Illinois’ tech scene stays stalled
Despite raves about Chicago’s hot technology startup scene, Illinois maintains its No. 8 ranking in tech employment nationwide for the fourth straight year, a study released Tuesday shows.
Illinois’ tech industry employed 209,776 in 2012, the latest data available, an increase of 1.6 percent, or 3,361 jobs, from the prior year and a bigger increase than tech-heavier Virginia and Massachusetts, according to the study by TechAmerica, a technology booster group with Midwestern offices in the 1871 technology startup hub in the Merchandise Mart.
Illinois’ growth rate was faster than the national average of 1.1 percent for the tech industry overall.
“What is particularly telling for Illinois is that much of this growth has been concentrated in the software services industry, which grew at 6 percent, to 69,266 from 65,481,” says Matthew Kazmierczak, TechAmerica’s senior vice president. “Many of the new and innovative companies are located in this sector, which includes computer systems design and makers of off-the-shelf software.”
Nationwide, software services grew 4 percent, adding the most jobs of any sector.
But the Illinois tech scene isn’t all rosy.
The total number of tech jobs is 4.5 percent lower than the 219,637 jobs five years ago, the study reveals.
Most of the job losses came from telephone company downsizing, which accounted for 4,300 job cuts statewide in the five-year period. The next-largest job loss categories were communications equipment with 2,800 job cuts; electronic components with 2,700 job losses, and testing and research and development labs with 3,500 job losses, the data show.
The same categories shrank on a national basis, Kazmierczak says. Illinois’ telecom sector got hit in early 2012 with call-center closings by T-Mobile and Verizon, and the state suffered along with the nation in losing high-tech manufacturing jobs in the past 12 years as companies moved those jobs overseas or cut them during the recession, according to news releases and job loss reports.
The state’s total tech payroll, meanwhile, is 85 percent smaller than No. 1 California’s, which is twice the size of Texas’, the No. 2 state.
Illinois’ standing as a technology center is the subject of constant handwringing among business and political leaders. Brad Keywell, co-founding investor in daily deals site Groupon, told an innovation conference here last week that the Chicago area’s big, established companies should make it a priority to talk with startups.
“Lots of ideas are bubbling up,” Keywell says. “One that’s become a conversation at the city and state levels is to ask big companies to hire a ‘chief startup officer’” to actively work with entrepreneurs.
The conference highlighted “disruptive” technology entrepreneurs and was hosted by Lightbank, the $200 million, Chicago-based investment fund started by Keywell and Eric Lefkofsky, the founding backer and now interim co-CEO of Groupon.
Keywell says the way to boost good-paying jobs is to get schools, government and private enterprise to work together.
“Connecting all those dots is the magic,” he says.
The average Illinois tech worker’s yearly wage, at $87,223 in 2012, edged up 1.1 percent from the year before, the same as the national average, and reflected an 8 percent jump from the low point of $80,724 three years earlier.
Illinois’ tech payroll, at $18.3 billion, ranks No. 9, behind California — with $120 billion — Texas, New York, Massachusetts, Virginia, Washington, New Jersey and Florida.
Illinois ranks 28th among the 50 states in the percentage of technology workers in its private-sector workforce, at 4.4 percent, compared with No. 1 Virginia’s 9.8 percent and No. 2 Massachusetts’ 9.1 percent.
Illinois achieved its highest ranking — No. 3, behind California and Massachusetts — in its number of consumer electronics jobs (1,100), and number of tech “establishments,” or site locations, at No. 4 with 20,885, behind California, Texas and Florida. The Illinois site total reflected a 2.8 percent increase in the number of establishments from a year earlier. As for consumer electronics jobs, California had six times as many with 6,500, and Massachusetts had twice as many at 2,200.
Above: Mayor Rahm Emanuel talks about why local tech startups are so important to the city at 1871. Photo by Brian Jackson