In 2014, Austin’s high tech industries added over 5,400 net new jobs (+4.7%).
Over 290 high tech manufacturers added 4,270 jobs, bringing total employment to nearly 34,100.
Tech companies in nonmanufacturing industries saw a much lower net job gain in 2014 largely due to losses in computer and software merchant wholesaling outnumbering gains in computer systems design and related services.
Annual average employment in high tech industries in the Austin MSA in 2014 was 120,707, up 4.7% from 2013. That’s a greater gain than the 4.2% increase for employment across all industries. High tech jobs represent 13.7% of all jobs. Over the last five years, employment in high tech industries has grown by 27.8%, compared to 18.5% for all industries. However, over the last six years, the gain for high tech and all industries is virtually the same—15.4% and 15.3% respectively.
The recession’s impact on Austin jobs was a loss of nearly 21,000 jobs between 2008 and 2009 and nearly half of those jobs were in high tech. Thus, while high tech jobs have grown faster than all jobs in each of the last five years, as of 2014, tech’s share of all jobs has only returned to that of 2008.
New industry data through the final quarter of 2014 was released earlier this month by the Texas Workforce Commission. The Quarterly Census of Employment and Wages(QCEW) produces much finer industry detail than the monthly Current Employment Statistics program and allows users to examine trends in distinct and narrow sectors like computer systems design or scientific R&D at the metro or even the county level. Since Austin is one of the most technology intensive metro economies in the U.S., we regularly take down new releases of QCEW to quantify the character and trends of Austin’s tech sector.
In addition to employment estimates, QCEW also provides data on firms, establishments and payrolls. Austin has 5,523 high tech industry establishments (11.1% of total) or 5,068 firms (12.0% of total). A firm may have more than one establishment in an area. The recession did not cause the number firms to fall in either high tech or overall. The number of tech firms grew by 314 or 6.6% in 2014. Firms in all industries number 42,134 in 2014, up 2,005 or 5.0% over 2013. High tech firms are a larger percent of total firms now than before the recession (the share was 11.5% in 2008). Over the last five years, the number of firms has grown 26.6% in high tech industries compared to 21.0% overall.
Among Austin's high tech firms, 5.7% (291) are manufacturing and 94.3% (4,777) are nonmanufacturing.
High tech payrolls in 2014 totaled $11.9 billion, or 25.0% of the metro’s total payroll of nearly $47.7 billion. Payrolls have shown slightly better gains than employment over the last year, but with payrolls, the gain overall exceeds the gain for high tech industries. Total payrolls are up 7.8% in 2014 while high tech payrolls are up 6.4%. Since 2009, total payrolls and high tech payrolls have seen similar gains (35.1% and 36.2% respectively), however, since the 2008 prerecession peak, total payrolls are up 31.1% and high tech payrolls are up 24.3%.
For all industries, the average annual salary in Austin is $54,104, up 3.5% from 2013, while the average salary across all high tech jobs was $98,679, up 1.6%. Since 2009, the all-industries average annual salary is up 14.0% and the average tech salary is up 6.5%. High tech salary growth primarily faltered in the last three years. After being at or above 196% of the average salary in 2010 and 2011, the average high tech salary fell to 182.4% of the average all-industries salary in 2014.
Austin’s high tech employment is 28.2% manufacturing (34,090 jobs) and 71.8% nonmanufacturing (86,617 jobs). Manufacturing’s share has declined significantly over the long term, however each of the last four years have seen gains in both total manufacturing jobs and high tech manufacturing jobs. High tech’s share of all manufacturing jobs is 59.4% in 2014, higher than any year since 2006.
Computer and electronic product makers (numbering 173 firms) account for the vast majority of Austin’s high tech manufacturing jobs (29,110 or 85.4%). Of those 29,110 jobs, 14,428 are in semiconductor and electronic components and 11,290 jobs are in computers and peripheral equipment. Pharmaceuticals and medicines manufacturing employs 1,834 and medical equipment and supplies manufacturing employs 988. Computer and electronic products manufacturing jobs grew 16.0% in 2014, largely due to computers and peripheral equipment which accounted for 3,882 of the 4,270 high tech manufacturing jobs added in 2014.
Salaries are higher in high tech manufacturing, $116,400, compared to an average of $91,704 in nonmanufacturing high tech industries. In the tech sector, manufacturing salaries have gained 13.5% over the last five years, while the nonmanufacturing average has only risen 3.6%.
Nonmanufacturing high tech industries include subsectors of trade, information, professional and business services, and education and healthcare.
The high tech portions of the information industry include software publishers (150 firms); motion picture and sound recording (189); data processing, hosting and related services (125); and internet publishing, broadcast and web portals (120). Other IT-related industries include computer systems design and related services (2,221) in professional and business services and computer training (33) in the education sector. Combined, high tech information and other IT accounts for 44,455 jobs and 2,959 firms in Austin in 2014. Jobs in this group of industries are up 13.7% (5,718) in just one year, clearly dominating the net jobs added (5,409) by the tech sector in 2014. Computer systems design and related services employs 26,071 and grew by 20.3%, or 4,395 jobs, in 2014.
The average annual salary in high tech information and other IT was $94,003 in 2014, with software publishing and computer systems design being the best paid ($122,382 and $103,432 respectively). Salary gains were almost flat in 2014 (0.8%) and gained 13.2% over the last 5 years (compared to 14.0% for all industries).
After computer systems design and related services, the next largest nonmanufacturing tech industry is computer and software merchant wholesalers (127 firms) which employed 16,982 in Austin in 2014, down 5,043 jobs or 22.9% from 2013. This trade industry, together with business-to-business electronic markets and electronic shopping represents 368 firms and 18,752 jobs in high tech trade industries. Employment in high tech trade is up a slender 3.6% since 2009, but down 10.1% from 2008. In addition to a dramatic loss of jobs, the sector has seen average annual salary decline from $107,877 in 2009 to $87,611 in 2014, (-18.8%).
Changes in high tech trade, which represents 15.5% of Austin’s tech jobs, significantly impact overall performance. If the sector were excluded, high tech jobs would be up 33.6% over the last five years, instead of 27.8%; and average salary would be up 13.2% instead of 6.5%. There are no specific reported layoff events that we can point to during 2014 to help account for a reduction of approximately 5,000 jobs.
Architectural and engineering services (1,102 firms), environmental consulting services (89), scientific R&D services (202), and medical and diagnostic laboratories (57) round out the remainder of the high tech sector and employed 20,411 in 2014, up 1.7% from 2013 and up just 4.4% since 2009. Architectural and engineering services employs 13,924 of the total and scientific R&D employs 3,953.
An Excel file of Austin MSA establishments, firms, employment, and payrolls data for 2005-2014 for all of the high tech industry classifications referenced above, plus data for all other industry classifications up to at least the 3-digit NAICS level is here. The sheets in this file open on each sheet’s high tech summary table (rows 171-208). Scroll above that table to see data for other industries in order by NAICS (rows 2-169).
A map of major Austin high tech employers is here.
A log of new and expanding companies is located here.
 QCEW estimates are derived primarily from the reporting of private business and government agencies under the unemployment insurance program. While all states produce similar data from the program, how much of the data different states publish in terms of industry detail, periods published, and geographic regions reported varies considerably. The U.S. Bureau of Labor Statistics also produces a database of QCEWfor all U.S. counties, metros and states, however, the level of industry detail available for most areas is more limited than desirable for estimating the tech sector. Thus, this article does not include metro comparisons or rankings. In last year’s article about this data, we supported the statement about Austin’s relatively high concentration of tech industries with a footnote reproducing data from the U.S. Bureau of Economic Analysis. The BEA’s gross domestic product by metro program eliminated the special “information, communications and technology” (ICT) sector data in the most recent release. However, you can refer to the first footnote to last year’s article here.
 Given the significance of semiconductor manufacturing in Austin and the industry-related employers here, such as Applied Materials which does not make chips, but makes machinery that produces chips, it is surprising that semiconductor machinery manufacturing is reported to be made up of 8 firms employing only 284. This seems to highlight an issue with how companies (or the Workforce Commission) classify reporting units since Applied Materials alone employs 2,727 (according to recent reporting in the Austin Business Journal). If publishing data for an industry would serve to disclose information about a particular employer which might dominate the industry, that industry is expected to be suppressed from reporting, but the employers’ data would be included in the larger industry (in this case, “industrial machinery manufacturing,” or the level above that, “machinery manufacturing”). However, since the semiconductor machinery manufacturing industry is not being suppressed, it’s hard to presume where this particular employer may be reflected and what use to make of the semiconductor machinery manufacturing series as reported.
Another ambiguity with respect to the manufacturing sector is treatment of “factoryless goods producers.” The North American Industrial Classification System (NAICS) has allowed some inconsistency among U.S. statistical agencies in classifying such units. Some programs classify the units to manufacturing if the value of intellectual property is a significant portion of the value of the finished good. Other programs classify the units to wholesale trade because there are no factories, plants, or mills to classify in the manufacturing sector. It has been proposed that the NAICS manual be revised (for the 2017 edition) to classify factoryless goods producers in manufacturing. The Census Bureau provides the Federal Register announcement and a fact sheet about the proposal here. The Bureau of Labor Statistics has information about the potential impact of the change here.
 These trade classifications are not commonly found in definitions of the tech sector used in reports such as the Milken Institute’s North America’s High-Tech Economy or the TechAmerica Foundation’s “cyberstates” and “cybercities” reports. Although the Workforce Commission makes no disclosures of the names of companies included in different classifications, it is understood that these trade classifications include all or parts of the payrolls of employers that would commonly be considered tech companies and therefore we believe they are important to include.
Vice President of Research, Beverly Kerr, joined the Chamber’s Economic Development Department in 2004, following 10 years in a similar role with the Kansas City Area Development Council. Beverly earned an M.A. in economics at the University of Missouri-Kansas City.