The Bay Area's golden age of tech may be losing its luster. While other parts of the country dealt with massive job cuts in 2023, the Silicon Valley region appears to have been the most severely affected. A deep wave of job losses in the tech industry has not only left many scrambling to find new jobs, but also resulted in significant salary cuts for those who kept their jobs. This came after a period of explosive salary growth early in the pandemic, followed by relatively modest increases in 2022. Now, a study by advocacy group Women Impact Tech shows that the average tech industry salary will decrease by 12.1% in 2023.
Layoffs surge in Bay Area tech industry, leading to pay cuts
Large tech companies like Google, Microsoft, and Tesla are experiencing major changes as they continue to aggressively cut staff to cut costs. A new report finds that declining average salaries at tech companies have led to “annual pay slashed from $207,000 to $182,000,” reports Mercury News. The Bay Area's golden age of tech may not be as glorious as it once was. According to WIT data, Bay Area employees experienced the largest year-over-year salary decline at 15.25%, despite tech companies having the highest average salaries in the nation.
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A surge in layoffs is the main reason for pay cuts
According to WIT researchers, their study strongly suggests that the surge in layoffs is the main cause of the nationwide decline in compensation. Moreover, the study highlights that among US tech employees, those with less than six years of tenure face an average 15% pay cut in 2023, while more experienced employees will see smaller cuts. Moreover, women, who saw faster earnings growth compared to men between 2019 and 2022, saw a larger decline in earnings over the previous year.
Salaries for job-changers fall by 26%
“Even in the Bay Area, we kept seeing people take those jobs so quickly that we called it the 'Great Restructuring,'” said SFGATE WIT President Paula Ratliff. “The jobs were still there, they just weren't as high-paying as people were paying right after the pandemic,” she continued.
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The survey noted a significant 26% drop in average income for those who changed jobs in 2023. Meanwhile, there was no change in salary for those who decided to stay in their current role. WIT found that “project and product managers, and basic software engineers” saw a larger drop in salary compared to “data, artificial intelligence and machine learning engineers.”
