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I.T. Takes a Village

by Cameron Macht
July 2017

Back in 1999 the University of Minnesota, Duluth (UMD), and Lake Superior College committed to becoming two of the first tenants in a new technology center situated in downtown Duluth. The plan for the Soft Center and Duluth Technology Village was to create a campus that joined computer software entrepreneurs and businesses, local colleges and universities, and well-trained students, all with a goal of creating hundreds of high-paying jobs in Duluth.1

However, an article in the Duluth News-Tribune recapped how the Soft Center's "completion coincided with the crash of the technology industry in the late 1990s," significantly altering the launch and success of the campus and changing the type of companies that currently occupy the space.2 But while the Technology Village didn't attract software and information technology (I.T.) companies as quickly or easily as planned, it's important to note that Northeast Minnesota and the city of Duluth have still seen a huge increase in employment at Computer Systems Design and Services firms since 2000.

According to the most recent data from DEED's Quarterly Census of Employment & Wages (QCEW) program, Northeast Minnesota is now home to 42 Computer Systems Design and Related Services establishments providing about 650 jobs and more than $43 million in annual payroll. That is up from just 274 jobs back in 2000, a whopping 136 percent increase. In comparison, total regional employment expanded just 1.2 percent since 2000, meaning that computer systems design accounted for 23 percent of job growth in the region over the past decade and a half (see Figure 1).

Figure 1. Northeast Minnesota Industry Employment Trends, 2000-2016

Technology Village

With 538 jobs at 19 firms, about 83 percent of the region's Computer Systems Design jobs are located in the city of Duluth, with another 9 percent found in other parts of St. Louis County and the other 8 percent spread through the rest of the seven-county Arrowhead region. At that level, Duluth has the 12th largest number of Computer Systems Design and Related Services jobs in the state, and the largest number for any city outside the Twin Cities metro area. Duluth has nearly 150 more jobs in this subsector than Rochester, 225 more jobs than in St. Cloud, and nearly four times as many jobs as Mankato (see Table 1).

Table 1. Employment in Computer Systems Design and Related Services by City in Minnesota, 2016
City, County Number of Firms Number of Jobs Total Industry Payroll
Minneapolis, Hennepin 322 9,350 $1,004,935,552
Bloomington, Hennepin 134 3,414 $390,563,283
Edina, Hennepin 91 1,966 $217,461,692
Eden Prairie, Hennepin 104 1,914 $194,789,244
Saint Paul, Ramsey 121 1,802 $178,522,767
Minnetonka, Hennepin 73 1,331 $143,257,819
St. Louis Park, Hennepin 60 1,160 $115,169,244
Eagan, Dakota 83 1,089 $108,205,893
Roseville, Ramsey 38 1,043 $127,059,250
Plymouth, Hennepin 99 866 $91,704,648
Blaine, largely Anoka 24 713 $68,600,718
Duluth, St. Louis 19 538 $37,531,141
Brooklyn Park, Hennepin 27 438 $49,054,962
Rochester, Olmsted 45 391 $35,122,978
Golden Valley, Hennepin 37 385 $35,740,270
Burnsville, Dakota 44 360 $29,043,071
St. Cloud, largely Stearns 14 311 $28,272,318
Woodbury, Washington 42 212 $18,419,021
Maple Grove, Hennepin 66 157 $11,527,006
Mankato, largely Blue Earth 13 144 $11,587,941
Source: DEED Quarterly Census of Employment & Wages

While Computer Systems Design and Related Services employment in Duluth doubled from 2000 to 2016, the faster growth actually happened in the rest of the region, where employment increased over 600 percent since 2000. Duluth had 94.5 percent of total jobs at the turn of the century, but rapid growth also occurred in Carlton, Itasca, and the rest of St. Louis County to bring the region up to speed.

Information Technology

At a technical level the Computer Systems Design and Related Services industry comprises "establishments primarily engaged in providing expertise in the field of information technologies through one or more of the following activities: (1) writing, modifying, testing, and supporting software to meet the needs of a particular customer; (2) planning and designing computer systems that integrate computer hardware, software, and communication technologies; (3) on-site management and operation of clients' computer systems and/or data processing facilities; and (4) other professional and technical computer related advice and services."3

As such, workers in this sector have very specialized skills and knowledge and must continually learn new technologies to keep pace. Many of the largest occupations in demand in Computer Systems Design and Related Services require Bachelor's degrees, and almost all require at least some college experience or vocational training.

This higher education has led to higher wages. QCEW data show that average annual wages in 2016 were $66,612 at Computer Systems Design and Related Services firms, compared to $41,704 across all industries in Northeast Minnesota. Wages in the I.T. sector increased 62 percent since 2000, the equivalent of a $25,500 raise.

All but two of the computer-related occupations that required a Bachelor's degree paid more than $30 an hour in the region, while jobs that required an Associate's degree also paid well over $20 an hour at the median. The highest wages were being paid to computer and information systems managers, who had a median hourly wage of $46.27 in the region in the first quarter of 2017 – producing an annual wage of more than $95,000. Even the non-computer-related occupations found in the industry, such as sales representatives, general and operations managers, and customer service representatives, were paid relatively high wages for the region (see Table 2).

Table 2. Wage and Employment Estimates for Occupations in Demand in Computer Systems Design, Northeast Minnesota, 2017
Occupational Title Estimated Regional Employment Median Hourly Wage Typical Education Needed
Software Developers, Applications 220 $35.24 Bachelor's degree
Computer Systems Analysts 180 $34.61 Bachelor's degree
Computer Programmers 130 $33.59 Bachelor's degree
Computer User Support Specialists 420 $22.93 Associate's degree
Computer and Information Systems Managers 130 $46.27 Bachelor's degree
Network and Computer Systems Administrators 230 $33.90 Bachelor's degree
Web Developers 90 $23.12 Bachelor's degree
Computer Network Support Specialists 90 $27.98 Associate's degree
Computer Network Architects 70 $30.58 Bachelor's degree
Database Administrators 60 $37.60 Bachelor's degree
Operations Research Analysts 40 $28.34 Bachelor's degree
Information Security Analysts 10 $37.83 Bachelor's degree
Sales Representatives, Services, All Other 500 $21.89 High school diploma
General and Operations Managers 2,080 $33.84 Bachelor's degree
Customer Service Representatives 1,910 $14.29 High school diploma
Total, All Occupations 141,910 $17.25 -
Source: DEED Occupational Employment Statistics (OES) program, Qtr. 1 2017

Future Growth

The future looks even brighter for the industry with Northeast Minnesota expected to see a nearly 60 percent increase in employment in the sector over the next decade. DEED's Employment Outlook tool projects that the region will surpass 1,000 Computer Systems Design and Related Services jobs by 2024, adding 400 net new jobs in the 10-year span. At that rate, Computer Systems Design would account for one in every eight new jobs created in the region (see Table 3).

Table 3. Northeast Minnesota Industry Employment Projections, 2014-2024
Industry Estimated Employment 2014 Projected Employment 2024 Percent Change 2014-2024 Numeric Change 2014-2024
Total, All Occupations 159,860 163,078 2.0% 3,218
Computer Systems Design and Related Services 679 1,079 58.9% 400
Source: DEED Employment Outlook

But in addition to the Computer Systems Design and Related Services sector, the information technology field is much larger, with many companies in every industry employing workers who provide these types of skills and services. For example, the Finance and Insurance, Management of Companies, Information, Manufacturing, and Health Care and Social Assistance industries also hire many of these same workers. This extra demand leads to even larger increases for many of the computer-related occupations in the region.

These occupations will also have hundreds of replacement openings, which are a count of existing jobs that become available because the current jobholder retires, leaves the occupation to start doing something else entirely, or leaves the geographic region. The number of replacement openings is projected nearly to match the number of new jobs created, with the most total openings expected for software developers, computer systems analysts, and computer user support specialists (see Table 4).

Table 4. Northeast Minnesota Computer-related Occupational Projections, 2014-2024
SOC Code Occupation Estimated Employment 2014 Projected Employment 2024 Percent Change 2014-2024 Numeric Change 2014-2024 *Replacement Openings 2014-2024 **Total Openings 2014-2024
0 Total, All Occupations 159,860 163,078 2.0% 3,218 38,200 44,660
150000 Computer and Mathematical Occupations 2,392 2,762 15.4% 370 340 710
151121 Computer Systems Analysts 254 334 31.4% 80 30 110
151122 Information Security Analysts 24 25 4.1% 1
151131 Computer Programmers 139 137 -1.4% -2 30 30
151132 Software Developers, Applications 355 496 39.7% 141 50 190
151133 Software Developers, Systems Software 121 150 23.9% 29 10 40
151134 Web Developers 127 144 13.3% 17 10 30
151141 Database Administrators 83 91 9.6% 8 10 20
151142 Network and Computer Sys. Administrators 280 283 .0% 3 30 30
151143 Computer Network Architects 168 167 -0.5% -1 20 20
151151 Computer User Support Specialists 487 528 8.4% 41 60 100
151152 Computer Network Support Specialists 93 108 16.1% 15 10 20
151199 Computer Occupations, All Other 210 223 6.1% 13 20 +40

* Replacement Openings: Net replacement openings is an estimate of the need for new work force entrants to replace workers who leave an occupation. It estimates the net movement of:1) experienced workers who leave an occupation and start working in another occupation, stop working altogether, or leave the geographic area, minus2) experienced workers who move into such an opening. It thus does not represent the total number of jobs to be filled because of the need to replace workers.

** Total Openings: Total job openings represent the sum of employment increases and net replacements. If employment change is negative, job openings caused by growth are zero and total job openings equals net replacements. Source: DEED Employment Outlook

I.T.'s a Man's World

While these jobs should be in high demand from the high growth and high wages, it is interesting to see that they are primarily filled by males. Data from DEED's Quarterly Workforce Indicators (QWI) program show that 63 percent of jobs in the Computer Systems Design industry are held by men, and just 37 percent of the workforce is female. However, the share of women workers is increasing over time, rising from 32.6 percent in 2000 and increasing nearly 10 percent since the low in 2006 (see Figure 2).

Figure 2. Northeast Minnesota Computer Systems Design Industry Workforce Demographics by Gender

1Reitan, Cheryl. "An Uncommon Vision: Duluth Technology Village/Soft Center." BRIDGE, the UMD Magazine, Volume 16, Number 1, Winter 1999.

2Renalls, Candace. "Duluth Tech Village nearly full as efforts by A&L's 'man on a mission' pay off." Duluth News-Tribune, May 21, 2012.

3United States Census Bureau. North American Industry Classification System.

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