Despite steady growth across the U.S., for the first time since November 2014, San Francisco Bay Area’s wage growth rate has fallen below the national average.
The tech-heavy metro area saw 2.5 percent year-over-year median base pay growth to $65,818 in February, a pace that is down from a revised 3.6 percent growth rate in January, as reported by Mill Valley-based Glassdoor, a jobs and recruiting website.
By comparison, wage growth in Chicago and Los Angeles were both 4 percent.
Wage growth in San Francisco has fallen steadily in the past five months, down from a high of 4.2 percent in September 2016.
“This month’s report shows wage growth beginning to slow in the tech-heavy San Francisco area, which comes as a surprise. It could be an early indication of softening in the Bay Area labor market,” said Andrew Chamberlain, Ph.D., chief economist of Glassdoor. “We’ll be monitoring that pattern closely in coming months, both in the Bay Area and other tech-heavy metros around the nation.”
Chamberlain suggested one of the reasons tech jobs may be seeing lackluster growth is due to the supply of workers catching up with the high demand that has become the norm over the past few years. Many workers are gaining the skills and training needed to become data scientists or web developers, for example, and switching jobs to earn higher pay, and filling gaps in the labor market.
In addition, workers in those jobs see big paychecks and perhaps those have topped out. Continued growth is tough when the U.S. average median base pay for data scientists, for example, is more than $100,000 per year, Chamberlain said.
“It remains a highly paid position, but median compensation is being driven down because companies are hiring more junior data scientists with less skills and prerequisites than were previously required for the role,” he said.
The reason isn’t a slowed demand for the job, but a maturation of a job category that was once dominated by those with doctorates.
In San Francisco, it’s still a “fast-growing field in terms of jobs added, but the definition of who qualifies for the job title ‘data scientist’ is changing, and the median pay is coming down on average to reflect the maturing of these relatively new roles.”
In addition to a slowdown in tech-heavy San Francisco, Glassdoor Local Pay Reports show a leveling off of pay growth for several technology jobs across the country compared to last year. For example, data scientists saw a sluggish 1.1 percent pay growth to $95,829, while web developers saw a 1.2 percent decline in wages to $61,846.
Other tech jobs seeing below average growth include java developers at 2.4 percent growth to $74,344, and software engineers at 2.6 percent growth to $85,888.