2021 has been an unprecedented year for the job market, and that was especially true for the Data Science and Data Engineering community. Many clients and job-seekers have been asking us for data around the salary increases candidates are getting when they change jobs in an effort to be competitive in attracting talent. Certainly, the offers going out in the last eight months have ramped up quickly and aggressively, so to provide more clarity on this hot topic, we put numbers together for you.
The job market really exploded starting in April this year, so we focused our analysis on data scientists and data engineers who changed jobs in Q2 through Q4 of 2021. As you can see, an eye-popping 51% of the sample got a base salary increase of 20% or more. Digging deeper, 16% of the sample got a base salary increase of over 30% and some early career professionals realized nearly a 50% increase in their base salaries when changing jobs.
The average salary increase for data scientists and data engineers this year was 20%. This certainly outpaces the overall average of a 6.6% increase for job switchers reported by ADP.
What is driving this salary escalation?
There is a major war for talent being waged. As companies prioritize data-driven decision making and continue on their digital transformation journey, data scientists and data engineers are in higher demand than ever before. It is a simple supply and demand mismatch.
A major factor, of course, is the impact on job opportunity and salary increases the pandemic caused in 2020. Most professionals stayed in their jobs (if they could) creating pent up demand for job movement this year. Also, last year many companies did not increase salaries or give bonuses, and so professionals were anxious to make up for those lost earnings, understanding the bonanza of demand in data roles and the compensation increases accompanying job changes.
The third critical factor driving professionals to switch jobs is the wider pool of opportunities available as many companies embrace a remote data team. Now companies are competing for talent with firms across the country (as well as globally), with the West Coast and Asian tech firms driving up compensation with remote teams that can work from anywhere. Enticing candidates with compensation is now like “pulling up with a Brinks truck full of cash” as one client put so well. Without the limitations of location, data scientists and data engineers can realize even more competing offers than ever before, driving the salary bidding war.
Retention strategies are more important than ever.
With the opportunity to get such a large step up in salary, employers are facing serious retention challenges. Keeping an eye on what factors keep professionals at their current roles can help inform a retention strategy. It’s important to keep in mind that base salary is only one lever in a good strategy. Benefits, culture, leadership, advancement paths, and other factors all play into a data scientists or data engineers job satisfaction.
And while it may not be what many hiring managers want to hear, attrition is here to stay – at least for the near term. This means continuous recruiting for key roles is essential. With the current talent war raging, filling an open role could take weeks, if not months, and set back the timeline on many business goals. So it is critically important to keep your talent pipeline in place in advance of a true open position.
For more information on effective recruiting strategies, see our piece in CDO Magazine.
And if you are considering a job change, now is a great time to do it. There are many, many options for you and certainly additional money. Just be sure to think this through – changing jobs is a serious decision that could impact the rest of your career, so be deliberate, thoughtful, and strategic.