It’s upon us. The time of year locals love to hate and hate to love. When the “old Austin” vs “new Austin” bickering reaches its fever pitch crescendo, increasing to new levels of absurdity each year.
When usually reasonable minded people convince themselves that live tweeting panels somehow counts as productive economic activity.
When the Panel Economy, as a friend so aptly put it recently, blurs the line between what’s real and worth paying attention to and what’s personal brand marketing, which I’m still not really sure how to define or make sense of.
Economic development outfits from cities around the US have apparently joined the party like never before this year in an attempt to convince SXSW intelligentsia that their markets are viable alternatives to the usual suspects. So, in the spirit of promoting fair competition, here’s a quick update on 2015 performance and 2016 projections for some of the tech-driven regional economies around the US.
We’re defining tech here in the same way we do for the research we’ve published with the Austin Technology Council, relying primarily on the CompTIA/TECNA definition used in their annual Cyberstates report, but with an additional industry category that captures one of Austin’s largest tech employers. Our adapted CompTIA/TECNA definition includes 49 six-digit NAICS industries, and we rely on data from EMSI, which includes self-employment.
The first table below focuses on metropolitan statistical areas (MSAs) with at least 50,000 employees in the tech sector and a location quotient of at least 1.5, or, in other words, places where the concentration of tech employment is at least 50% greater than the US economy as a whole.
Economic development analysts like to quibble over where to draw that line–1.5, 1.3, 1.2–to delineate degrees of concentration, but for our purposes here 1.5 is good enough because it captures most of the usual suspects and excludes markets like New York (0.9) and Los Angeles (1.0) that have large tech sectors simply because they are very large markets overall with a lot of employees in most sectors.
Atlanta, you have a strong case (1.36) to argue while you’re here, but we’re leaving you off this list.
As expected, San Jose and San Francisco are leading the pack of large and highly concentrated tech markets ranked by job growth in 2015. Raleigh and Portland, with fewer than 100,000 tech employees, get a bit of a boost here since we’ve used percentage growth to create the ranking, but impressive nonetheless. I’m a bit surprised that Austin is not a few spots higher on the list, but 3.4% annual job growth is nothing to be ashamed of. EMSI’s projections for 2016 seem to reflect the slowdown that many of the macro soothsayers have been predicting now for several years, with only San Francisco and Seattle in the 3.0%+ range.
Austinites love to complain about how the city is turning into California, even though much of that ire should really be directed at Florida. But for those of you in Austin worried about becoming the “next Silicon Valley,” don’t fret, we have a really long way to go. Value-added is the tech sector’s contribution to Gross Domestic Product (GDP) at the regional level. Basically, it is tech’s share–direct, no multiplier–of the total regional economy. Tech accounts for $98.3 billion of San Jose MSA’s GDP, or approximately one-half of the total, according to EMSI’s estimates. That’s nearly as large as Austin MSA’s entire GDP ($107.7 billion). Further, Austin’s economy is much more diversified than Silicon Valley’s economy. Tech here makes up only about 21% of Austin MSA’s GDP.
However, if anybody sees Mike Judge at SXSW, this in no way suggests that he shouldn’t do a Silicon Valley spinoff on the social entrepreneurship scene in Austin. Mr. Judge, you should totally do a Silicon Valley spinoff on the social entrepreneurship scene in Austin. #socent
Now, the smaller markets:
We’re defining small here as highly concentrated (tech LQ 1.5+) MSAs with 10,000-50,000 tech employees. Two of my favorites, Provo and Durham, make the cut, as well as a few others I know very little about (Palm Bay?). Provo’s economy appears to be at ludicrous speed, with merely ridiculous speed projected for 2016.
My advice to the economic developers and PR professionals, especially from non-coastal markets, in town for SXSW marketing their cities: print out a copy of these tables, add a column with average housing costs, and then make your pitch. We’re reaching a tipping point, even here in Austin.
Image Credit: http://the-gadgeteer.com/