Climbing The Pay Scale
Spot labor shortages in a handful of hot regional markets are triggering salary windfalls for select workers. Here's how (and where) to take advantage.
(Business 2.0) – Workers at Miami's Jackson Memorial Hospital call the place "the war zone" for a good reason. As the nation's largest public hospital, Jackson treats so many trauma patients--about 3,500 per year--that the Army sends medics there to train for the battlefield. A couple of buildings over from the trauma center, though, the hospital's HR managers are fighting a different kind of war. Thanks to surging population and economic growth, they're battling with other top health-care employers to hire enough pharmacists, medical technicians, and nurses to keep Jackson fully staffed.
Armed with big pay hikes and signing bonuses as large as $15,000, HR staffers around the state have been raiding other hospitals for talent--and blaming one another for escalating salaries. Workers, meanwhile, love the attention. Korie Roberts, 34, a clinical pharmacist at Doctors Hospital in Sarasota, moved there a year and a half ago from Connecticut for a 32-hour-per-week job that pays about $80,000. Headhunters, she says, are constantly plying her with leads on jobs that pay $100,000 or more. "I can't relate to these stories about jobless recovery," Roberts says. "I'm so happy I picked the profession I did and the place I did." Not so happy are managers like Jon Cecil, HR chief at nearby Lee Memorial Health System, who agonizes over the scarcity of workers. "The system is going to break," he says, "and the phenomenon isn't just happening in south Florida."
Here's the real surprise: The phenomenon also extends to a growing number of job markets beyond health care. Workers in other industries and in other regions of the country are capitalizing on a rare convergence of economic forces that employees love and employers loathe. Economists call them spot shortages--spikes in demand for specific skills in a geographic pocket. Accountants in Southern California today are a hotter commodity than IT workers were during the tech boom, while many biotech specialists in Raleigh-Durham's Research Triangle have seen their value climb 10 percent or more in the past year. If you possess the skills, know where to look, and are willing to move, you can boost your compensation overnight. That's a tantalizing proposition for many, given a labor market that seems stuck in the slow lane.
A Sign of Good Times
Even if you don't work in one of the five hot job sectors we highlight in these pages--health care, technology, life sciences, entertainment, and accounting--you still might benefit. Economists consider these shortages a leading indicator of a tight national labor market and rising pay for workers of all stripes. They surfaced a decade ago, before labor's great run of the late 1990s. "Occupational tightness manifests itself in regional markets before you see it as a nationwide phenomenon," says Ross DeVol, an economist who heads the Milken Institute's annual study of top-performing labor markets. That survey, along with data from Tampa-based Kforce, one of the nation's top executive search firms, helped us pinpoint the hottest intersections of jobs, salaries, and regions in the United States. (To see more detailed salary data, take a look at the expanded version of our survey at www.business2.com/b2/worth.) It's a far cry from our first salary survey, in 2003, when many jobs actually recorded declines in pay and regional booms were few and far between.
The most intense worker shortage today is in the Washington, D.C., metro region. The federal government's skyrocketing spending on defense, intelligence, and security has jacked up demand for IT specialists, while the high cost of housing makes it difficult for employers to recruit talent from other parts of the country. That's giving the region's limited pool of IT workers (especially those with security clearances) newfound clout in job negotiations. "They know it coming in here," says Karen Price, director of U.S. staffing at $7 billion defense contractor SAIC. Price has been scrambling to fill 3,000 high-paying tech jobs in the United States--half of them in the D.C. area. "They're asking for 20 percent increases, which they're not going to get." But she admits that those in greatest demand--program managers and security analysts--are getting 15 percent hikes on already hefty salaries. "It's the mid-'90s again," Price says. "Believe me, I was recruiting back then--I know what it's like."
Scott Force is one beneficiary of Washington's spot shortage. Last fall the 35-year-old computer systems trainer started getting calls from headhunters. By Thanksgiving he had landed a promotion, a 30 percent pay increase into the six-figure range, and hefty bonus incentives. His new employer, Acelsior, is an up-and-coming contractor. "It took me five years to double my salary in my last job," Force says. "I'm doing it again inside a year."
Stories like Force's seem all the more striking given that the average pay hike for all U.S. workers across all jobs in 2004 was just 2.4 percent. That statistic continues to fuel doom-and-gloom headlines about a so-called wageless recovery and can dupe workers into thinking that upward mobility is a thing of the past.
Here's why they should not succumb to defeatism: Today's economy is practically a mirror image of the one a decade ago that foreshadowed the biggest job boom since World War II. In early 1995 fewer than 50 U.S. cities had unemployment rates lower than 4 percent. Yet regional shortages were already raging for IT workers like network architects and software engineers in high-tech centers around San Francisco and Boston.
The shortages of 1995 soon spread to other locations and occupations--and by spring 1996, when the national jobless number was still higher than it is today, more than 100 cities had fallen below the 4 percent mark. The trend hit its peak in April 2000, when U.S. unemployment bottomed out at 3.8 percent, the lowest in three decades. Today more than 100 metropolitan areas--about a third of all cities in America--boast unemployment rates under 4 percent. Only 41 regions could make the same claim in January 2004.
While we can't say for certain that regional hot spots will lead to a white-hot economy like the last time around, they do signal the death of a long-standing buyer's market for workers, which managers have wielded since 9/11 to squeeze productivity gains from existing staff. Lee Memorial's Cecil, for one, predicts that competition for medical talent in Florida will only get worse. Medical technicians, he says, are in particularly short supply in part because U.S. colleges have cut the programs that train them; the courses are extremely expensive to teach. "Health care is in a labor crisis," he says. "We're gonna hit a wall." Maybe. For the time being, though, thousands of workers are hitting a jackpot.
OUTLOOK: Nearly a fifth of Florida's residents are seniors, the highest proportion in the country. Each day, more than 1,000 people move to the Sunshine State, 15 percent of them at or near retirement age. That's one reason Florida led the nation last year in creating jobs, many of them in health care. Filling those positions--especially in nursing--has become increasingly difficult for employers and increasingly lucrative for workers willing to migrate. Some hospitals in Sarasota have been luring RNs with signing bonuses of up to $15,000. Nursing schools are turning away students because they don't have enough qualified instructors. For job seekers, there's no end to the good times in sight: During the next 15 years, the National Center for Healthcare Workforce Analysis estimates, Florida will have 61,000 nursing positions that it won't be able to fill. "We're all in the same boat," says Eddie Rundel, head of HR at Miami's Mercy Hospital. "We're all looking for the same types of people."
The pharmacy business is also feeling the pinch. National drugstore chains like Walgreens and CVS are expanding to keep up with Florida's swelling population of prescription-reliant residents; as a result, they're bidding up wages for druggists right out of school. Says one compensation manager at a large Florida hospital, "They can't open up one of those stores without a pharmacist, so they just buy them by overpaying."
TOP EMPLOYERS: Albertsons, Baptist Health System, CVS, HCA, Jackson Health System, Lee Memorial Health System, Publix, Shands HealthCare, Walgreens
DEAD ZONES: Kansas, Kentucky, Wisconsin
Salary sources: Florida Hospital Association; Lee Memorial Health System; Shands HealthCare
OUTLOOK: In the 1990s--driven by Wall Street and a gusher of venture capital--the San Francisco Bay Area played host to the biggest tech-employment bonanza in U.S. history. Today a different sort of IT job boom--driven by taxpayers--is generating thousands of help-wanted postings in greater Washington. The Bush administration's military and national security buildup has created not only huge budget deficits but worker shortages up and down the skills ladder.
Companies like SAIC and Computer Sciences Corp. are paying particularly high premiums for specialists such as satellite experts and systems integrators working on database overhauls for federal law enforcement and intelligence agencies. Most of those workers require a security clearance that takes the government as long as two years to process because of a colossal backlog of applications. Meanwhile, the capital's roaring economy, which generated more jobs than any other metro area last year, is adding to the pressure. Managers and white-collar professionals make up only 25 percent of the workforce but accounted for 37 percent of the 70,000 new jobs in 2004. The fastest-growing employers are IT services contractors in Virginia's Fairfax County, a suburban area with a million residents that boasts the lowest unemployment rate in the country: 1.7 percent.
TOP EMPLOYERS: Accenture, Boeing, CACI, Computer Sciences Corp., General Dynamics, Lockheed Martin, Nextel, Northrop Grumman, Oracle, SAIC, Titan
DEAD ZONE: San Jose
Salary sources: ClearanceJobs.com; Kforce; MBA Management; SAIC
OUTLOOK: Your grandmother was right--you should've been a doctor. More specifically, a Ph.D. According to government labor economists, firms that do research and consulting for biotech companies and Big Pharma will foster one of the hottest skilled job markets in the nation this decade, second only to computer-systems design. In fact, the Bureau of Labor Statistics estimates that biotech contractors will create more than 400,000 high-paying positions between 2002 and 2012.
Raleigh-Durham's Research Triangle hosts the greatest concentration of such companies in the world. It's home to the biggest biotech outsourcer of all, Quintiles Transnational, with 2004 sales of $2 billion. Raleigh-Durham is also a major center for drug plants and ranks second in the United States in the number of biotech startups that have received VC funding since 2000. All of the above--biotechs, contractors, and drug giants--are jousting for the same workers: scientists with titles like "bioinformatician." Salaries are exploding in the upper ranks because this is a young industry lacking a deep management bench, especially in Raleigh-Durham. But it's also an industry that's pushing its products through clinical trials and on to full-scale manufacturing, which is generating ever sweeter starting offers for bioprocessing technicians. A year ahead of most regions, Raleigh-Durham saw its unemployment rate fall below 4 percent last spring; today it's a measly 3.3.
TOP EMPLOYERS: Bayer, Biogen, BioMérieux, Covance, GlaxoSmithKline, Quintiles Transnational
DEAD ZONES: Philadelphia, Seattle
Salary sources: Biolex; Carlyle & Conlan; Manpower; North Carolina Biotechnology Center; Walker & Associates
OUTLOOK: Hollywood had a blockbuster 2004, releasing an unprecedented three pictures that sailed past the $300 million mark in domestic box-office revenue. But that's nothing compared with a record $15 billion in DVD sales. It's no wonder that salaries for the top third of studio staffers in Los Angeles are setting records. "Movies had a good year, and for those people, things have never been better," says Jeffrey Cole, a program director at the University of Southern California's Annenberg Center for Communication. "Salaries have been going crazy."
But the film industry isn't the hottest sector in entertainment; that distinction belongs to the videogame business, in which sales are expected to nearly double by 2008. Like biotech, the industry hasn't been around long enough to groom a workforce that can keep pace with that growth. The biggest game studios in Southern California and the San Francisco Bay Area are pouncing on a tiny talent pool. THQ, for example, based in Calabasas Hills, was recently looking for an art director with a BFA, seven years' experience, and four videogame credits. One CEO estimates that there are only 200 people in the country who fit those job specs.
TOP EMPLOYERS: Large movie studios, Activision, Capcom, Electronic Arts, Sony Computer Entertainment, THQ
DEAD ZONES: Austin, Boston, New York City
Salary sources: EA; Korn/Ferry; Ray & Berndtson; Sorrent; USC Annenberg Center for the Digital Future
OUTLOOK: The Sarbanes-Oxley Act of 2002 was the biggest boon to accountants since the invention of double-entry bookkeeping in the 1400s. Stricter reporting requirements for public companies took CPAs and auditors from famine to feast in a down economy. Small and midsize firms are now outsourcing accounting work like never before because they don't have the in-house talent to handle the load. So it's no wonder that the Big Four accounting firms and hundreds of smaller ones are hiring in record numbers. Meanwhile, corporations with sales of more than $500 million are competing for the same workers because they're beefing up their internal compliance departments. And now that the economy has turned, they are also adding financial analysts to help fuel growth by studying acquisition targets.
So why are accounting jobs and salaries climbing especially sharply in Los Angeles and San Diego? In short, because neither felt the big chill of recession, since they lack exposure to sectors like manufacturing and investment banking that kicked other regions in the gut. This region's strengths were relatively recession-proof: biotech, defense, entertainment, and the No. 1 port for Chinese goods. "Southern California stayed hot," says Steve McMahan, a group president at staffing firm Kforce, "so a sudden spike in demand for a specific skill falls on already strong market conditions and inflates salaries."
TOP EMPLOYERS: Big Four accounting firms, Bank of America, Boeing, Kaiser Permanente, Walt Disney Co.
DEAD ZONES: Miami, New Orleans, Orlando
Note: Median salary estimates based on actual placements. Salary source: Kforce
15 of the fastest-growing occupations through 2012 and what they pay.
[*] Bureau of Labor Statistics, Q4 2003
For the full results of our salary survey, go to www.business2.com/b2/worth