In a new tech talent study for the Austin Technology Council, Brian Kelsey of Civic Analytics showed that Austin compares favorably with the likes of Raleigh and San Francisco on job growth, but when it comes to degrees awarded in core tech programs—and wages in core tech occupations—the Central Texas metro lags behind other major tech markets.
Kelsey and ATC used EMSI labor market data to analyze Austin’s tech industries, occupations, and educational programs. They also conducted an employer survey to provide “a primary data check for what we observed in the EMSI estimates.”
In 2013, Austin produced just over 1,500 degrees in the 19 core high-tech occupations that Kelsey and ATC studied. That’s fewer than every other tech capital in the US (except for Durham-Chapel Hill), and far below the 2,500 to 3,500 estimated job openings that Austin is expected to have every year through 2024 in the same 19 occupations.
Austin is also near the bottom in annual wages for tech workers. With a median wage of $80,454, which doesn’t include benefits, Austin sits behind all but one peer region (Salt Lake City, $75,254) and is far eclipsed by West Coast tech hubs and Washington, D.C. Some of this big disparity in salaries can be chalked up to cost-of-living differences—wages in the Dallas-Forth Worth metro, for example, are only a touch above Austin’s—but Kelsey noted the issue warrants further investigation.
“Austin wages are assumed to be low relative to high-cost markets like San Francisco, Silicon Valley, or Washington, D.C., given cost of living differences,” he wrote on his blog. “But to what extent are lower home prices, rents, and breakfast tacos able to make up for $20K or $30K in wages? Is the Austin premium still what we think it is, or have home prices, rents, and traffic increased enough here to reset the scale with California?”
Wages are just one component of the complicated supply-and-demand picture, as illustrated in the study. Pairing primary and secondary data research, Kelsey and ATC showed that Austin isn’t producing enough high-tech degrees (1,500 for about twice as many openings). And even so, only 12% of employers surveyed hire freshly minted graduates, while 42% said they require applicants to have at least five years of work experience. This presents “a barrier to getting entry-level core talent into the supply, especially local graduates,” ATC said.
Overall, 70% of employers said they find it difficult to very difficult to fill job openings. And as the Austin American-Statesman noted, the “hardest hit appeared to be firms in the ‘second stage’ of growth—established companies that are still going through a key growth spurt.”
Austin’s Total Tech Scene
The analysis showed that Austin has 108,000 tech jobs, 11.1% of its total workforce (including EMSI’s self-employed figures). Only San Jose, at 27%, has a greater share of tech workers among major tech markets. The 49 industries used to define the tech sector made up $22.3 billion in value-added (gross domestic product) in Austin in 2013.
Kelsey and ATC determined that 67,500 of Austin’s 108,000 tech jobs are in 19 core occupations, a list that includes software developers, network administrators, etc. Using EMSI’s staffing pattern data, the researchers found that about a third of those 67,500 jobs are in non-tech industries. Meanwhile, employers advertised for about 6,000 monthly jobs for tech workers from March 2014 to March 2015.
Difficulty of Measuring Workforce Gaps
In his blog post on the tech study, Kelsey had some helpful words on trying to quantify skill gaps. He was tasked to look at labor demand for tech workers in his first economic development job at the Sonoma County Economic Development Board, back in 2000. The data and tools have improved since then, he wrote, but “some of the methodological challenges are the same today as they were 15 years ago.”
For example, labor markets don’t operate like commodity markets. Price of labor (wage) is not as responsive to relative movements in supply and demand, for a variety of very complicated reasons, especially when you try to measure market conditions for one particular industry sector. Firm-level versus industry-level issues are also extremely difficult to sort out. If larger, established corporations report less difficulty finding qualified workers compared to smaller, growth-stage companies, is there a talent shortage? A researcher’s gut reaction may be to look for differences in wages, benefits, working environment, etc. at large companies versus small companies, but what if all of those factors were comparable?
Read more about the Austin Technology Council’s study here.
Data for the Austin tech talent study came from EMSI Analyst. For more on Analyst and EMSI’s employment data, contact us. Follow EMSI on Twitter (@DesktopEcon) or check us out on LinkedIn and Facebook.