Report: Colorado’s technology sector still riding high

The competition for attracting technology jobs is getting more intense every year, but Colorado still is running near the front of the pack.

The state ranked third in the nation for its concentration of high-tech workers and fifth for percentage of its payroll coming from technology industries, according to “Cyberstates 2015,” an annual report from the nonprofit TechAmerica Foundation that also found that the technology industry accounted for 11.3 percent of the state’s economy in 2014.

“It doesn’t surprise me based on what we’re seeing in the community,” said Todd Headley, president of CSU Ventures, the technology arm of Colorado State University in Fort Collins.

The report identified “hubs” of concentration in certain states. Washington, for instance, has the highest concentration of software publishers, while Arizona and Oregon are meccas for semiconductor manufacturing.

“Digital health is certainly an area that’s growing here,” Headley said, “but any of these tech sectors that are strong and growing – it helps the whole ecosystem.”

The figure for concentration of workers in Colorado – at 9.2 percent of the workforce – trailed only Massachusetts at 9.8 percent and Virginia at 9.4 percent, and far exceeded the national average of 5.7 percent. Even more pronounced was technology’s slice of the payroll pie in Colorado; 18.4 percent of the state’s total came from the tech sector, fifth behind California at 20 percent, Virginia at 19.3 percent, and Massachusetts and Washington at 19 percent each.

“We planted this seed here in Colorado long ago and watered it, and now it’s bearing fruit,” said Ryan Martens, founder and chief technology officer at Boulder-based Rally Software Development Corp. (NYSE: RALY). “A lot of it comes from the different sectors – high tech, green tech, life sciences, telecom – working together.”

Technology’s importance to Colorado’s economy also is reflected in its share of the state’s gross domestic product. By the end of 2014, according to the report, the tech industry in Colorado accounted for 11.3 percent of the state’s GDP, trailing only Oregon at 26.5 percent and Washington at 12 percent – and compared with 7.1 percent in the nation as a whole.

“While Colorado continues to be a leader in the technology sector, we know it will continue to take a lot of work to maintain the momentum, so public and private policy need to prioritize keeping Colorado as a top innovation center,” said Mike Freeman, chief executive of Innosphere, a Fort Collins-based clean-tech incubator. “To keep Colorado at the top, we need to get better at reducing manufacturing risk. We know this because over the past 24 months, Innosphere saw a high number of companies fail because they were never able to effectively address their technology-development risks.”

Colorado had 186,149 tech-industry jobs with a total annual payroll of $19 billion by the end of 2014, the report said, up from 156,900 and $14.2 billion just four years ago. Its average tech-industry salary of $101,842 a year ranks ninth in the nation and was nearly twice the state average for private-sector wages, which stood at about $51,000.

Twenty-four companies have graduated from Innosphere’s incubation program in the past two years, Freeman said, creating 204 jobs with an average full-time salary of $94,334.

Martens pointed to more initial public offerings on the horizon in Colorado’s tech sector as a factor that will build visibility and management caliber on which companies in the state can draw. But he said that very attraction and growth can create problems that could hinder tech-industry growth in Colorado.

“We’ve got to address housing affordability, transportation and diversity in the workforce,” he said. “Some of the greatest technology innovations are in the Silicon Valley, but it’s getting pretty hard to live there. And what’s happened to Austin (Texas) is fantastic, just in the past three years – but the traffic is abominable.”

With the U.S. Department of Labor forecasting that the United States will have 1 million more technology-industry jobs than candidates to fill them by 2020 if trends continue, Colorado’s high rankings are likely to continue to serve as lures for workers from other states who haven’t ridden the tech wave as successfully.

A recent story in the Miami Herald featured the case of Brad DeRolf, who has worked in the technology sector for 35 years but took a senior quality-assurance position at Intel in Fort Collins because he couldn’t find an opportunity in south Florida at the pay and level of benefits he wanted. Florida’s average salary for tech workers in 2014 was $80,367, according to the report, about 80 percent of what firms in Colorado pay – even though Florida ranked fourth in the number of tech jobs added in 2014 and near the top for total jobs in 10 of the report’s 17 industry segments.

DeRolf still owns a home in the Fort Lauderdale area, but for now he’s a Coloradan.

“Too many employers seek employees that have done the exact job rather than look at the successes of the prospect and what they can bring to the company,” DeRolf told the Herald. “Any programmer worth a dime can learn a new language rapidly. (Companies) should be more concerned with the overall aptitude and ‘gets it’ factor of new employees.”

Computer-systems design and IT services made up nearly a third of all tech jobs in Colorado in 2014, followed by engineering services, telecommunications, and R&D and testing labs.

Although the software-publishing industry claimed the fifth-biggest share of tech jobs in the state, it was the only one in the top five to have lost positions over the previous year in Colorado. That sector had 11,500 jobs in 2014, according to the report, down from 11,900 in 2013.

Although space- and defense-systems manufacturing accounted for just 5,600 jobs in Colorado, that was enough to rank the state fifth in the nation, behind California, Arizona, Florida and Massachusetts.

The producer of the report, the TechAmerica Foundation, sponsors research projects, surveys and conferences to examine critical technology issues within the federal sector. Arlington, Va.-based Professional Services Council, a group that counts defense and technology companies from Lockheed Martin to Amazon Web Services as members, acquired TechAmerica last month – just after the Cyberstates report was issued – from Downers Grove, Ill-based CompTIA Properties LLC, an information technology trade association, which itself had acquired TechAmerica last year.

“We have been working closely with Congress and the administration to make IT training and certification a priority,” said Todd Thibodeaux, president and CEO of CompTIA. “The average IT worker’s salary is double that of the private sector and we must continue to expand access to these jobs, many of which do not require a four-year degree.”

Dallas Heltzell can be reached at 970-232-3149, 303-630-1962 or dheltzell@bizwestmedia.com. Follow him on Twitter at @DallasHeltzell.

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