Austin’s Talent Shortage?


Lori Hawkins and Kirk Ladendorf wrote an interesting piece this weekend in the Austin American-Statesman on the difficulty some technology companies are reporting finding skilled developers. It apparently struck a nerve (HT Omar Gallaga). Specifically, this part:

“Unless they’ve raised their hand and said, ‘I’m coming to Texas,’ you go to a lot of trouble, and then they bail,” said CEO [of Spiceworks] Scott Abel. “I’m not going to pay the California wages, which can be 30 percent higher. But the bigger problem is the density of startups there is so high, people realize, ‘Why would I leave?’”

Emphasis added. First things first: Mr. Abel deserves credit for saying what most companies won’t when lamenting a lack of skilled workers. A talent shortage, and a talent shortage at the wages you are willing to pay, are usually two separate issues. See Why Companies Aren’t Getting the Employees They Need or sit down with workforce development experts like Alan Miller for thirty minutes and you’ll quickly appreciate why more objective research is needed. Much like the ubiquitous hand wringing about America’s “innovation crisis,” tracing the flow of research funding can be illuminating.

Now, before we haul off and start booking more flights to California or New York for breakfast taco socials, let’s consider what some trustworthy data can tell us about the market for developers in Austin and other U.S. regions. The Bureau of Labor Statistics (BLS) publishes a wealth of information on nearly every occupation in the economy. Here are links to the three most relevant occupations for what we might refer to as developers:

Computer Programmers

Software Developers, Applications

Software Developers, Systems

So what can we learn about Austin versus other markets? First, Austin’s talent pool is surpassed in number at least by some surprising places. Detroit (5,970) and St. Louis (4,600), for example, have more programming jobs than Austin (4,430). Denver has nearly 75 percent more developer jobs than Austin. Austin also trails Columbus and St. Louis in developers. Austin fares a bit better when you adjust for difference in total employment, such as by using developers per 10,000 jobs, but still trails most of what we consider Austin’s peer regions.

As for salaries, Austin is in the upper range of the market, and it doesn’t matter if you are looking at averages or the top earners. Compare the salaries in the tables below. Top 10 percent of workers earn at least the figure in that column. The BLS does not publish a specific estimate for Top 10 percent programmers in Austin but suggests that it’s at least $166,400.

A few caveats: (1) this data is from May 2010 so it may not accurately reflect current conditions; (2) it does not account for self-employed people and independent contractors, which is important for places like Austin, but this does represent the vast majority of the workforce; and (3) a top 10 percent salary does not necessarily mean top quality with the appropriate skill sets for Austin companies, but it’s a good starting point for recruiting visits. Forget Silicon Valley. Surely we’d have better luck recruiting people to Austin from Columbus or St. Louis, or tapping larger markets like Washington DC, where you could likely find many workers with Texas roots who would consider returning.

My takeaways: (1) a rigorous analysis of this data would probably reveal a shortage in Austin, particularly at the higher, specialized end of the market, compared to many other regions; (2) we’re overlooking recruiting markets closer to home in Dallas and Houston as well as other less obvious targets; and (3) Mr. Abel and other tech executives searching for top talent at bargain prices at home or elsewhere are going to be at it awhile. Austin companies are already paying a premium for top talent, and so are companies in every other major market.

We may be able to sell Austin’s lower cost of living, but don’t bet on coming down on salary.

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Brian Kelsey Web

Brian Kelsey is Principal at Civic Analytics LLC and a lecturer at The University of Texas at Austin, where he teaches economic development and serves as a fellow at the Center for Politics and Governance at the Lyndon B. Johnson School of Public Affairs.

Phone: 512.731.7851

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