Wage Growth Frenzy: What’s Happening and What to Watch Out For
Glassdoor’s newly published report* shows the highest wage growth in the nation is happening in my back yard. The San Francisco-Oakland-Hayward metro region shows a dramatic spike during the last five months. It’s affecting two categories of work: technical industry roles with high-end skills in engineering, biotech and pharmaceuticals and – quite different – roles such as bank tellers, cashiers, truck drivers.
On one hand, it is good news when companies are growing and need highly capable professionals who can both handle technical solution development and work with businesses to implement them. On the other hand, the competition to secure them is causing the hiring and compensation frenzy. The median jumped for technical talent to 60K+, with averages for Java Developers at $150K, Solutions Architects at $160K and Technical Support at $90K. The median for biotech roles rose to $74K, which are all well above wage averages in US major areas. By contrast, finance and accounting wages remain flat, despite the shortage of talented, strategic people. The requirements remain high but the compensation is less. Companies are investing in technical and engineering talent at a premium to propel their growth.
This has consequences for other industries as well. The real estate and construction businesses have more demands for talent to keep up with the needs for incoming professionals for the companies in the region. The crackdown on immigration makes this even more difficult. The traditional “blue collar” work force shortage for moving goods, construction, etc. has been a developing problem for more than a decade. With the investment in new construction supporting the tech industry and housing industries, cost remains the primary concern to the project managers. They react inconsistently, sometimes paying “higher rates” under pressure and other times turning away experienced construction workers because they are considered too expensive.
Another consequence relates to education. Many of our top universities are having difficulty keeping their students enrolled through graduation. For the first time in many decades, engineering and math departments have larger student enrollment than the business schools.
Pressure makes us do crazy things. To stay clear of the mayhem, here are some guidelines:
- Do not delay on your hiring offer while you debate or figure out pricing.
- Establish the percentile range your business can work with and look for additional compelling reasons that will attract professionals.
- Be straight with candidates. Market exuberance can influence candidates’ expectations and overreacting by excessive overpayments makes the frenzy worse.
- Do not hire a less competent person than you need because you can’t attract the top talent you need. The cost of that mistake only creates a costly boomerang.
- That said, be realistic about what you need. Coach hiring managers who think seeking perfect candidates means finding only those who meet every requirement or criteria. Those are far and few between. The demand is great and the supply is limited.
Take a deep breath and realize that capable, sound talent is invaluable. Spending the time to hire both well and prudently is the wise move.
Jodi is the Director of Recruiting Services for CFOs2GO. She has been with CFOs2GO for more than 15 years providing executive search and placement services across virtually all industries. Her background includes sales and healthcare following a stint in a Big 4 CPA firm. She sits on several Boards for non-profits, including The East Bay Leadership Council and currently serves as the past Chairman for Opportunity Junction in Antioch. Jodi speaks French, has studied German and Russian, and plans to add Spanish next.
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