Austin, other hubs keep­ing the tech jobs

Study: North­ern Calif., Cen­tral Texas in­crease hold on dig­i­tal work­ers.

Austin American-Statesman - - FRONT PAGE - By Dan Zehr dzehr@states­man.com

Most of the visi­tors bustling around Austin for South by South­west’s in­ter­ac­tive track hail from the usual tech hubs, and the stran­gle­hold those re­gions have on the coun­try’s high-tech ta­lent pool has only tight­ened in re­cent years.

From 2010 to 2015, most of the coun­try’s 100 largest metro ar­eas added jobs in a key set of dig­i­tal-ser­vices in­dus­tries, ac­cord­ing to a new Brook­ings In­sti­tu­tion re­port, but the vast ma­jor­ity of them still lost ground rel­a­tive to Sil­i­con Val­ley, Austin and a dozen other tech-heavy cities.

San Fran­cisco and San Jose led the gainers, fur­ther con­sol­i­dat­ing Sil­i­con Val­ley’s dom­i­nance of the Amer­i­can high-tech work­force. Austin ranked third, in­creas­ing its share of the U.S. dig­i­tal-ser­vices work­force by 0.5 per­cent­age points over the pe­riod. Only 15 metro ar­eas grew or main­tained their share over that span.

“Though we all love the idea of the rise of the rest, it’s mainly nu­mer­i­cal,” said Mark Muro, se­nior fel­low at Brook­ings’ Metropoli­tan Pol­icy Pro­gram. In terms of share, “it’s a good story for Austin and the big tech hubs, but it’s provoca­tive for the other guys.”

In fact, for Austin, last year might have been bet­ter than ini­tially pro­jected. Ac­cord­ing to the Texas Work­force Com­mis­sion’s first re­vi­sions to its 2016 work­force data, em­ploy­ers ex­panded Austin metro area pay­rolls by 3.3 per­cent in 2016, up sharply from the 1.9 per­cent rate ini­tially re­ported in Jan­uary, the com­mis­sion said Fri­day.

That ini­tial fig­ure would have been the metro area’s slow­est job growth rate since 2000. In­stead, it now ap­pears Austin’s tight la­bor mar­ket didn’t hin­der job growth

as much as ini­tially ex­pected, although the re­vi­sions still in­di­cated a slower growth rate than each of the last four years, in which pay­rolls ex­panded by more than 4 per­cent.

The com­mis­sion will re­lease its fi­nal re­vi­sions to last year’s data March 24.

On Fri­day, the work­force com­mis­sion also re­leased pre­lim­i­nary data for Jan­uary, show­ing the Austin-area unemployment rate ris­ing to 3.5 per­cent from 3.2 per­cent the pre­vi­ous month, an in­crease that was un­usual for the start of the year, ac­cord­ing to the com­mis­sion’s his­tor­i­cal data.

Lo­cal em­ploy­ers cut 10,000 jobs dur­ing the month. That was down about 1 per­cent, less than the re­duc­tions that typ­i­cally oc­cur in Jan­uary, when re­tail­ers pare back hol­i­day staffing and other em­ploy­ers re­cal­i­brate for the new year.

A key swath of the re­gion’s high-tech em­ploy­ers — many of them the dig­i­tal-ser­vices firms in­cluded in the Brook­ings anal­y­sis — helped limit Jan­uary’s losses and have fu­eled Cen­tral Texas job growth in re­cent years.

While its pace of growth slowed last year, even after the re­vi­sions, pay­rolls in Austin’s pro­fes­sional, sci­en­tific and tech­ni­cal ser­vices in­dus­tries have bal­looned since the re­ces­sion. In fact, the num­ber of jobs in the sec­tor, which in­cludes many of the re­gion’s dig­i­tal-ser­vices and other high-tech oc­cu­pa­tions, has nearly dou­bled in the past decade.

“Austin is build­ing strength on strength now,” Muro said.

Muro said he started look­ing at th­ese con­cen­tra­tions of dig­i­tal-ser­vices jobs in re­sponse to in­quiries from a hand­ful of top Sil­i­con Val­ley ex­ec­u­tives. They had ex­pressed con­cerns about the widen­ing cul­tural and po­lit­i­cal rifts be­tween the high-tech hubs and the U.S. heart­land, and they wor­ried that pro­pos­als in Washington to re­strict im­mi­gra­tion would re­sult in a short­age of work­ers with needed dig­i­tal skills.

Ul­ti­mately, he said, it might not be healthy to have huge con­cen­tra­tions of tech work­ers in just a few re­gions.

“A lot of peo­ple com­ing to SXSW are rightly ex­cited about the idea about the rise of the rest and the ben­e­fit of hav­ing mul­ti­ple di­verse tech­nol­ogy cen­ters,” Muro said. “This is im­por­tant for the coun­try’s com­pet­i­tive­ness and im­por­tant for dozens of medium-sized cities (that) do have le­git­i­mate tech­nolo­gies, great en­trepreneurs and of­ten a univer­sity-driven tech skills pipe­line.”

Yet, it was many of the larger tech-cen­tric met­ros that built “strength on strength” in re­cent years, cap­i­tal­iz­ing on both the depth and di­ver­sity of their tech economies, ac­cord­ing to a sep­a­rate Brook­ings study re­leased last year.

Some mid­sized metro ar­eas — such as Madi­son, Wis., and Provo, Utah — have ma­tured over the past decade, cap­i­tal­iz­ing on their high-tech di­ver­sity to nudge their share of the coun­try’s dig­i­tal-ser­vices job base higher from 2010 to 2015.

Like the top tech metro ar­eas, those re­gions en­joy larger-than-av­er­age con­cen­tra­tions of jobs in a wider spec­trum of ad­vanced in­dus­tries. Provo’s work­force mix, for ex­am­ple, in­di­cated spe­cial­ties in 14 of 50 ad­vanced in­dus­tries in 2015, up from 10 in 1990, ac­cord­ing to a sep­a­rate Brook­ings re­port. Madi­son made an even big­ger jump, to 13 from five.

Austin dipped to 12 in 2015 from 14 in 1990, but re­mained among the most di­verse met­ros for high-tech spe­cial­iza­tions. Mean­while, San Jose has greater con­cen­tra­tions of jobs in 20 dif­fer­ent ad­vanced in­dus­tries.

In fact, take out re­gional economies that skew more to­ward man­u­fac­tur­ing and en­ergy — leav­ing the re­gions fo­cused more to­ward the types of dig­i­tal ser­vices in Muro’s lat­est anal­y­sis — and the top share-gainers ranked among the most di­verse.

How­ever, while di­ver­sity spurred growth across some mid­sized re­gions like Madi­son and Provo, a com­bi­na­tion of di­ver­sity with depth sep­a­rated Sil­i­con Val­ley, Austin and Dal­las from the rest.

From 2013 to 2015, San Fran­cisco and San Jose col­lec­tively added 59,000 jobs in the dig­i­tal-ser­vices in­dus­tries Muro an­a­lyzed — far more than any re­gion. Austin added around 11,000 in that span, a smaller vol­ume than Sil­i­con Val­ley but a faster av­er­age growth rate than all the other top 50 metro ar­eas.

“For Austin, there’s new ev­i­dence of so­lid­i­fied take­off — reach­ing a new level of di­ver­sity, depth and com­pet­i­tive­ness,” Muro said. “And it does show how far the rest have to go.”

The num­ber of jobs in the sec­tor, which in­cludes many of the re­gion’s dig­i­talser­vices and other high-tech oc­cu­pa­tions, has nearly dou­bled in the past decade.

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