The Risk in the IT Salary Spiral

Susan Hall

John Shinal at MarketWatch writes that all the patent litigation is telling us something important about the value of intellectual property. He's writing for investors, saying that the talent crunch for tech workers will hurt entire industries and shareholders themselves.


As Google and Facebook push tech salaries ever higher, the tide lifts all boats, so to speak. Startups have to swim in the same ocean. And Shinal makes the point that health insurance and benefits make up a quarter to half of a new hire's overall compensation, so labor costs are rising in the double digits annually at tech companies.


He writes:

Google spent a total of $8.52 billion combined for research and development, sales and administrative costs in 2010. Most of those costs are salary and benefit expenses. So the 10% across-the-board raise it handed out last year was worth something slightly less than $850 million. That's great for the Silicon Valley housing market, but bad for Google investors.

He points to engineering jobs at companies such as Microsoft and Qualcomm that have gone unfilled for three to six months. The time it takes to add staff means time not used to speed new products or services to market. And with tight controls on foreign workers and U.S. universities not churning out enough tech workers, he predicts only another economic slowdown or recession will stop this trend.

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