In-Depth

2006 ESJ Salary Survey, Part 3: The Northeast, Larger Firms Pay the Most for IT Skills

In the third of our four-part report, we look at compensation by company size, industry, and region.

• 08/22/2006

By: The Enterprise Systems Staff

For many IT professionals seeking higher salaries, the best bet is to go to a larger company based in the Northeast. The high-tech and software industries continue to pay top dollar for many positions, but many opportunities can also now be found in the financial and business services sectors.

These are the findings of a recent salary survey of 852 enterprise IT sites conducted by Enterprise Systems. The latest salary survey tracked salary figures for IT managers and professionals across a broad spectrum of organizations. Our survey covered eight key IT management and eight key staff positions. All figures are reported in U.S. dollars.

This year, as shown in the first two sections of this year's Enterprise Systems Salary Survey report, things are looking brighter than they have for years on the IT compensation front. Previous surveys, conducted beginning in 2001, found that roughly half of the positions covered saw increases from year to year. In this survey, all seven key IT staff positions covering applications and systems responsibilities we have seen increases in average base salaries. In addition, six of the eight management-level positions covered in the survey gained ground since our 2005 survey. Raises ranged between a fraction of a percent up to six percent for some positions.

Our survey found that top IT executives make up to $139,900 a year, along with average bonuses of more than $34,000. IT managers earn $67,000 to $90,000 a year, with bonuses of up to $7,000. Line IT positions (analysts, programmers, administrators) average between $61,000 to more than $75,000 a year, with bonuses of $2,000 to $3,000 a year.

In this special report, the third of a four-part series, we drill down into IT salaries from company size, geographic, and industry-specific perspectives. The survey divides the respondents into four regions across the country, as shown in Table 1. Table 2 explores salaries across selected major metro areas. Table 3 explores salary differentials based on industry groups, and Table 4 looks at the impact of company's size on IT salaries.

REGIONS

Regionally, as we found in previous surveys, the Northeast and West Coast dominate the competition to pay the highest IT salaries. Overall salaries in the Los Angeles area, however, are higher than in the New York region. Breakdowns of regional salary rates are shown in Table 1. Selected metropolitan area results are shown in Table 2.

Northeast: Companies in the northeastern United States -- defined as the region that incorporates New England and the Mid-Atlantic states (NY, NJ, PA, MD, DC) down to Washington, D.C. -- pay the highest rates for 12 of the 16 positions covered in this survey (including two positions tied with the West).

Compensation for top-level executives reported in this survey -- CIOs or vice presidents of IT -- at Northeast locations was just below the overall average in salaries nationwide, at $134,300 in annual base salary (versus $139,900 overall). At the next level, IS directors fared better than the average at about $103,000, versus $99,600.

Mid-level and departmental managers were likely to see higher pay across the Northeast as well. With the exception of Internet managers, Northeast companies led in compensation for all management categories.

Members of development teams -- which include systems analysts, programmer/analysts, applications programmers, and systems programmers -- were all more likely to be more highly compensated at Northeast-based companies. Average salaries range between $67,000 and $80,000 a year.

With the exception of network administrators, administrators for northeastern organizations are being paid slightly higher rates than their counterparts in other parts of the country, our survey also finds. For example, database administrators in the Northeast had the highest wages in the nation ($85,800, while the national average is $75,500).

South/Southeast: For the most part, IT salaries in the South/Southeast region of the country -- defined in this survey as the region extending from Virginia to Texas, and including Kentucky, Arkansas, and Oklahoma -- tracked closely to the overall national average. This has been the general trend in previous Enterprise Systems salary surveys as well.

The exception to this rule is CIOs in the southern states. The average base salaries of these top IT executives stands at $150,400, or about seven percent above the nationwide average of $139,900. Otherwise, all other positions -- including managers, developers, and administrators -- saw pay ranges within one or two thousand dollars of the overall average. This is similar to the trend revealed in last year's survey.

Midwest: As has been the case with previous surveys, salaries in the Midwestern United States -- encompassing the region that extends from Ohio and the Great Lakes in the East to the Great Plains states -- lag those of other regions. This has been the case in all surveys from year to year, and the lower cost of living probably accounts for much of this gap.

West: Salaries in the West -- which covers the states from the Rocky Mountains to the Pacific Ocean -- are higher than the national average. Companies in the region report the highest salary levels for five of the 16 positions covered in the survey. CIO salaries in the West surpassed the rest of the nation (averaging $153,800 versus $139,900 nationally), while IS directors simply kept pace with the overall average at $100,900. The average base salaries of Internet managers and network administrators also surpassed those in other regions, while help desk managers and systems programmers ranges were tied for the lead with their northeastern counterparts.

HIGH-TECH AND FINANCIAL SERVICES FIGHT TO PAY THE MOST

The survey shows that opportunities are increasing across a wider range of industry groups than in recent surveys. In past surveys, the high-technology and software-development sectors held the edge in salaries, while other industries kept a lid on their pay scales. But this year, IT salaries in the financial and general business services sectors are coming on strong. Table 3 provides breakouts of salaries by major industry groups.

Software/high tech paid the highest average levels for eight out of 16 of the positions in the survey. The high-tech sector may pay the best overall, but not for top IT executives. In fact, health care CIOs saw the highest average salaries reported in this survey at $176,700, followed by financial services with $175,800.

High tech does pay best for most middle management positions, leading in four out of the eight categories covered in the survey. Pay rates in high-tech companies range between $81,000 for Internet managers to $116,000 for top-level IS directors. The exception is application development managers, who are best compensated within service-sector companies.

For developers, the highest salaries this year can be found in the business services sector, our survey shows. Salary averages range between $75,000 for application programmers to $85,000 for systems analysts.

For administrators, opportunities are divided between high-tech firms and financial services. Database administrators are seeing base compensation as high as $85,000, while network administrators are drawing more than $69,000 in high-tech firms. Systems and storage administrators, on the other hand, were best paid in the financial services sector, with both positions here averaging $70,000.

THE SALARY GAP: SMALL VS. LARGE VS. VERY LARGE

Now that IT budgets are freeing up for new projects, and skills demand is up, competition for key IT skills is inevitably increasing. Here, the survey finds that larger companies have an enormous edge over small businesses. The largest corporations pay anywhere between seven percent to 80 percent more than their small business counterparts for various IT management and technical skills.

It's no surprise that larger companies pay more than small businesses for their IT talent. Still, the gaps between large and small can be eye-opening. For example, starting at the top, CIOs at large corporations with 50,000 or more employees make almost 80 percent more than very small companies. For staff below this level, however, the gap drops to a more reasonable 25 percent.

Table 4 shows the salary breakouts by company size, starting with very small businesses with 50 or fewer employees, all the way up to large organizations with more than 50,000 employees.

For two positions in the survey, salaries are almost the same within smaller organizations as they are in the largest of the large organizations. Application development managers in smaller organizations are paid almost as much as their large corporate counterparts. The average annual base salary for AD managers in organizations with 51 to 500 employees is about $92,000, a level that rises to $99,000 in the largest organizations. Likewise, systems analysts in the smallest firms (50 employees or less) average about $78,000, compared to $84,000 in large corporations -- an eight percent gap.

For most other IT staff positions, the salary differential between small firms and large corporations ranges between 16 percent (for programmer/analysts) and 41 percent (for network administrators).

With the exception of AD managers, the gap is just as pronounced for middle management positions -- ranging from 25 percent (for IS directors) to 29 percent (for help desk managers).

Related Articles

2006 ESJ Salary Survey, Part 1: Salaries Grow for All IT Staff Positions

2006 ESJ Salary Survey, Part 2: Raises for IT Executives and Managers Remain Tepid

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2006 ESJ Salary Survey, Part 1: Staff Salaries
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2006 ESJ Salary Survey, Part 4: IT Attitudes
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