Fact of the Week: IT Workers Accept 2 to 4 Percent Lower Wages to Work at Companies That Use Emerging Technologies

Source: Prasanna Tambe, Xuan Ye, and Peter Cappelli, “Paying to Program? Engineering Brand and High-Tech Wages,” NBER Working Paper No. 25552, February 2019.

Commentary: For IT workers, the chance to use emerging technologies represents an opportunity to develop new skills, which increases the wages they will command in the future. It follows that IT workers would be willing to earn less in the near term at a job that utilizes new technology in order to burnish their credentials and earn more later, which defrays the costs employers face in adopting new IT systems. This is supported by a study of over 50,000 IT workers’ current and “target” wages, which represent the salary levels necessary to lure them from their current jobs. It finds that, relative to their current wages, workers utilizing emerging IT systems have target wages between 2.1 and 3.7 percent higher than other workers. The gap rises to 5.0 percent within companies that provide skills training, bolstering the conclusion that IT workers will accept lower salaries to work with emerging technologies.