Quantcast
Home / Biz Blog / Idaho’s software labor shortage and economic development

Idaho’s software labor shortage and economic development

For months, I’ve studied the debate on whether there’s a shortage of software developers in Idaho. I’ve decided there is a gap, but there’s also a broader issue of concern. I’ll explain.

To research the labor market, I dived into academic papers, studied arguments for and against visa programs for skilled foreign workers, read dry economic formulas with regression analyses, and tracked international, national and regional statistics. But I’m not going to descend into the rabbit hole of tracking all the different arguments, because that type of analysis would be pages long. I’m going to try to keep it clean and simple.

Is there a shortage of software developers in Idaho? Yes, there is. Even a recent article in Boise State University’s Blue Review that questions the significance of the software industry relative to other sectors in Idaho finds there is a talent gap in a job category that captures software developers.

The author, Chris Blanchard, cites a 2010 study by Economic Modeling Specialists International, an employment data and economic analysis firm in Moscow, Idaho. EMSI researchers estimated a talent gap of 371 Idaho workers in 2009 for jobs identified as “computer programming, specific applications.”

To complicate the issue a bit, EMSI researchers also took a look at data in 2012 that found real wages for programmers and web developers across the country have declined since 2004, suggesting that there might not be pressing demand for those workers across the country. But as EMSI researchers surmised, “Maybe the demand is there and employers aren’t willing or able to pay what they need to find skilled developers.” That’s an argument being hotly debated between private industry, academics and labor unions.

That led to another study a few months later that looked at an estimate of broader IT worker shortages by state. Again, EMSI identified a talent gap in Idaho, this one on the order of 68 workers. That number doesn’t sound like a lot and pales in comparison to California’s 6,475, but it is significant.

For instance, a conservative back-of-the-envelope calculation assuming an annual average salary of $59,000 for computer and mathematical occupations multiplied by 68 workers equals more than $4 million in wages that could contribute to the Idaho economy. Multiply that same salary, keeping in mind that software developers tend to make more, by 371, and the result is nearly $22 million in Idaho wages that never entered the economy.

Now let’s go back to Blanchard’s article. His point is that the gap in software developers isn’t as great as Idaho’s need for talent in other job categories, such as business administration and management. As public and private dollars are limited, he thinks money for education and human capital should be targeted to areas that are relatively more significant to the Idaho economy than software and “generates the greatest benefit.”

In that regard, Blanchard’s thinking is similar to that of Idaho Commerce Director Jeffery Sayer, who told me, “We should be investing in the highest return, but the more relevant, accurate data is coming directly from industry leaders, and not depending on government data that can oftentimes be a couple of years behind.”

According to the Idaho Department of Labor, there were more than 1,800 online job postings within the past four months for a broad range of computer jobs. Department officials caution this isn’t exactly the number of jobs available, but they believe it’s a good proxy for hiring demand in Idaho.

But my concern for Idaho’s economic development is broader than software development or tech workers or industries with the greatest return. It’s tough for government to pick winners and losers in dynamic economies.

I don’t think I’m risking my neck by saying any investment in the education system, especially in a state with low graduation rates at the college level, is worth it. Whether it’s in science, technology, engineering and mathematics (STEM) fields, or the humanities, or the arts, any subject that enriches critical and cognitive thinking is of value for the state’s economic development.

Although there may be disagreements among economists as to how much education creates how many percentage points of economic growth for which types of countries, it’s pretty clear that a solid education is beneficial for any economy around the world, including Idaho’s.

Now, let’s turn to what this issue is really about. Economic development is essentially money. Does Idaho have what it takes to keep it, grow it and attract it?

This reminds me of my past work at the U.S. Trade Representative’s Office. Two of my bosses there, Robert Zoellick, former head of the World Bank, and Jon M. Huntsman Jr., former Republican presidential candidate, were fond of saying, “Capital is a coward.” I don’t think they originated the phrase, but they used it to illustrate that money is rational. It likes to flee or avoid risky environments, including those with bad policies, unpredictability, ignorance and illiteracy.

If Idaho can’t attract or keep capital or talented workers here, then that’s an issue. So let’s find a way to create a sound, predictable business environment where capital isn’t afraid to come, stay and grow in Idaho.

Scott Ki is a Boise-based writer. He is a former staff writer for the Idaho Business Review and reporter for Boise State Public Radio. His past experience ranges from international trade negotiations to tech marketing and sales consultant to part-time “associate” at REI. He’s now considering starting a small business.

About Scott Ki

4 comments

  1. Yes, Idaho is becoming the outsourced workforce in the American West. They all send $$$ back to family members in-state, just like the Filipino & Indian ex-pats do in places like Abu Dhabi & Singapore.

    I’m surprised Otter & all his fellow wingnuts in the Legislature haven’t found a way to tax this income transfer. If they looked hard enough, I’m sure they could find something “unholy” or “unnatural” about it.

  2. Bill, I have been told that the biggest challenge in increasing the number of college graduates residing in Idaho to 60% of the 25-34 year-old population (see http://www.boardofed.idaho.gov/communications_center/documents/publications/2012_higher_ed_factbook.pdf ) is not funding for education, but stemming the out-migration of educated people from Idaho and the in-migration of less-educated people into Idaho. Smart people leave for all the reasons you cite.

  3. Yes Scott, it is a good article. I don’t think there’s any danger of Idaho state government “picking winners and losers”, when essentially they couldn’t sell prostitutes to a troop train.

    Aside from the actual supply-demand metrics of software developers in Idaho, my question is simply, “why would they even want to be here?” HP? Micron? can’t that be done remotely? Why put up with a place with an abysmal income tax code, lousy public schools & destabalized universities, little or no infrastructure investment, crazy healthcare costs with no competition, cities and towns that cannot do anything significant without the express permission of an imperial legislature….all in all, it makes no sense.

  4. Nice work, Scott. In a very polite way you illustrated the problem. Idaho’s leaders are content to follow the easy path – bash the feds for giving them stats that are “a couple of years behind.” The more difficult path, is to host the conversation about why Idaho’s breath stinks, i.e., why capital is too cowardly to come here.

    I don’t know where Sayer gets the idea that data gathering is a couple of years behind, but if it is, it is because Idaho’s state agencies are not doing what they are supposed to be doing, i.e., collecting data on a routine basis from employers. But that’s not a real issue.

    The real issues are things like the loss of a regional presidency at Key Bank, and the 46th lowest interest rates on deposits in the U.S. That shows a low demand for investment capital here.

    So we can talk about that stuff, or we can keep playing whack-a-mole on the feds. We’ll see how far the latter gets us.