Until recently, the high-tech industry cluster was relatively amorphous. Analysts chose industries that best suited the immediate objective – a “know it when you see it” approach, but that made it difficult to compare one analysis to any other. So in 2013 the Workforce Information Council, a federal-state organization set up under federal law, created a new, statistically robust high-tech taxonomy or classification procedure.
The taxonomy is based on the concentration of science, technology, engineering and mathematics occupations within an industry. To qualify as high-tech, an industry must have 2.5 times the national average of so-called STEM occupations. The current national average is roughly 5 percent, meaning to qualify as high-tech, an industry must have at least 15 percent of all employment classified as STEM occupations.
The most recent industry assessment under the taxonomy, released in 2014, includes 31 industries ranging from computer systems design and related services, where STEM concentration was about 67 percent nationally, to resin, synthetic rubber and artificial synthetic fibers and filaments manufacturing, where the STEM concentration was roughly 16 percent nationwide.
History of the High-Tech Sector in the Boise Metropolitan Area
In the past, the five-county Boise Metropolitan Statistical Area experienced relatively high levels of high-tech employment, carried almost exclusively by the production of semiconductors — computer chips and memory. Between 2007 and 2009, semiconductor manufacturing shed nearly 40 percent of its jobs in the Boise MSA because of a “global supply glut” of DRAM memory chips and NAND flash memory, forcing firms like Micron Technology to cut costs by laying off workers and sending some production off shore.
One of the top five high-tech industries showed appreciable growth through the recession and over the past 10 years. Management, scientific and technical consulting services – marketing consulting services, human resources consulting services, administrative management consulting services and environmental consulting services – increased jobs 135 percent from just over 800 jobs in 2004 to about 1,900 jobs in 2014. Even so, its share of high-tech employment in 2014 was 9 percent compared to 36 percent for semiconductor manufacturing.
The failure of the single dominant high-tech industry concurrent with the contraction of the national, state and local economies in 2008 has made it difficult for southwestern Idaho’s high-tech sector to return to its prerecession success – 2014 employment was 1,200 higher than the low point in 2010 and 4,700 below the 2007 peak.
High-Tech Occupations in the Boise Metro Area
Despite the recent decline, the Boise metro area still had 18,500 high-tech jobs in 2014, and the concentration of high-tech jobs at 7 percent of all jobs in the region remained 15 percent above the national concentration. The median wage for high-tech occupations at $34.74 an hour was slightly below the national median but well above the median for all Idaho jobs. The median is the point where half of the workers earn more and half earn less.
Fourteen of the top 100 “hot jobs” in Idaho are high-tech occupations. “Hot jobs” are those with the largest number, highest wages and greatest prospect for growth. Although a “hot job” listing is not available for the Boise metro area, generally the situation in the area is reflected in the statewide listings. An exception would be atmospheric and space scientists, which is more prevalent in other parts of the state like eastern Idaho’s Idaho National Laboratory.
The majority of jobs in the 14 high-tech occupations on the “hot jobs” list are held by people who have an associate degree or higher. For example, only 11 percent of all software application developers have less than an associate degree. With the exception of atmospheric and space scientists, civil engineers typically have the highest levels of education with 90 percent holding an associate degree or higher. Sales representatives for technical and scientific products typically have the lowest education level – 44 percent have less than an associate degree. For all these occupations, a bachelor’s degree is the most commonly held degree.
These data indicate the importance of having a skilled and well-educated workforce. However, the number of completed degrees at the associate level or higher in computer and information science and technology, engineering and engineering-related fields has declined 6.5 percent in the Boise metro area since 2003 compared with a national growth of 5.4 percent. Over the same period, employment in the high-tech cluster decreased nearly 13 percent while cluster employment in the nation grew 7.3 percent. If the Boise area expects to attract these high-paying jobs, there must be a skilled and educated workforce available. This continues to be one of the largest barriers to development of the high-tech cluster in the region.
A projected 3.3 percent growth rate for metro Boise from 2014 – 2022 compared with 12.6 percent for the nation may in part, be due to an inadequately trained high tech workforce.
Another factor could be that manufacturing jobs, which buoyed the high-tech sector in the Boise area, have been declining nationally, and the metro area is simply experiencing that national trend. A shift-share analysis indicates this is not the only factor at play. Shift-share analysis breaks down causes for expected job growth into three categories – the effect of national growth, industry growth and the competitive effect of regional factors. The shift-share analysis shows industries that are projected to find regional conditions most amenable to their development are management, scientific and technical consulting services, wired telecommunications carriers, data processing and hosting and related services. Except for management, scientific and technical consulting services, these industries are projected to decline on a national level, but are projected to prosper in the Boise area.
Industries projected to struggle due to regional conditions are computer systems design and related services, semiconductors and other electronic component manufacturing, professional and commercial equipment and supplies and merchant wholesalers. Semiconductor manufacturing, still a staple in the regional economy, is projected to lose ground because of the national industry trend and local conditions such as a lack of skilled workers, local demand, infrastructure and transportation concerns.
Comparing Boise’s Performance to Other Metro Areas
Compared to nine other Northwest metro areas including three others in Idaho, Boise’s experience has been relatively negative. Using location quotients showing employment concentration compared to the nation, in 2004 Boise’s high-tech concentration was 40 percent greater than the nation’s. Only Idaho Falls, Seattle and Richland, Wash., had higher concentrations. But Boise’s concentration dropped 25 percent by 2014. Only Richland and Idaho Falls lost more. Only in Seattle did high-tech grow more concentrated faster than the nation although Olympia and Spokane, Wash., are poised to increase their high-tech share. From 2004 to 2014, Olympia’s concentrations increased 19 percent while Spokane’s was up 3 percent.
But Idaho is not the high-tech hub that the 1990s and early 2000s indicated it could be. It was hampered by the decline of the semiconductor industry and the onset of the recession and has had difficulty remaking itself as a place where high-tech industries want to be. Workforce concerns, access to markets and social, cultural and political climate may be reasons that high-tech firms locate elsewhere. While Idaho touts its business-friendly wages and tax rates, there are other factors that influence business location decisions.
The projection for the high-tech cluster is not set in concrete. Investment in education and training programs will impact the employment and wage growth of the industry. And despite the data showing a decline, there are many successful high-tech companies, jobs and individuals prospering in the Boise metro area and statewide.
Ethan.Mansfield@labor.idaho.gov, regional economist
(208) 332-3570 ext. 3455