Data Center Salaries Continue Trend Upward

Between COVID-19, working from home, and the Great Resignation, 2021 was a heck of a year for data centers, and compensation reflects it, according to the Data Center Knowledge IT Salary Survey.

“Before the year’s out, you can expect a lot more people in this industry to be looking for higher money,” predicted Carrie Goetz, principal and CTO of Dunedin, Florida-based data center consultancy StrategITcom and author of the forthcoming book, Jump-start Your Career in the Data Center.

Salary Competitions

Labor costs in mission-critical areas such as data centers have always commanded a salary premium, said Ryan Buhk, vice president of human resources for Salute Mission Critical, a Franklin, Wisconsin-based supplier of data center services to 32 states and 13 countries that provides skilled and unskilled labor ranging from janitorial on up.

Historically, that premium has been 15% to 18%, but over the past year or so, with pressure from labor shortages and inflation, it is now 23% to 25% over other technology fields, Buhk said. “Even at the lowest levels, from cleaning and security up to regional directors of operations,” he said. “There’s ripple effects all the way up the stack.”

CyrusOne, a Dallas-based operator of more than 30 data centers in the United States, has noticed a dramatic shift upwards in salary requests, particularly with Dallas’ growth, said Leslie Smithart, senior director of HR. “We evaluate when we bring in new hires and see if we need to adjust anyone else on that team,” she said.

Moreover, big companies are not only paying more, but hiring more people than they immediately need, assuming they’ll find a position for them later, Goetz said. 

That said, Buhk said he is seeing some easing on the lower level. “The hope is that, with those markets easing, we’ll see more stabilizing trends on compensation and wage expectations,” he said.

Removing Barriers to Hiring

Nonetheless, data center operators need to find ways to expand their pool of potential employees by removing barriers, Goetz said.

One of the biggest is requiring a college degree when jobs don’t really need it, Goetz said. As much as 80% of data center jobs could be done with skills and training, but only about 31% of the population has at least a four-year degree, she said. By the time you eliminate doctors, lawyers, dentists and other degrees that have nothing to do with technology, “you’re down to 14%, and they’re trying to fill every job in tech with those people,” she said.

Some companies tell her, “’If we find the right candidate, we’ll waive the requirement,’” Goetz said. “Well, why are you putting it down, then? People who don’t have it won’t apply.”

Companies also need to make positions more flexible for people who don’t like to go into an office or who need to take parents or children to doctor’s appointments and school recitals, Goetz said. “Not all benefit packages have kept up with people’s lives and the way they work,” she said, noting that during COVID-19, five times more women than men left their jobs because they were caregivers.

“It’s impacted our recruiting,” Smithart agreed. “There are people who want fully remote jobs and don’t even want to consider a hybrid [work environment].”

In other areas, COVID-19 has also been a factor, but in a different way. “Specific clients had vaccination mandates that were not well received by our teams,” Buhk said, saying that accounted for 10% to 15% of its labor pool.

Similarly, some potential employees are repelled by social media hostility – assuming all technology jobs would be like that – or by the perception that, as a conservative, they wouldn’t be welcome, Goetz said. “Who are we as an industry to shout about ‘diversity and inclusion’ when we’re anything but inclusive?” she asked.

Preparing for This Year’s Salary Review

For the current year and beyond, expect salary pressures to continue, said Amy Stewart, associate director of content at Payscale Inc., a Seattle provider of compensation data, software, and services. “2022 has been a landmark year for compensation management,” she said. “Organizations have had to respond to increased competition for talent, rising inflation, new legislation, and budget constraints with a potential recession looming.”

“A properly paid employee is a happy employee,” Buhk said. “If you’re not good to your employees, there’s every reason why the next data center down the line in northern Virginia will pay them 10% to 15% more than you’re already paying them.”

But while it may still be a buyer’s market, it’s important for employees to be prepared, Stewart said. “Employees are still advised to look up their salary and bring that information to their employer in advance of a salary review,” she said.

On the other side of the desk, it’s important for companies that want to keep their employees to be prepared for questions, Stewart said. “Research from Payscale shows that perception of fair pay is most important when it comes to retention, which is why pay transparency is so important,” she said. Organizations should use multiple data sources to determine salaries for a comprehensive understanding of the market, especially if current data sources are old or the market is changing fast.

Companies should also be prepared to justify those salaries. “Salaries can vary for numerous reasons, ranging from company size to industry to the unique responsibilities atypical for the position,” Stewart said. “The employer should be able to explain that pay is competitive, equitable, and fair using survey data. It is also important to have a compensation strategy and job architecture in place with all compensable factors determined — such as years of experience, tenure, or special skills — and to make sure employees understand these compensable factors.”

In fact, companies open about their compensation strategies are more likely to keep employees, Stewart said. “Pay communications can increase retention even when employees are paid below market,” she noted.