Tech Talent StudyPreliminary Findings

Brian KelseyCivic Analytics LLC

May 2015

2

Purpose

• Quantify perceptions of tech “skills gap” and create a baseline for future assessment.

• Identify critical skill (core) occupations in tech workforce necessary for growth.

• Provide input on employer needs to education and training providers.

• Inform ATC’s tech talent work plan focused on strengthening public-private partnerships.

3

Austin is among fastest growing tech markets in U.S.

Tech Jobs % Tech 2013-14

Raleigh 57,838 9.5% 9.4%

Durham-Chapel Hill 32,920 10.4% 7.2%

San Jose 294,848 27.0% 6.4%

San Francisco 236,525 9.7% 5.7%

Austin 108,310 11.1% 5.3%

Boston 266,409 9.6% 4.0%

Seattle 175,670 8.6% 3.8%

Salt Lake City 43,686 6.1% 2.6%

Dallas 207,012 5.8% 2.2%

Washington DC 295,106 8.8% -2.4%

Nation 6,736,083 4.4% 2.6% 5.0%

6.0%

8.5%

8.9%

9.9%

11.0%

11.4%

14.8%

15.5%

16.0%

Dallas

Durham-Chapel Hill

Boston

San Jose

Washington DC

Austin

Raleigh

San Francisco

Salt Lake City

Seattle

Projected Job Growth, ‘14-’20

Source: EMSI. Includes self-employment. Comparison regions selected based on anecdotal information of markets Austin likely competes with for tech talent. No statistical procedure was used to select comparisons.

4

Secondary Data Summary:Overview of Austin’s Tech Talent Landscape

• $22.3 billion in value-added (GDP)

• 4,182 establishments

• 108,310 jobs (120,257 by 2020)

• 67,546 “core” jobs in total tech talent labor pool in Austin (66% in tech)

• ~6,000 avg monthly job postings for core occupations – ~2,500 to 3,500 avg core job openings expected per year in Austin, 2014-2024*

• 1,539 core degrees awarded (2013)

How are we defining “tech”?

ATC generally follows the methodology used by TECNA/CompTIA/TechAmericafor their annual Cyberstates report.* It currently includes 49 industries.

Austin’s largest tech sectors ranked by minimum of $1 billion contribution to regional gross domestic product:

#1 Computer & Peripheral Equipment

#2 IT Services & Applications

#3 Internet & Telecommunications

#4 Semiconductors

#5 Software

Source: EMSI, 2014. GDP is an estimate for 2013. Jobs include self-employment. *Job postings are unique, de-duplicated average monthly openings advertised online during March 2014-March 2015 and include job openings at tech and non-tech businesses (i.e. total demand for core technical workers). See full Tech Talent Report for details and explanation of methodology used for estimates.

5

Employer Survey

• Web-based survey conducted in April 2015.

• Sent via email to ATC contact database.

• Included tech and life sciences firms.

• 52 responses (8% response rate).

• 87% respondents HQ in Austin.

Employer SurveyOverall Perceptions

Tech companies in Austin account for 108,310 jobs. Is Austin meeting current and future workforce needs?

Source: EMSI, 2014. Includes self-employment.

7

Survey Respondents (52 ATC Members)

Employees Number % Total

1 to 10 19 37%

11 to 50 16 31%

51 to 125 8 15%

126 to 500 6 12%

501+ 3 6%

Total 52 100% 10

3

3

3

4

8

21

Other

Internet/Telecom

Life Sciences

E-Commerce

Semiconductors

IT Services/Apps

Software

Source: ATC Tech Talent Employer Survey.

*Software is overrepresented in sample compared to its share of tech sector as measured by number of companies or jobs. Findings may change w/ higher response rate or more representative sample.

*

8

3

12

19

9

8

Not difficult

Somewhat difficult

Difficult

Very difficult

Extremely difficult

70% reported moderate-significant difficulty in hiring but majority confident in ability to grow in Austin

Source: ATC Tech Talent Employer Survey.

2

5

15

16

8

5

I don’t know

Not confident

Somewhat confident

Confident

Very confident

Extremely confident

≥ Difficult: 70% ≥ Confident: 57%

How confident are you that Austin will be able to meet your future workforce demand?

Overall, how difficult is it to find qualified people to fill job openings at your company in Austin?

9

EmployeesRespondents

Number*DifficultyAverage

ConfidenceAverage

1 to 10 19 3.1 2.8

11 to 50 15 3.5 2.5

51 to 125 7 3.6 2.4

126 to 500 6 2.5 2.8

501+ 3 2.3 3.7

Total (Ans) 50 3.1 2.7

Source: ATC Tech Talent Employer Survey. Second-stage firms have reached a growth stage of $1M to $50M in receipts and 10 to 100 employees. For more on second-stage company research see Edward Lowe Foundation at http://edwardlowe.org/who-we-serve/secondstage. *Complete responses only (n = 50). Differences not statistically significant.

1 = Not difficult2 = Somewhat difficult3 = Difficult4 = Very difficult5 = Extremely difficult

1 = Not confident2 = Somewhat confident3 = Confident4 = Very confident5 = Extremely confident0 = I don’t know

Smaller companies may be feeling disproportionate impact of perceived shortage – “2nd Stage” effect?

Overall, how difficult is it to find qualified people to fill job openings at your company in Austin?

How confident are you that Austin will be able to meet your future workforce demand?

31% respondents reported that unfilled jobs having harmful to extremely harmful effect. Not harmful/didn’t know: 33%

Employer SurveyCore Occupations

There are more than 250 different types of occupations reflected in Austin’s tech workforce, including 19 core occupationsfoundational to Austin’s tech talent pipeline based on required technical skills, high volume of job postings, and projected employment growth.

11

Occupation Average N/A

Comp & Info Research Scientists 3.2 65%

Information Security Analysts 3.2 65%

Software Developers, Apps 3.2 18%

Software Developers, Systems 3.2 29%

Computer Network Architects 3.1 55%

Electrical Engineers 3.1 71%

Computer Programmers 2.9 40%

Database Administrators 2.8 51%

Web Developers 2.8 41%

Computer Systems Analysts 2.7 69%

Occupation Average N/A

Electronics Engineers 2.7 76%

Network & Comp Systems Admins 2.7 52%

Computer Hardware Engineers 2.5 78%

Computer & Info Systems Managers 2.4 51%

Computer Miscellaneous (QA, testers) 2.3 51%

Industrial Engineers 2.3 82%

Comp Network Support Specialists 2.0 61%

Electrical/Electronics Engin Techs 2.0 76%

Computer User Support Specialists 1.8 53%

Developers likely driving perceptions of shortages but could be “spiky” by industry & growth stage

How difficult is it to find qualified people to fill job openings in Austin?

1 = Not difficult2 = Somewhat difficult

5 = Extremely difficultN/A = Not applicable

3 = Difficult4 = Very difficult

Source: ATC Tech Talent Employer Survey. Scores were averaged from number of respondents providing a rating or answering N/A (i.e. blank responses were excluded).

Developers accounted for 43% of reported job openings.

Employer SurveySupply-Side Issues

Are secondary & postsecondary programs aligned to needs of employers in Austin?

Are postsecondary institutions graduating enough students to meet labor demand?

13

Tech skills should be CTE priority in K-12 but current offerings in Austin not aligned w/ employer needs

ISD Certifications Offered Avg N/A

Network+ 1.9 44%

Cisco Net Associate (CCNA) 1.8 47%

A+ 1.8 50%

Cisco Entry Net Tech (CCENT) 1.7 47%

Internet & Comp Core Cert (IC3) 1.7 48%

Sun Cert Java Associate (SCJA) 1.6 47%

Adobe Dreamweaver 1.5 48%

Internet Webmaster (CIW) 1.5 48%

Strata IT Fundamentals 1.3 55%

TestOut PC Pro 1.3 54%

1 = Not important2 = Somewhat important3 = Important4 = Very important5 = Extremely importantN/A = Not applicable

60% of respondents reported that all certifications currently offered in Austin area school districts were not applicable or not important.

Source: ATC Tech Talent Employer Survey. List of certifications offered in Austin area school districts was provided by E3 Alliance (October 2014). Scores were averaged from number of respondents providing a rating or answering N/A (i.e. blank responses were excluded).

Employer Needs Avg

JavaScript 3.8

Linux 3.5

Java 3.4

C++ 3.1

PHP 3.1

Python 3.1

Ruby 3.0

C# 2.9

Perl 2.6

Haskell 2.0

Others:Lisp 1.7/40%Go 1.5/45%

Write-ins:Objective-CSwift

Career & tech education (CTE)

14

Hiring every local graduate of core related programs would still fall short of meeting core labor demand

Core Related Programs Degrees Awarded

The University of Texas at Austin 836

Texas State University 269

ITT Technical Institute-Austin 126

Austin Community College District 123

The Art Institute of Austin 58

CyberTex Institute of Technology 56

Saint Edward's University 38

Huston-Tillotson University 10

Strayer University-Texas 10

Southwestern University 8

Various 5

Total 1,539

Postsecondary institutions in Austin awarded 1,539 degrees (2013) in programs preparing students for critical skill (core) occupations.

~450 bachelor’s degrees awarded in comp & information science & related fields. 20% of total is associate’s degrees/certifications.

The number of students graduating with core credentials is growing slowly, ~70 per year.

MakerSquare & other non-traditional educ & training programs not reflected in data.

6,075 avg monthly job postings online for core positions at Austin companies.* ~2,500-3,500 core openings expected per year, 2014-2024.

Source: EMSI, 2013 (latest available). Includes only data reported to the National Center for Education Statistics and therefore may not be comprehensive. *Job postings are unique, de-duplicated average monthly openings advertised online during March 2014-March 2015 and include job openings at tech and non-tech businesses (i.e. total demand for core technical workers). See full report for details & methodology.

15

635

1,539

1,744

2,152

2,158

2,209

3,600

3,923

4,705

8,811

Durham-Chapel Hill

Austin

Raleigh

San Francisco

San Jose

Salt Lake City

Seattle

Dallas

Boston

Washington DC

Austin is trailing other leading regional tech markets in # of degrees awarded from core tech programs

Nationally, there were 228,731degrees awarded in core tech occupation programs in 2013.

Figures include only accredited postsecondary institutions that report data to National Center for Education Statistics (i.e. no data for MakerSquare, etc.).

Study Follow-Up:

No single, authoritative source for collecting, validating, and tracking postsecondary data for labor market research exists in Austin. This is one area of opportunity for ATC & its members.

See Recommendations for more on this.

Source: EMSI, 2013 (latest available). Includes only data reported to the National Center for Education Statistics and therefore may not be comprehensive.

16

Job Postings for Core Occupations (March 2015)

422

377

171

148

133

124

124

104

94

85

80

78

Source: ATC Tech Talent Employer Survey, EMSI. Job postings are unique, de-duplicated average monthly openings advertised online in March 2015 and include job openings at tech and non-tech businesses (i.e. total demand for core technical workers). Only top 12 companies listed here based on number of job postings. More than 50 companies in Austin had at least 25 job postings as of March 2015.

37% respondents reported outsourcing work to firms outside Austin to mitigate impact of unfilled jobs.

Study Follow-Up:

What is impact on Austin’s economic development of outsourcing work outside Austin as a result of talent shortages at tech firms?

Employer SurveyDemand-Side Issues

What are the opportunities & challenges associated with strengthening Austin’s tech talent pipeline?

18

• 67% respondents estimated at least 50% of new hires are already living in Austin – and nearly half respondents said at least 75%.

• 33% of respondents reported employees w/ certificates and associate’s degrees – not all tech jobs require advanced degrees.

• 71% respondents hire student interns and 48% respondents reported preference for hiring more local graduates.

Source: ATC Tech Talent Employer Survey.

Tech Talent Pipeline Opportunities

19

• 92% respondents support outside education & training for employees (38% respondents subsidize tuition and/or training costs).

• Only 1 respondent could name a program in Austin that provides employers w/ publicly-funded job training assistance – how can we increase awareness & participation?

• 27% respondents are active in schools, job shadowing, and/or STEM non-profits.

Source: ATC Tech Talent Employer Survey.

Tech Talent Pipeline Opportunities

20

Tech Talent Pipeline Challenges

• 42% of respondents require at least 5 years of work experience for job applicants to be considered qualified for technical jobs.

• 25% of respondents don’t hire recent college graduates and 24% don’t offer internships.

• Only 12% of respondents reported that they consider recent college graduates qualified, or don’t ask for min years work experience.

Source: ATC Tech Talent Employer Survey.

21

Transit

Housing

Traffic

Salary

Source: ATC Tech Talent Employer Survey.

Austin’s challenges may be impacting tech recruitment

Why do candidates living outside Austin typically turn down job offers?

Of the respondents who ask candidates why they decline job offers in Austin, 47% said that low salary was a factor.

Nearly 1 in 5 respondents do not ask candidates why they decline job offers in Austin.

22

Cost of living is (still) lower in Austin, but salary gaps are significant with other leading regional markets

Median Wage Bottom 10% Top 10%

San Jose $116,314 $74,110 $178,693

Seattle $102,066 $66,706 $148,824

Washington DC $101,712 $62,899 $154,565

San Francisco $100,547 $63,398 $155,480

Boston $96,616 $61,797 $148,387

Durham-Chapel Hill $88,691 $56,992 $135,886

Raleigh $83,054 $53,955 $123,386

Dallas $81,848 $50,710 $127,150

Austin $80,454 $49,150 $127,442

Salt Lake City $75,254 $47,424 $111,155

National $81,037 $49,275 $129,480

Table shows wage comparisons for core occupation (19) jobs in tech as of 2013 (latest available).

Bottom 10% and Top 10% refer to the wage level signifying that 10% of all jobs pay below (or above).

Wages do not include benefits.

Study Follow-Up:

We need better grasp on impact of lower salaries in Austin to understand how talent supply is affected –e.g., where are most job offer declines occurring, early-career, mid, senior?

Source: EMSI, U.S. Bureau of Labor Statistics. Data is for 2013. Includes self-employment. Wages do not include benefits.

23

Summary Observations

• Tech talent shortage not at critical level yet overall, but may be for second-stage firms –a serious concern for Austin growth model.

• Graduates of core programs are increasing, but slowly – capacity for education/training may be adequate, but what about demand?

• Significant mismatch in certifications offered in K-12 and skills demanded by tech firms in Austin – greater alignment only possible w/ stronger public-private partnerships.

24

Recommendations

• We need more data to make more informed conclusions – repeat employer survey to get better response rate & more representative sample of all tech companies in Austin.

• Collect and integrate completion data from MakerSquare & other non-traditional educand training providers to improve estimate for locally-produced tech talent supply.

25

Recommendations

• Explore feasibility of partnering with higher education institution (Ray Marshall Center) to create a Tech Talent Institute to improve access to data & sustain effort.

• Convene K-12 & postsecondary education & workforce development partners to review and validate study findings & develop plan for achieving greater alignment w/ hiring needs of local tech companies.

26

Recommendations

• Develop an employer-driven strategy & peer-to-peer marketing campaign to increase the number of employers in Austin who are able to invest in work-study experience – it’s only way to increase # of work-ready graduates.

• Work through ATC Foundation to identify & prioritize federal & state programs that can subsidize STEM education/training projects.

27

Recommendations

• Engage in discussions about how proposed Innovation District anchored by UT Medical School could be leveraged as testing ground for pilot tech talent initiatives.

• Develop and commit to regional tech talent strategy w/ SMART goals for improving the pipeline – we’ll be having this conversation again five years from now otherwise.

7600 Burnet Road, Suite 108Austin, Texas 78757

@civicanalyticshttp://civicanalytics.com