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A Second Reboot: Information Technology in the Twin Cities

by Tim O'Neill
December 2014

In November 2004 Employment Review spotlighted information technology (IT) in the seven-county Twin Cities region of Minnesota. At the time IT had undergone significant employment fluctuations almost entirely attributed to the dot-com bubble of the late 1990s and the subsequent burst of that bubble in 2000. Four years after the burst, IT employment was primed for resurgence in the Twin Cities. IT-related industries were entering the Twin Cities area, vacancies were climbing steadily, and unemployment insurance claims were on the downward trend. So what ultimately happened with IT in the Twin Cities? Was the Golden Age of IT just around the corner?1

Fast forward to April 2010. With the state just beginning to climb its way out of the Great Recession, Employment Review once again turned the spotlight to IT, and once again IT employment had undergone major fluctuations. Strong employment gains made between 2004 and 2007 had been wiped away. Taking a look at Computer Systems Design and Related Services reveals these stark losses. This industry subsector, which employs more computer and mathematical occupations than any other subsector, grew by a remarkable 21 percent between 2004 and 2007, when total employment grew by 3 percent. By 2010, however, this subsector contracted by 5 percent, shedding more than 1,200 jobs.

Losses in IT during the Great Recession were deep and broad. In Review's 2010 analysis of the top 18 employing IT industries, two-thirds witnessed employment losses between 2008 and 2009.2 Clearly, the Golden Age of IT was derailed once again in the Twin Cities.

Defining the IT Occupation

Information Technology can be a nebulous term for defining specific occupations and industries. For the purposes of this article, IT will refer to 13 computer occupations as nationally defined by the Bureau of Labor Statistic's Standard Occupational Classification System (Table 1). It should be noted that significant updates were made in 2010 to this classification system. For example, four new computer occupations were introduced to reflect technological changes: Web developers, information security analysts, computer network architects, and computer network support specialists. Other revisions ranged from occupational title and description changes to the assigning of new codes.3


Table 1

Twin Cities Information Technology Employment Statistics, First Quarter, 2014, Wage Data,
Second Quarter, 2013, Employment Data

Occupation

Employment

10th Percentile
Wage

Median Wage

Location Quotients

Region-U.S.

State-U.S.

Total, All Occupations

1,660,560

$9.20

$19.92

-

-

Computer Systems Analysts

11,520

$26.35

$39.48

1.81

1.25

Software Developers, Applications

8,900

$29.24

$44.51

1.10

0.86

Computer User Support Specialists

8,580

$16.14

$24.29

1.27

1.07

Computer Occupations, All Other

7,570

$21.39

$35.29

3.08

2.21

Software Developers, Systems Software

6,650

$29.28

$45.60

1.42

1.15

Network and Computer Systems Administrators

6,390

$25.20

$36.97

1.41

1.10

Computer Programmers

4,630

$21.76

$36.08

1.18

0.90

Computer Network Architects

2,760

$30.82

$44.63

1.56

1.32

Computer Network Support Specialists

2,530

$20.12

$30.19

1.22

0.98

Database Administrators

2,320

$25.03

$41.62

1.61

1.15

Web Developers

2,240

$19.86

$33.35

1.59

1.15

Information Security Analysts

1,450

$29.26

$44.09

1.48

1.02

Computer and Information Research Scientists

370

$30.22

$58.42

1.21

0.77

Source: DEED Occupational Employment Statistics


As of the second quarter 2013, the 13 IT-related occupations accounted for an estimated 65,910 jobs in the Twin Cities or 4 percent of the region's total employment. Computer Systems Analysts, with an estimated 11,520 jobs, is the single largest-employing IT occupation in the Twin Cities. The average median hourly wage for Computer Systems Analysts, at $39.48, is significantly higher than the average median hourly wage for the total of all occupations in the Twin Cities, $19.92. Starting wages for IT occupations, typically set around the 10th percentile wage, are also significantly higher than the average starting wage for all occupations (Table 1). These higher wages can be attributed to higher requirements for advanced computer and statistical skill sets as well as increased needs for post-secondary education.4

Another method to gauge the importance of IT in the Twin Cities is an analysis of employment concentration. This can be done with location quotients which compare the share of employment at a local level to that of a base level, often the national economy. Analyzing state to national employment shares reveals Computer Systems Analysts, Computer Network Architects, and Computer Occupations, All Other to be highly concentrated in Minnesota. Comparing the Twin Cities to the nation, however, reveals nearly every IT occupation to be highly concentrated in the Seven-County Metro Area.5 These high levels of concentration came as no surprise since more than 80 percent of Minnesota's IT employment is located in the Twin Cities.

The Elusive Golden Age of IT

After enduring the dot-com bubble and the Great Recession, IT is once again showing signs of strength in the Twin Cities. According to DEED's Job Vacancy Survey results, Computer Occupations have averaged 2,267 vacancies every second and fourth quarter since 2010. This is 65 percent higher than the number of vacancies reported for those second and fourth quarters in 2010. In addition to the increasing number of IT vacancies, the number of layoffs has been in steady decline. Between the second quarters of 2010 and 2014, the number of computer and mathematical workers filing for initial UI claims dropped by 15 percent in the Twin Cities.


Figure 1


The recent trends in IT-related vacancies and UI claims go in concert with IT-related industry growth. While IT occupations are spread throughout numerous industry sectors, notable sectors for employing IT workers have been expanding. Table 2 showcases the high employment growth witnessed by Computer Systems Design and Related Services, the industry subsector with the highest concentration of IT-related computer occupations. Between 2010 and 2013 Twin Cities' growth in this subsector was over twice the growth rate of all industries in the region and accounted for two-thirds of the state's total computer systems design growth. Most growth within this subsector was in Custom Computer Programming Services, which comprises establishments primarily engaged in writing, modifying, testing, and supporting software to meet the needs of a particular customer.6


Table 2

Computer Systems Design Trends, 2010 - 2013
Sorted by Employment

NAICS Code

Industry Title

Firms

Employment

Average
Annual Wage

2010 - 2013
Employment Change

Minnesota

0

Total, All Industries

164,460

2,691,838

$50,128

5.0%

5415

Computer Systems Design

4,695

32,326

$96,928

4,190 / 14.9%

541511

Custom Computer Programming Services

2,074

14,000

$96,200

2,137 / 18.0%

541512

Computer Systems Design Services

1,552

11,324

$97,136

820 / 7.8%

541519

Other Computer Related Services

982

5,649

$92,456

1,144 / 25.4%

541513

Computer Facilities Management Services

87

1,353

$121,316

89 / 7.0%

Seven-County Metro

0

Total, All Industries

78,768

1,618,931

$56,576

5.3%

5415

Computer Systems Design

2,149

26,159

$98,644

2,879 / 12.4%

541511

Custom Computer Programming Services

857

10,798

$97,916

1,685 / 18.5%

541512

Computer Systems Design Services

840

9,458

$99,632

382 / 4.2%

541519

Other Computer Related Services

418

4,740

$90,688

847 / 21.8%

541513

Computer Facilities Management Services

34

1,163

$129,636

-34 / -2.8%

Source: Quarterly Census of Employment and Wages


Looking Ahead

While the Golden Age of IT has remained elusive, recent trends and current conditions point toward a steady need for IT services. Cloud computing, or the online networking of computer storage, services, and resources, is one emerging trend that promises to bolster IT growth into the future.7 In Minnesota, Computer and Mathematical occupations are projected to grow by nearly 10 percent between 2012 and 2022. Total employment growth is projected to be 7 percent. Most of the IT-related growth will be with Computer Systems Analysts and Computer User Support Specialists, which are projected to add 2,227 jobs and 1,198 jobs statewide, respectively, between 2012 and 2022. With its high share and concentration of IT-related computer occupations, most of this projected growth is likely to occur in the Twin Cities.

1Uphoff, Kyle. "Labor Market Rebooted: Information Technology Employment in the Twin Cities." Minnesota Employment Review (November, 2004): 12-14.
2Vilsack, Rachel. "Twin Cities Trends in Information Technology." Minnesota Employment Review (April, 2010): 1-4.
3Watson, Audrey L. "Implementing the 2010 Standard Occupational Classification in the Occupational Employment Statistics Program." Monthly Labor Review (2013): 36-49.
4Csorny, Lauren. "Careers in the Growing Field of Information Technology Services." Beyond the Numbers, Vol. 2. No. 9. Bureau of Labor Statistics, April 2013.
5Location quotients greater than or equal to 1.20 are generally considered to be of significance.
6North American Industry Classification System . U.S. Census Bureau.
7Csorny, p.3.

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