Most of the visitors bustling around Austin for South by Southwest’s interactive track hail from the usual tech hubs, and the stranglehold those regions have on the country’s high-tech talent pool has only tightened in recent years.
From 2010 to 2015, most of the country’s 100 largest metro areas added jobs in a key set of digital-services industries, according to a new Brookings Institution report, but the vast majority of them still lost ground to Silicon Valley, Austin and a dozen other tech-heavy cities.
San Francisco and San Jose led the gainers, further consolidating Silicon Valley’s dominance of the American high-tech workforce. Austin ranked third, increasing its share of the U.S. digital-services workforce by 0.5 percentage points over the period. Only 15 metro areas grew or maintained their share over that span.
“Though we all love the idea of the rise of the rest, it’s mainly numerical,” said Mark Muro, senior fellow at Brookings’ Metropolitan Policy Program. In terms of share, “it’s a good story for Austin and the big tech hubs, but it’s provocative for the other guys.”
In fact, for Austin, last year might have been better than initially projected, too. According to the Texas Workforce Commission’s first revisions to its 2016 workforce data, employers expanded metro-area payrolls by 3.3 percent in 2016, up sharply from the 1.9 percent rate initially reported in January, the commission said Friday.
That initial figure would have been the metro area’s slowest job-growth rate since 2000. Instead, it now appears Austin’s tight labor market didn’t hinder job growth as much as initially expected, although the revisions still indicated a slower growth rate than each of the last four years, in which payrolls expanded by more than 4 percent.
The commission will release its final revisions to last year’s data on March 24.
On Friday, the workforce commission also released preliminary data for January, showing the Austin-area unemployment rate rising to 3.5 percent from 3.2 percent the prior month, an increase that was unusual for the start of the year, according to the commission’s historical data.
Local employers cut 10,000 jobs during the month. That was down about 1 percent, less than the reductions that typically occur in January, when retailers pare back holiday staffing and other employers recalibrate for the new year.
A key swath of the region’s high-tech employers — many of them the digital-services firms included in the Brookings analysis — helped limit January’s losses and have fueled Central Texas job growth in recent years.
While its pace of growth slowed last year, even after the revisions, payrolls in Austin’s professional, scientific and technical services industries ballooned since the recession. In fact, the number of jobs in the sector, which includes many of the region’s digital-services and other high-tech occupations, has nearly doubled in the past decade.
“Austin is building strength on strength now,” Muro said.
Muro said he started looking at these concentrations of digital-services jobs in response to inquiries from a handful of top Silicon Valley executives. They had expressed concerns about the widening cultural and political rifts between the high-tech hubs and the U.S. heartland, and they worried that proposals in Washington to restrict immigration would result in a shortage of workers with needed digital skills.
Ultimately, he said, it might not be healthy to have huge concentrations of tech workers in just a few regions — neither for the country’s cohesiveness, nor for its economic vitality.
“A lot of people coming to SXSW are rightly excited about the idea about the rise of the rest and the benefit of having multiple diverse technology centers,” Muro said. “This is important for the country’s competitiveness and important for dozens of medium-sized cities (that) do have legitimate technologies, great entrepreneurs and often a university-driven tech skills pipeline.”
Yet, it was many of the larger tech-centric metros that built “strength on strength” in recent years, capitalizing on both the depth and diversity of their tech economies, according to a separate Brookings study released last year.
Some mid-sized metro areas — such as Madison, Wisc., and Provo, Utah — have matured over the past decade, capitalizing on their high-tech diversity to nudge their share of the country’s digital-services job base higher from 2010 to 2015.
Like the top tech metros, those regions enjoy larger-than-average concentrations of jobs in a wider spectrum of advanced industries. Provo’s workforce mix, for example, indicated specialties in 14 of 50 advanced industries in 2015, up from 10 in 1990, according to a separate Brookings report. Madison made an even bigger jump over that time, to 13 from five.
(Austin dipped to 12 in 2015 from 14 in 1990, but remained among the most diverse metros for high-tech specializations. Meanwhile, San Jose has greater concentrations in 20 different advanced industries.)
In fact, back out regional economies that skew more toward manufacturing and energy — leaving the regions focused more toward the types of digital services in Muro’s latest analysis — and the top share gainers ranked among the most diverse.
However, while diversity spurred growth across some mid-size regions like Madison and Provo, a combination of diversity with depth separated Silicon Valley, Austin and Dallas from the rest.
From 2013 to 2015, San Francisco and San Jose collectively added 59,000 jobs in the digital-services industries Muro analyzed — far more than any region. Austin added around 11,000 in that span, a smaller volume than Silicon Valley but a faster average growth rate than all the other top-50 metros.
“For Austin, there’s new evidence of solidified takeoff – reaching a new level of diversity, depth and competitiveness,” Muro said. “And it does show how far the rest have to go.”
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