High tech industry
Posted on 06/08/2021 by Beverly Kerr
- Over 8,300 employers in the Austin metro area are in high tech industries in 2020.
- Jobs in Austin’s tech industries total 176,406, or 17.1% of all jobs, compared to 9.2% nationally.
- In 2020, jobs in Austin’s high tech industries grew by 3.5%, while the metro’s total jobs fell by 2.9%.
Annual average employment in high tech industries in the Austin MSA in 2020 was 176,406, up by 5,977 or 3.5% from 2019. That growth occurred while employment across all industries fell by 2.9% due to the impact of COVID-19. High tech jobs represent 17.4% of all Austin area jobs in 2020. Nationally, high tech accounts for 9.2% of all jobs and tech jobs fell by 0.3% in 2020 while total jobs fell by 6.1%.
Over the last five years, employment in high tech industries has grown by 24.4%, compared to 11.6% for all industries in Austin. Over the last ten years, the gain for high tech (62.0%) also surpasses the gain for all industries (36.5%). Growth of Austin’s tech sector also outpaces tech growth nationally, which was 7.4% over the last five years and 17.3% over the last decade.
New industry data through the final quarter of 2020 was recently released by the Texas Workforce Commission (TWC) and the U.S. Bureau of Labor Statistics (BLS). 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 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 examine new releases of QCEW to quantify the character and trends of Austin’s tech sector. To simplify the data for this look at the composition and current trends of Austin’s tech sector, this article aggregates individual tech industries into several groupings—manufacturing; energy; trade; information and other IT; and engineering, R&D, labs/testing and other.
There are 8,301 high tech employer firms in Austin. The number of tech firms grew by 619 or 8.1% in 2020. Total firms in Austin number 54,873 in 2020, up 2,704 or 5.2% over 2019. Over the last five years, the number of firms has grown 34.3% in high tech industries compared to 24.0% overall. High tech firms account for 15.1% of all firms in 2020, up from 14.0% five years ago and 13.2% ten years ago. Among Austin's high tech firms, 5.7% (473) are manufacturers and 94.3% (7,828) are in nonmanufacturing industries.
High tech payrolls in 2020 totaled $24.1 billion, or 32.4% of the Austin metro’s total payroll of $74.3 billion. Total payroll growth in 2020 was 6.3%, while the gain for high tech industries was 10.9%. High tech payrolls also have an edge over the last five years, gaining 62% compared to all payrolls gain of 43%. Over the last decade, tech payrolls are up 131% compared to 101% for all payrolls.
For all industries, the average annual salary in Austin is $72,090, up 9.5% from 2019, while the average salary for high tech jobs is $136,541, up 7.1%. Note that leisure and hospitality, the industry sector with the lowest average salary in the Austin MSA, lost over 29,000 jobs in 2020. Austin’s 2020 percent change in average salary for all jobs would not approach 9.5% if job losses had been spread more evenly across industries
Since 2015, the all-industries average annual salary is up 28.0% and the average tech salary is up 30.4%. Over the last decade, the average salary is up 47.3% overall and 42.6% for in the tech sector. High tech salary growth in Austin primarily faltered relative to all industries in 2013, as well as during the last two recessions. In 2006, before the Great Recession, the average high tech salary was 200% of the average salary. The average high tech salary registered a post-dot-com recession low of 185% of the all-industries salary in 2014, attained 194% in 2019, but fell back to 189% in 2020.
Austin’s high tech employment is 22.3% manufacturing industries (39,270 jobs) and 77.7% nonmanufacturing industries (137,136 jobs). Jobs in high tech manufacturing gained 0.7% in 2020 while nonmanufacturing tech jobs gained 4.3%.
Manufacturing’s share of Austin’s tech jobs has declined significantly over the long term. Before the Great Recession, manufacturing accounted for over a third of Austin’s tech jobs and before the Dot.com recession, the share was over half. High tech’s share of all manufacturing jobs in Austin is 63.4% in 2020, up from 62.8% in 2019. Tech’s share of all manufacturing has averaged 63% since the Dot.com recession, but in the decade preceding, the share was about 69%. Nationally, tech’s share of manufacturing jobs is 27.3% in 2020.
Computer and electronic product makers (208 firms) dominate Austin’s high tech manufacturing jobs (28,081 or 71.5%). Of those jobs, 13,885 are in semiconductor and electronic components and 9,109 jobs are in computers and peripheral equipment. Pharmaceuticals and medicines manufacturing employs 2,086 and medical equipment and supplies manufacturing employs 1,469.
Austin has a location quotient (LQ) of 1.6 for the collection of industries making up high tech manufacturing, meaning that Austin employs workers in the sector at over one-and-a-half times the national rate. Austin’s computer and electronics manufacturing industry employs workers at over 3.6 times the national rate. However, within that industry grouping, computer and peripheral equipment manufacturing has a LQ of 7.7 and semiconductor manufacturing has an LQ of 5.1.
Salaries are higher in high tech manufacturing, $146,171, compared to the average of $133,784 in nonmanufacturing high tech industries. In Austin’s tech sector, manufacturing salaries have gained 18.3% over the last five years, while the nonmanufacturing average has risen 36.6%. Over the same period, the average salary for all industries rose 28.0%. Over the last year, salaries in high tech manufacturing rose 3.3% and high tech nonmanufacturing gained 8.5%.
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 (333 Austin firms); motion picture and sound recording, excluding motion picture exhibition (273); telecommunications (138); data processing, hosting and related services (263); and internet publishing, broadcast and web portals (215). Other information technology (IT)-related industries include computer systems design and related services (3,486 firms) in the professional and business services sector and computer training (46) in the education sector.
Combined, high tech information and other IT accounts for 73,408 jobs and 4,752 firms in Austin in 2020. Jobs in this group of industries are up 5.2% (3,640) over the last year, dominating the net jobs added (5,688) by nonmanufacturing tech industries in 2020. Computer systems design and related services employs 40,926 and grew by a moderate 1.6%, or 661 jobs, in 2020. Driving growth this year were the smaller software publishers (up by 1,473 jobs or 23.6%) and data processing/hosting (up by 828 jobs or 11.2%) industries.
Austin has a LQ of 2.3 for the group of industries we’re calling high tech information and other IT, meaning that Austin employs workers in the sector at more than two times the national rate. Data processing/hosting is the sector with the largest LQ (3.0) in this grouping.
The average annual salary in high tech information and other IT was $137,118 in 2020, with data processing/hosting and software publishers being the best compensated industries ($162,399 and $146,771 respectively). Average salary increased 8.2% in 2020. The industry group gained 33.1% over the last five years, compared to 28.0% for all industries.
After computer systems design and related services, the next largest nonmanufacturing tech industry is computer/computer peripherals and software merchant wholesalers (168 firms) which employed 20,743 in Austin in 2020, up 816 jobs or 4.1% from 2019. This industry, together with medical equipment merchant wholesalers, business-to-business electronic markets, and electronic shopping and mail-order houses represents 774 firms and 27,503 jobs in Austin’s high tech wholesale and retail trade industries. The average annual salary is $137,145 in 2020, up 8.2% over 2019.
Austin has 41.4% more high tech trade jobs in 2020 than it had in 2010, while jobs in the sector nationally are up by 37.0%. The driver of job growth nationally has been electronic shopping and mail-order houses. This industry has grown 73.8% over the decade, while computer and software merchant wholesaler jobs have increased only 5.2%. As of 2020, electronic shopping and mail-order accounts for 44.9% of high tech trade jobs nationally. In Austin, electronic shopping and mail-order represents only 16.2% jobs in the grouping, but growth over the decade is 352%.
Austin is highly concentrated in high tech trade. Austin has nearly four times the national concentration of jobs in this group and has more than 12 times the national concentration for jobs in computer and software merchant wholesaling.
High tech energy (oil and gas extraction and electric power generation, transmission and distribution) is the smallest tech grouping in Austin with 119 firms employing 6,165 in 2020. Oil and gas extraction presently only accounts for 1,011 jobs, and growth has been slower than average—negative over the last year and less than half overall growth over the last five years and the last decade. Oil and gas’ average annual salary, $531,981, is by far the highest within tech and also the highest across all industries in Austin in 2020.
Architectural and engineering services (1,326 firms), environmental consulting services (99), other scientific and technical services (301), scientific R&D services (265), medical and diagnostic laboratories (84), electronic and precision equipment repair and maintenance (106), and national security and international affairs (4) round out the remainder of the high tech sector. This grouping employed 30,061 in 2020, up 4.1% from 2019 and up 20.6% since 2015. Architectural and engineering services employs 17,556 of the total while scientific R&D employs 4,424. Austin’s LQ for this grouping we're calling "engineering, R&D, labs/testing and other services" is 1.1. Perhaps not surprising given the concentration of tech manufacturing in Austin, electronic and precision equipment and repair has the highest LQ (2.2) within the grouping.
An Excel file of TWC data for Austin MSA establishments, firms, employment, payrolls, and average salary data for 1990-2020 for all of the high tech industry classifications referenced above, plus data for other major industry is here. The file opens on an extract of the Austin data for high tech industries as employed in this article. The second tab in the file contains national employment data from the BLS for 2009-2020 for high tech industries. The last tab in the file contains Austin MSA data for major industry sectors for reference. The data in the file is “total,” i.e., represents private and public employers.
- 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. TWC’s data begins in 1990, and for Austin in 2020, estimates are published for over 1,350 industry classifications. The U.S. BLS also publishes a database of QCEW data for all U.S. counties, metros and states, however, the level of industry detail available at the local level is often more limited than desirable for estimating the tech sector, hence the omission of metro comparisons from this article. ↩
- Industry LQs are calculated by comparing the industry’s share of regional employment with its share of national employment. High tech manufacturing represents 3.8% of jobs in the Austin MSA, compared to 2.4% nationally. 3.8 divided by 2.4 yields a LQ of 1.6. ↩
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