With unemployment still high and the U.S. economy still tight, it’s always a bit surprising to see companies struggling to staff up. But that’s exactly what Austin Technology Council’s recent survey results from more than a hundred CEOs showed. I looked at three of the top findings and tried to uncover some of the reasons why.
77% of respondents agree that there will be a shortage of technically skilled talent in the future.
Attendees and panelists certainly saw eye-to-eye on this issue, as evidenced by a panel with STEM Education as the backdrop for discussion.Samsung’s Public Affairs & GC Catherine Morse mentioned it’s focusing on “Texas Talent” for manufacturing and mentioned the importance of regional universities as a pipeline for talent. That point was taken in another direction by Microsoft’s Cameron Evans, CTO for the company’s education unit in the United States. Evans thinks Colleges of Education are the next battleground to facilitate change in the workforce. He argued putting skills in teachers’ hands will be what fuels the jobs we need over next the 20 years. A recent visualization from GOOD and University Of Phoenix compiled some additional STEM-related data, much of it echoing Evans’ points.
In a National Journal article covering a panel from the President’s Council on Jobs and Competitiveness, Facebook’s COO also mentioned STEM challenges. “Echoing concerns raised by tech firms for years, Sandberg said that the U.S. needs better graduation rates and must get more students interested in pursuing science, technology, engineering, and math degrees. “We are not investing for the future,” she said. “We are falling behind in every way possible.” Immigration reform was another hot topic during the discussions, with AOL’s former chief Steve Case urging less restrictions on visas and green cards for foreign workers. That, he said, “is the only way to get [to the] issue of high-skilled workers in the next 12 months.” That seems like an interesting statement as U.S. employment hovers around 9% and seems to imply there’s a shortage of skilled U.S. workers. An interesting debate for another time.
71% of respondents agree that there is a shortage of technically skilled talent at the present time in Austin.
Talent shortages seem to be a consistent theme in tech-focused cities, and certainly ones with a lineage of supporting startups. I scratch my head a bit on this one. The Census Bureau shows Texas’s population increased by 20.6 percent to 25,145,561 from 2000 – more than twice the 9.7 percent national rate. Austin’s population had an almost identical increase, rising 20.4 percent since 2000, so raw human capital isn’t the issue. We can look at it another way. Brookings analyzed 2010 Census data and compared trends in cities and suburbs, classifying certain metro areas as its “Next Frontiers.”
“At one end of the spectrum lie nine Next Frontier metros, the demographic success stories of the 2000s. These places are fast growing, rapidly diversifying, and outperforming the nation in educational attainment. Eight of these nine metro areas lie west of the Mississippi River, with Washington, D.C. as the lone Eastern exception.”
Brooking’s analysis opens up several discussion points. With diversity and the educational pieces presumably in place, what then are the obstacles to acquiring the right talent? Are companies just terrible at recruiting? Are all the good engineers are in Silicon Valley or overseas? Perhaps even more provocative, are companies really investing in people and training their employees to become more highly-skilled instead of sourcing things out to get the razor-thin margins necessary to sustain their models? Whatever the case, the NYT surfaced data from the National Employment Law Project [below] showing low-end jobs are actually the ones making a comeback, again leading me to question how aggressive some companies are really approaching the recruiting process.
“The report by the National Employment Law Project, a liberal research and advocacy group, found that while 60 percent of the jobs lost during the downturn were in midwage occupations, 73 percent of the jobs added since the recession ended had been in lower-wage occupations, like cashier, stocking clerk or food preparation worker.”
As for the engineering note, Gowalla’s CEO Josh Williams cleared up some of the speculation, saying the local company hires more than half its engineers from the Bay Area. You can debate the pros and cons of that, but it seems like digging a little deeper in your own backyard might be a good idea. If we look at what industries are creating jobs in Texas, there’s another storyline. A recent Wall Street Journal report showed what areas are really creating jobs.
“The fastest-growing employment sector in Texas during his [Rick Perry] tenure has been mining, which includes the booming oil and gas industry, up 63% in past decade, or 94,000, to 243,000 jobs.”
Those figures don’t exactly paint the picture of a diversified job sector, especially when you compare to other industry segments like information and manufacturing. Both were down 22% and 33% respectively. It forces the question of where we’re putting our resources and investments. Are we backing the right entrepreneurs in areas that are actually creating valuable products with a real global market base? Perhaps another way to look at it is to consider how Stratfor’s CEO and futurist George Freidman described high-tech. During his keynote, he said if you’re not fighting degenerative diseases, utilizing robotics, maintaining productivity, or lowering energy costs, you’re not really high-tech. Now granted the productivity piece is very broad, but you get the sense of which areas could have real longevity.
More than half of respondents believe that talent issues have limited their organization’s productivity and efficiency.
One of the ways to address talent concerns is to look at where the pipeline originates. During one of the panels, Calxeda’s Barry Evans mentioned the importance of attracting big corporations, many of which set up R&D centers and bring engineering and business talent along. Some of the bigger tech and internet companies can also help fill the talent crunch void. TopProspect compiled information available from companies started within the last five years and combined that with company size and publicly available funding data. The infographic below, though valley-centric, shows having a cubicle at Google makes you a pretty good candidate for getting funding. But whatever stock you put it into data like this, it’s clear that whether it’s software, semiconductors, or finance, big companies are fertile grounds for breeding entrepreneurs and jumpstarting innovation. I’d guess a decent percentage of the last ten or twelve Austin-based startups pulled from the talent pool of large corporations.
It’s an interesting dilemma for startups in general. They have to battle with more established companies (industries) and yet these same companies are also their customers and potential partners. You can see the rest of the survey results here.