The U.S. technology sector is booming. By our calculations, the ten largest U.S. tech companies have a combined market capitalization of over $5 trillion today, up from just $0.8 trillion in 2010, and employ more than 1.7 million workers, up from about 0.84 million. Although many are multinational companies, most employ a large majority of their workers within the U.S.
|Tech Company||Employees in 2018||Market Cap (in billions)|
Sources: Numbers of employees are taken from the companies’ latest annual 10-K Securities and Exchange Commission filings. Market capitalizations are reported as of May 6, 2019, based on data from Google Finance.
Not only are these tech titans performing well, but tech startups are raising record amounts of money from investors and expanding at breakneck speeds, as Bloomberg’s U.S. Startups Barometer illustrates. As tech companies of all sizes expand, demand for U.S. tech workers continues to rise. Tech job postings on ZipRecruiter more than doubled between 2017 and 2018, and they are showing no signs of slowing down in 2019.
What is most remarkable at this point of the economic recovery, however, is that applicant volumes for tech jobs keep expanding too, despite the lowest unemployment rate since 1969. The average number of days it took employers on ZipRecruiter to fill tech job openings fell from 20.6 days in 2017 to 14.1 in 2018.* In a tight labor market, as job seekers become choosier, ever more appear to be choosing tech and investing in developing their skills accordingly.
Tech opportunities expand to new industries and cities
One reason job seekers are flocking to tech is that tech job opportunities are emerging in an ever-wider range of industries as entrepreneurs apply innovations in cloud computing and AI to new problems. For example, there are rising numbers of jobs for software developers and web developers in fields ranging from mining and agriculture to entertainment and education. At the same time, traditional retailers, like Walmart and Nordstrom, are becoming incredibly technologically advanced companies, with larger software engineering and user experience design teams than most tech companies.
Number of systems software, application software, and web developers employed in the U.S.
|Agriculture, Forestry, Fishing and Hunting||0||30|
|Accommodation and Food Services||50||280|
|Mining, Quarrying, and Oil and Gas Extraction||230||570|
|Arts, Entertainment, and Recreation||400||1,550|
|Real Estate and Rental and Leasing||1,820||4,120|
|Transportation and Warehousing||4,520||6,770|
|Other Services (except Public Administration)||1,960||7,390|
|Health Care and Social Assistance||97,10||17,840|
|Federal, State, and Local Government||18,060||25,230|
|Management of Companies and Enterprises||39,810||69,500|
|Finance and Insurance||68,860||119,280|
|Professional, Scientific, and Technical Services||385,240||610,640|
Source: U.S. Bureau of Labor Statistics, Occupational Employment Statistics, May 2018, released March 2019
Another is that tech jobs are increasingly springing up across the country—including in places where office space and housing are cheaper. For example, the fastest-growing locations for tech jobs on ZipRecruiter over the past year were Kalamazoo, Michigan; Decatur, Alabama; Athens, Georgia; and Pocatello, Idaho. While the Bay Area, Washington, D.C., Seattle, New York, and Austin continue to be the main tech hubs in the U.S., tech jobs are becoming more plentiful elsewhere as well.
Tech employers’ competitive advantages
Tech employers have largely managed to overcome hiring difficulties plaguing other industries because of some unique competitive advantages.
1. Exciting work
One is the nature of the work. Many job seekers are excited at the prospect of working in a growing sector that is tackling complex problems and changing the world.
2. Tech culture
Another is the allure of tech culture—the ability to work in a dynamic environment where there is constant pressure to innovate and succeed, but where you can wear jeans and sneakers to work, bring your dog to the office, and enjoy kombucha on tap. ZipRecruiter data show that employers are increasingly advertising lifestyle perks in job postings to entice job seekers. The percentage of companies offering at least one kind of perk–such as remote work, laundry services, gym memberships, tuition reimbursement, dog friendly offices, or cold brew–went from 25.5% in 2017 to 26.8% in 2018, and to 28.6% in the first quarter of 2019, with tech companies driving much of the growth.
3. Compensation in stock options
The third is compensation. The average salary listed in ZipRecruiter job postings for tech jobs, including those which do not require college degrees, increased 8.8% from $60,169 in 2017 to $65,478 in 2018. But many employees in tech companies also receive equity awards as part of their compensation packages. In a period when tech stocks have been performing well, tech companies have a competitive advantage in hiring and are able to use less cash compensation to attract top talent. The burst of initial public offerings (IPOs) in 2018 and 2019 that created multiple new tech millionaires has only made landing a tech job more appealing.
4. Stable work arrangements
A fourth, perhaps ironically, is job security. While other expanding industries (such as professional and business services, healthcare, and transportation and warehousing) are increasing their reliance on independent contractors and temporary workers to meet rising demand, tech is the notable exception. The share of tech job postings that are for contractors is falling. Perhaps to compensate for the inherent riskiness of tech startup jobs, tech companies are increasingly courting job seekers by offering permanent jobs with benefits.
Why the U.S. remains the world’s tech giant
Employers only raise wages and benefits at this pace when they are bullish about their business environment. Tech companies likely see the U.S. as a good place to do business for a number of reasons. It has the right mix of rules and incentives that allow tech entrepreneurs to take risks and fail, and that allow them to become fabulously wealthy if they succeed.
It also has a large and creative population of early adopters who are prepared to bet on new technologies and who provide rapid user feedback to entrepreneurs, enabling them to learn about consumer needs and rapidly improve their goods and services. In many ways, consumers serve as extensions of the company’s own research and development teams, adding layers of innovation and combining technologies in new and exciting ways.
With its large number of educated workers, large number of prosperous consumers, and relatively favorable policy environment, the U.S. should remain a center of tech innovation and job creation in the foreseeable future. That should make it a fertile source of opportunities for job seekers—attractive enough to draw workers away from other industries and off the sidelines of the labor market.
* The time to fill a job is an approximation based on the average number of days between the time an employer opens and closes a job posting on ZipRecruiter.com.