Glory Days Are Here Again for Tech
Monday, October 2, 2017
Since 2010, employment in the tech industry has been growing twice as fast as private-sector employment overall, and tech wages are outpacing the average. The glory days are back for tech, according to the Federal Reserve Bank of St. Louis, which defines the sector as comprised of seven industries.
Industries in the tech sector (and publicly-owned firm with largest revenue)
- Computer manufacturing (Apple)
- Electronic shopping (Amazon)
- Software publishing (Microsoft)
- Data processing, hosting, and related services (Xerox)
- Internet publishing, broadcasting, and web search (Google)
- Computer systems design (IBM)
- Scientific research and development (QuintilesIMS)
The tech sector has seen ups and downs over the decades. Tech employment as a share of total private employment climbed through 1990s and hit a high of 4% in 2000, then fell as low as 3.4% after the tech bubble burst in 2001. The Great Recession also shook the industry, but in 2010 the turnaround had begun. Tech employment as a share of total private employment reached 3.9 % in 2015 – nearly matching the all-time high of 2000.
Between 2010 and 2015, jobs in the tech sector grew 20% versus an 11% gain for all private-sector employment. Tech-sector wages grew 5% annually during those years. Wage growth has lifted the earnings of tech workers far above those of the average private-sector worker. In 1990, the average tech worker made 1.6 times as much as the average private-sector workers. By 2015, tech workers made 2.2 times as much.
“Innovations in digital computing systems and automation have triggered tectonic shifts in consumer and business behaviors across the economy” says the St. Louis Fed. All true, but the tectonic shifts to come may be even greater than the ones in our past – especially if a theory about the low productivity growth of recent years turns out to be correct (see the New York Times article, “Maybe We've Been Thinking about the Productivity Slump All Wrong”). The theory goes like this: Depressed wages have discouraged businesses from widespread deployment of productivity-boosting technologies. Why bother investing in capital equipment and software when workers are so cheap? As the labor market tightens and workers become more costly, businesses will deploy labor-saving technologies on a massive scale. The glory days may turn into glory years.