A recent report shared by the Austin Technology Council and sponsored by Engine Advocacy, was part reinforcement and part surprise.
The Bay Area Council Economic Institute prepared the report, “Technology Works: Patterns of High-Technology Employment and Wages in the United States,” and shows Austin and the Austin-San Antonio corridor is a favorable hub for high-tech employment. That’s not the surprise.
“Given the size of our market, that recognition is a testament to the variety and quality of our tech brands, the collaborative approach of our ecosystem, and the vision and contributions of our tech leaders,” said ATC President Julie Huls.
But as strong as Central Texas is represented, Austin didn’t crack the top 25 when it comes to creating new tech jobs. That’s the surprise.
In fact, Austin is below the U.S. average of 2.6% growth for the period of 2010-2011 and below the U.S. average over the last five years (2006 -2011). That underscores a big part of the report: high-tech jobs are being created in a “more geographically and economically diverse set of regions.” Emerging tech markets like Greensboro, NC, and Boise, ID now lead the market for those net new tech jobs, at least over the past five years.
It’s also impacted some of Austin’s most notable mates, like San Jose and San Francisco. Here’s that chart.
MapMyFitness Co-Founder Kevin Callahan also commented on the report.
“The elements that originally drew talent and capital are still here and Austin’s tech community is determined to create a new, distinct, and competitive tech ecosystem. Collaborating with ATC and Engine on understanding and implementing key market differentials is a great example of Austin’s commitment, innovation, and leadership.”
Austin is already seeing some of the collaboration Callahan mentions. Companies are clustering closer together, tech leaders are laying larger welcoming mats, and organizations like ATC are driving more aggressive roadmaps.
All that helps the bigger picture, something the report identifies as the “ripple effect” tech jobs have on the local economy.
Data shows secondary job creation stems from high-tech economic activity and that leads to more lawyers, dentists, schoolteachers, retail clerks, and the like. Technology workers, say researchers, “have higher levels of disposable income, which is spent on meals, transportation, housing and other services in the local community. ”
The other boost comes when high-tech companies start to cluster around each other, which tends to bring along other firms and pockets of innovation. Whole ecosystems of local service providers can spring up to provide business services. And take a look at the chart (Figure 12) to the left. While manufacturing holds its own as a multiplier, high-tech is the clear winner at a 4.3 clip.
- If we look at the highest concentration of technology employment (Table 2), the Austin/Round Rock area fares better, coming in at #14 (at 10.7% tech jobs) in the top 25 metros. That compares to a U.S. average of 5.6%. Other notable regions like San Jose, Cambridge and San Francisco come in at 28.8%, 20.3% and 12.2% respectively.
Some of the other Key Technology Works findings include:
- Employment grew 16.2 percent in STEM occupations between 2002 and 2011, while employment across the economy grew by just 0.6 percent.
- High-tech jobs are a critical – and growing – source of U.S. and regional employment and income. “Since the dot-com bust reached bottom in early 2004, employment growth in the high-tech sector has outpaced growth in the private sector as a whole by a ratio of 3 to 1. High-tech sector employment has also been more resilient in the recent recession-and-recovery period…. The unemployment rate for the high-tech sector workforce has consistently been far below the rate for the nation as a whole.”
- Job creation surrounding STEM occupations exceeds all other sectors. “Employment growth in STEM occupations has consistently been robust throughout the last decade, outpacing job gains across all occupations by a ratio of 27 to 1 between 2002 and 2011.” Growth in all occupations: 0.6%. STEM: 16.2%.
But more STEM degrees aren’t always a slam dunk when it comes to creating jobs. A recent Miami Herald piece examined the issue. Elizabeth Popp Berman, an assistant sociology professor at the University of Albany described the situation as “very mixed.” According to her, engineers in the fossil fuel industry are doing well. If you’re a biologist or chemist, it’s a different story. One thing to account for is the regional aspect of the data. That story pulls from Florida colleges, though I’m not certain about Berman’s other samplings.
Perhaps more controversial is another view of STEM. Rochester Institute of Technology professor Ron Hira asserts that many corporations are using STEM shortage cries as a front for off-shoring work to developing markets.
“..tech companies, for example, have claimed a shortage of trained workers even as they laid off thousands of U.S. employees, and moved those jobs to low-wage developing countries.”
“It’s a way for them to sort of excuse why they’re shifting so much work offshore,” said Hira.
What’s not controversial is technology’s impetus on innovation. The high-tech sector accounted for almost 54% of total private sector research and development between 1990 and 2007.
That’s more impressive when you consider the same companies were responsible for only 5.4% of private-sector employment and 3.9% of private-sector business establishments during the period. If you abstract the R&D piece, it’s clear there’s a significant spillover effect when investing in tech infrastructure and development. Add top-notch regional Universities to the mix and you can see why growth can be significant.
It was also interesting to see that Austin’s tech-based job market is roughly 11% of the workforce. And even with the economy still in a sludge, wages were up almost 5% from 2010 to 2011, with an average just over six figures, at $101,000. Compared to San Jose, where almost one out of three jobs (28.8%) jobs are tech, wages rose 5.6% from 2010 to 2011. That equates to a $60K premium for Silicon Valley tech workers, though the cost of living is a bit different, depending on your Austin zip code.
But however you slice the data, it’s clear there’s a good argument for further investments in tech-oriented infrastructure and development. Bulking up on STEM-related development, fortifying other tech clusters, and refining our region’s pitch are the three things that should keep the tech community busy in 2013.
“A deeper understanding of the Innovation Economy’s impact on job creation and our regional economy is critical to sustaining the benefits the tech sector brings to our community, ” said Huls.