Pave Data Lab
Compensation Wrapped: How Wild Was The 2021 Market?
Taking a look back to let the compensation benchmarking data reveal unpredictability
Recruiters and hiring managers faced an unprecedented year of challenges in 2021.
Across industries, efforts to rebound from the Great Resignation were complicated by rising inflation and the evolution of remote work. As the American workforce continues to reshape itself into the new year, we’re taking a look back to let the compensation benchmarking data tell us:
Just how unpredictable was the 2021 job market?
Reshuffling peaked in June
As companies grappled with the multi-year disruption of the global pandemic, 2021 saw workers leave their jobs at record pace. Multiple factors were at play, from seniors increasingly choosing retirement to a troubling rise in employee burnout.
While the underlying causes may be varied, the data is clear: last year saw a massive reshuffling of workers.
This exodus event, dubbed the Great Resignation, has led workers to take on new roles at unprecedented rates. Data from over 1,700 companies shows the influx of employees peaked in June of last year, when the rate of new hires in the workforce hit nearly 7%—more than double the rate seen in June 2020.
2020 was a time when the uncertainty of the early pandemic left many people feeling reluctant to make big life choices, which could mean the spike in 2021 job change was the result of pent-up churn, rather than an alarming trend.
This year’s data may hold more answers but, since resignations are known to dip seasonally in winter, 2022’s peak is likely still months away.
Salaries ballooned for engineers
In the face of worker shortages and rising inflation, the Wall Street Journal anticipates generous raises geared at keeping workers from jumping on the resignation bandwagon. Companies understand that retaining their most in-demand talent requires calibrating compensation against the current market. For engineers, our data kept a pulse on 2021 salaries as they rose in real-time.
At present, the average software engineer’s salary in top-tier metros has risen to $155,000, an increase of 4% over average salaries from midway through 2021. For DevOps engineers, though average pay is lower, the average salary has risen faster—growing 16% over the same period, up to $142,000.
Hiring demand remains high in 2022, with engineers among the most sought after roles. As compensation packages are pushed to become increasingly competitive, it’s unclear how fast salaries will continue to rise in the upcoming year.
Compensation strategies adapted to growing remote workforce
Since a growing number of urban employees have opted to start working remotely from the suburbs, hiring teams have been pushed to think critically about how location should impact salary. Whether or not your pay scale factors in cost of living, a complete view of the compensation landscape is critical for engaging top talent across multiple geographies.
When comparing only the most elite metro areas in the U.S., the salary swing can still span ten of thousands of dollars. For example, our data shows that, last quarter, software engineering new hires commanded an average of over $140,000 in the San Francisco and Seattle metro areas, while in the fifth hottest market, Austin, TX, that number drops to $122,000.
Pave monitors salaries at over 1,700 companies in real-time, providing a deep dive into location-based compensation trends, in addition to other shifts in the job market. While the challenges of 2022 may be just as unpredictable as last year’s, recruiters and HR professionals can leverage advances in compensation benchmarking to support data-driven policies.