Rising demand for developers is creating some unexpected consequences

An analysis of hiring suggests the average the tech salary has dipped marginally, but the reasons behind it are complex.

engineer-it-worker-male-data-technology.jpg

Not only are more employers hiring junior candidates, but they're also investing more in staff learning and development, Hired found.

Image: Nitat Termmee / Getty

An analysis of data from the Q2 hiring market suggests that tech salaries flattened in 2021 as more employers brought on junior candidates to meet demand.

Hiring platform Hired analysed more than 525,000 interview requests and 10,000 job offers between January 2019 and June 2021 and found the average US tech salary was $152,000 in 2021, a slight decrease of 1.1% compared to last year.

Special Feature

Building the digital workforce: Tech skills trends and strategies for success

In this special feature, ZDNet examines technology's role in helping business leaders build tomorrow's workforce, and employees keep their skills up to date and grow their careers.

Read More

It attributed this to increased pressure on hiring pipelines driven by the pandemic and the ensuing 'Great Resignation', which has seen employees quitting their jobs at record rates. This has led to heightened competition for software developers and other specialist tech workers, and "significantly shorter hiring cycles" as companies battle to meet demand: 30 days to hire in the U.S. and 34 days in the U.K., down 25% on average from a year ago.

SEE: Tech skills: Four ways you can get the right mix

In order to meet this demand, organizations are bringing on less experienced – and, therefore, cheaper – candidates, said Hired. The pivot to remote work is also impacting hiring: with more workers moving out of major tech hubs into areas with lower costs of living, and more remote-working roles being advertised, with employers expanding their addressable candidate pool, filling roles faster and paying lower salaries on average.

While the average US tech salary dipped, Hired found that pay for remote-working roles was getting better, increasing by 4.6% in 2021 to $143,000.

More experienced candidates also saw an overall pay increase, the data suggested, meanwhile in the UK and Canada, that the average salary for tech workers increased by 2.1% and 1%, respectively.

The freedom to work from anywhere has prompted many employees to move away from expensive businesses hotspots like San Francisco, London and New York and into more affordable towns and cities offering a higher quality of life.

Here, employees' pay packets can go much further: for example, making the average $165k salary in San Francisco would be the equivalent of making $243k in Dallas, Hired's data showed.

Yet the company warned against adjusting salaries downwards for remote workers who chose to work from more affordable locations, saying this would prompt higher turnover. In an accompanying survey of more than 1,200 technology professionals, Hired found that 75% of employees would begin looking for a new job if their salary were to decrease, while 45% of candidates disagreed with using the cost of living of the employee's location as a baseline.

SEE: Developers wanted: Companies are hiring, and these are skills they're looking for

In fact, 62% of employees surveyed said they were already planning to look for a new role within the next six months, meaning any decrease in salaries would only drive this number higher.

Offering flexibility in working arrangements will also be key to attracting and retaining talent, Hired's survey indicated: 52% of respondents said they wanted a remote-first model with the flexibility to go into an office if they choose to, while 33% wanted to stay fully remote – meaning that almost 90% want some kind of remote-work option entrenched into workplace policy. However, this may be falling on deaf ears.

CEO of Hired, Josh Brenner, said organizations should look at the transition to remote working as an opportunity to "rethink their recruiting and hiring strategies and reframe staffing challenges as opportunities for innovation."

Brenner added: "Increasing hiring efficiency and offering the right benefits will be absolutely critical to compete for top tech talent."

One trend highlighted by Hired's data was increased investment from employers in the learning and development of employees, which could help businesses address skills gaps and boost retention amid a shortage of more experienced candidates.

SEE: Remoteworking jobs are here to stay, and some employers are worried

Hired noted that more employer job postings now explicitly included 'career development' and 'training' terminology in job postings – up 35% and 32% respectively from March to July 2021.

It also found that younger, more junior candidates weighed up job opportunities differently to older candidates. "Younger candidates rank tuition reimbursement or professional development significantly higher than family-focused benefits," said Amy Pisano, CRO of Hired. 

"Older, more experienced candidates ranked support and care benefits higher, including childcare services and parental leave benefits. Employers should keep these differences in mind if they are targeting varying age groups in the job applicant pool."