Human Resources and Technology

Tech sector wage hikes stagnant

Nearly 80 percent of 110 West Michigan tech companies polled will keep pay rates the same, but hiring increases.

December 15, 2017
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The rate of hiring in West Michigan’s technology sector is going up for 2018, but pay rates are remaining relatively stagnant, according to a recent technology employment forecast.

Paragon Recruiting, which is based in Holland, polled approximately 110 West Michigan tech companies. About 60 percent of respondents said they were hiring new staff, and nobody is firing. Seventy-three percent of professional services companies said they plan to hire new staff in 2018, compared to only 48 percent in 2017. Also, two-thirds of health care employers in the area said they plan to increase their tech staff.

In spite of this projected growth of employment, the rate of pay is leveling out. Nearly 80 percent of respondents are keeping their pay rates the same. Although only 23 percent of responding companies plan to raise IT salaries, 80 percent of those are planning to hire new tech employees.

“We had seen a pretty significant jump (in pay) in the last couple of years,” said Jen Bradshaw, chief brilliance director for Paragon. ”In 2017, it just started to taper a little bit.”

Bradshaw speculated the demand for senior-level employees is dropping as their salary demands are increasing. In 2015 and 2016, the need for talent in the technology sector was so high, senior-level employees could demand their own salaries.

“Now, some of those senior leaders have kind of priced themselves out of employers’ budgets,” she said.

Bradshaw added senior-level talent in the application field could demand anywhere from $120,000-$135,000 per year, whereas mid-level talent in the same sector usually demands $75,000-$95,000 per year.

Mid-level talent may be more desirable to employers, because their salaries are under six figures. According to the employment forecast, hiring of mid-level employees rose from around 40 percent in the beginning of 2016 to above 80 percent by the end of 2017. Comparatively, hiring of senior-level talent went from over 40 percent in 2016 to only slightly above 20 percent in 2017.

The demand for mid-level talent is on the rise, but workers who can meet that demand are scarce. Bradshaw explained there currently are not enough college-level students in West Michigan enrolled for computer science degrees to meet the demand for future workers.

“We are seeing an increase in code camps, which are a shorter term depending on who’s offering it,” she added. “It’s a shorter, in-depth training of some basic coding.”

Bradshaw added another future problem for tech companies as they try to retain talent is competing with companies out of state. She said Paragon has seen an increasing trend of West Michigan-based workers for tech companies based in California and Arizona.

“If you’re living in Grand Rapids and being paid California salaries to sit at home and work, that can be a challenge for employers in this area,” she said. “We are constantly encouraging employers to come up with creative benefits, so they are able to attract that talent. … In the IT space and application spaces, they do have that ability for remote work.”

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