Technology: It's Where the Jobs Are

A new survey shows growth across the country, with higher-than-average pay. And with the number of tech grads falling, demand will only rise

Silicon Valley is still the center of the technology universe, but many other cities boast plentiful jobs as well.

Here's a hint for high school graduates or college students still majoring in indecision: Put down that guitar or book of poetry and pick up a laptop. Study computer science or engineering, and plan to move to a big city.

A new survey out this week from AeA, the group formerly known as the American Electronics Assn., reports that jobs in the technology industry are growing at a healthy clip, especially in large cities. The organization's Cybercities 2008 survey says that 51 cities added high-technology jobs in 2006, the most recent year for which data were available. The survey tracks new jobs related to the creation of tech products, including fields such as chip manufacturing and software engineering. It is the AeA's first such survey since 2000, which was taken before the crash of the tech bubble that created so many jobs in the late 1990s.

And while slowing economic conditions have dulled the pace of growth since the 2006 data were collected, AeA researcher Matthew Kazmierczak says it's far from turning south. "Nationally, there are some data that show the rate of growth has slowed since 2006, but it hasn't gone negative," he says.

The leader in number of jobs gained is Seattle, home to such tech companies as Amazon, RealNetworks, and software giant Microsoft, based in nearby Redmond, Wash. Seattle added a net 7,800 jobs during the period surveyed, followed by the New York and Washington (D.C.) metro areas, which added more than 6,000 jobs apiece. The fastest-growing area on a percentage basis was the combined metro area of Riverside-San Bernardino, Calif., which saw its tech-employment figures grow by 12%. Riverside-San Bernardino benefited from higher costs of living in nearby Los Angeles and Orange County.

Salary Strength

The highest concentration of technology workers—286 for every 1,000 workers—was in, no surprise, Silicon Valley. Boulder, Colo., came in second, with 230, and Huntsville, Ala.; Durham, N.C.; and Washington rounded out the top five in density.

Now for the answer to the question on everyone's mind: Where are the highest salaries? That would be Silicon Valley, where the average tech worker is paid $144,000 a year. That's nearly double the $80,000 national average for tech jobs. Runners up included San Francisco and Oakland, Calif. Austin, Tex., home of Dell came in fourth, and Seattle was fifth. San Juan, Puerto Rico, had the lowest salaries, with an average of $38,000 a year, but living expenses there are also considerably lower.

What does all this mean? There's still a labor shortage in tech. And if you took Economics 101, you know that's good news for paychecks. Already, tech wages are 87% higher, on average, than in the rest of the private-sector job market. Tech wages are also growing faster, by an average of 4% a year—double the 2% reported for private industry as a whole. And in Austin, San Diego, and Sacramento, Calif., tech salaries tend to be twice what they are for private-sector jobs generally.

A Shrinking Pool of Potential U.S. Hires

The AeA's findings jibe with what the U.S. Bureau of Labor Statistics says on the subject of technology jobs: More than 850,000 IT jobs will be added during the 10-year period ending in 2016, which would be a rise of 24%. Add all the jobs that will replace retiring workers, and the total increase could be a tidy 1.6 million. That means one job in every 19 created over the course of the next decade will be in technology.

And while demand for tech-savvy employees is certainly multiplying, another survey, this one from the Computing Research Assn. and released in March, found a 20% drop in the number of students completing degrees in computer-related fields, and the number of students enrolling in these programs is the lowest it's been in 10 years, as far back as the data go.

AeA's Kazmierczak says this confirms what its members are saying about their ability to hire new employees. Unable to find enough U.S. citizens for tech jobs, U.S. companies scoop up as many foreign nationals as they can using the limited pool of H-1B work visas issued by the federal government each year. But it's not enough, and the process is slow and cumbersome. "Our members are having problems finding a number of qualified workers," he says. "The U.S. doesn't really allow foreign nationals to compete in the job marketplace—we essentially tell them to go home to their own countries and to create competition there."

Best Cities for Tech Jobs

1. San Jose/Silicon Valley

Jobs per 1,000: 285.92
Total: 225,343
Rank: 3
Growth: 3%
Average wage: $144,828
Salary Rank: 1
Biggest sector: computer systems design
Area employers: Google, Intel, Hewlett-Packard, Apple

2. Boulder, Colo.

Jobs per 1,000: 230.45
Total: 30,533
Rank: 38
Growth: 1%
Average wage: $96,077
Salary Rank: 6
Biggest sector: computer systems design
Area employers: IBM, Level 3 Communications

3. Huntsville, Ala.

Jobs per 1,000: 188.46
Total: 28,806
Rank: 40
Growth: 1%
Average wage: $65,848
Salary Rank: 50
Biggest sector: engineering services
Area employer: Bechtel

4. Durham, N.C.

Jobs per 1,000: 155.94
Total: 33,454
Rank: 36
Growth: 8%
Average wage: $95,551
Salary Rank: 7
Biggest sector: R&D and testing labs
Area employer: Duke University

5. Washington, D.C.

Jobs per 1,000: 132.02
Total: 295,834
Rank: 2
Growth: 2%
Average wage: $92,718
Salary Rank: 9
Biggest sector: computer systems design
Area employer: Sprint Nextel

See more top cities for tech jobs

Hesseldahl is a reporter for BusinessWeek.com.