, worth $1.7 Billion in the United States in 2020, has remained relatively unscathed by the economic fallout of COVID-19 as compared to industries like entertainment and travel. As opposed to widespread lay-offs, a handful tech leaders are choosing an alternative path of reducing pay without slashing jobs.
Certainly, some technology sectors saw their demand skyrocket, as now everyone and their dog can operate a Zoom meeting. In all seriousness, concerns around salary changes and job security are real issues facing talented people in the tech industry.
Business owners and technologists have provided a range of feedback on how the economy will influence salaries moving forward. Today, we’re looking at how salary changes have impacted the tech industry. We will also cover how the tech community at large is making predictions for the future of work.
Let us start by saying it’s not all bad news. Our research uncovered that tech companies, big and small, are doing all they can to keep their employees on and not reduce their salaries. The Economic Times reported information that within the group of organizations surveyed, 77% indicated that there would be no salary changes or reductions this year.
Of this group, 57% predict seeing moderate negative impacts on their business over the next six months. This juxtaposition reflects resilience within tech companies, and an overarching desire to lessen the financial impact on their employees. Commenting on how tech leaders are handling tighter budgets in this recession compared to 2008, compensation expert Donald Delves said:
“Companies learned the hard way that once you lay off a bunch of people, it’s expensive and time-consuming to hire them back. Employees are not interchangeable. What we’re seeing this time around is more of a sense of shared sacrifice and shared pain.”
Even big tech giants like Facebook and Google offered employees additional paid leave to deal with increased childcare responsibilities. Apple, after originally saying their contract workforce was suspended without pay, reversed their decision and will continue to pay hourly contractors that make up much of their Silicon Valley workforce.
Examples like Apple’s public reversal on paying its contractors during an unprecedented global event reflect a larger cultural shift. Developers and engineers today are very aware of their agency. Tech workers have a newfound energy for getting what they are worth, even before the pandemic. Here in Denver, tech salaries rose by 9% from last year, with an average salary of $126,000.
This growth is not exclusive to Denver, as “tech salaries grew in every major market last year, with a US market average of $146k and a global average of $130k.” Keep in mind that these growth measurements reflect the pre-COVID era. However, they still bolster the rising tide of technologists pushing to lessen the wealth inequality gap and be compensated fairly for difficult work. The pandemic has only enhanced this shift wherein people feel even stronger about protecting their livelihoods and keeping themselves safe.
The technology sector has been hanging on, if not thriving during this time, but reality is more complicated. From Hired.com 2020 State of Salaries Report, “nearly one third of tech talent would be willing to accept a reduced salary if their employer made work from home permanent, while over half, 55%, would not.” Also, 53% of tech workers said permanent work from home would make them “likely” or “very likely” to move to a city with a lower cost of living. Full time remote work could “drive tech talent out of expensive hubs.”
The report identified several splits in how individuals think salary changes should be handled if remote work becomes more ubiquitous. Some tech workers, 40%, believe you should be paid the same salary for a job regardless of location, while others, 40%, acknowledge the need for cost of living adjustments in different regions.
At the end of the day, these results indicate that tech workers want the best of both worlds. They desire high salaries, flex work, staying in tech hub cities, and splitting their office time and home time. The jury is still out on how remote work and its longevity will impact salary changes in tech.
We spoke with a Consulting Networking Engineer in Colorado Springs about his experience with the pandemic and salary changes in his company. His position was mostly remote before the virus, with some international business travel.
What was your experience with how your company handled the onset of the pandemic? Did you experience a salary change personally?
“Yes, I did experience a salary reduction by 15% for over two months. My company furloughed over 4,000 people and reduced the salaries of many others. Our company sent a mass email to everyone under the generic covid-19 subject line, so a lot of people ignored the email entirely. I glanced at it, saw what it said, then called a friend and said ‘hey, you better read this.’ They also announced that senior directors were taking a 35% cut and VP’s were taking a 50% cut.”
In your opinion, how do you see expanded remote work impacting the future of the tech industry?
“I’m not sure how much it will impact the future of tech, but more companies will do more remote work. It saves money in office space. Before, there weren’t very many people doing remote work in our company. Now, there’s a lot more, and they’re going to keep it that way. My salary was restored in June, however, I do know that remote working and furloughing staff is still ongoing. Our company is trying to do some rolling furloughs where you work for a month, then stay furloughed another month to not entirely let people go.”
Regardless of finding consensus when it comes to salary changes, the tech industry has worked in overdrive to maintain its standing in the global economy. Behemoths like Facebook, Apple, and Google will continue to reckon with their power and aim to cultivate public support. Smaller tech companies and startups are also trying to do the right thing by their employees, and their effort does not go unrecognized.
Salary changes are becoming a tool of survival for companies staying afloat in 2020. In this, transparency becomes the most important element for having meaningful conversations about salary changes and remote work moving forward.
Here at BWBacon Group, we know and live what you are experiencing as an employer or job seeker in Denver, Boulder, Dallas, San Francisco, New York City or any of the other cities we work in. We believe great recruiting starts and ends with understanding people.
If you have any questions about living, working or playing any of the areas we serve, please contact us. We are happy to help. Seize the day, every day, that’s what we say!