LESSONS FROM THE FRONT LINES OF THE 21st CENTURY ECONOMY: The Structure of Job Opportunities in the Massachusetts Information Technology Industry

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Abstract

This article describes the occupational composition of the Information Technology (IT) industry and the structure of opportunities in this major and growing employment sector. The results of a recent and detailed assessment of the IT industry in Massachusetts are used to identify implications for career development practitioners. The data presented in this article suggest two broad lessons can be learned from the Massachusetts experience: 1) that there are more opportunities for less well educated workers in this sector than is commonly understood, and 2) that the return to the technical skills demanded by growing information technology firms is substantial.

Introduction:

The late 1990s witnessed a remarkable explosion of development and investment within the Information Technology (IT) industry, generated in large part by the advent and popularization of the Internet. The dot-com bubble expanded through the second half of the 1990s and into 2000, when venture capital investment peaked and initial public offerings produced instant millionaires. The bursting of the dot-com bubble was also followed by a dramatic decrease in venture capital and other investment funding in IT companies, which proportionately dampened confidence in other industries. Despite this retrenchment and the recent recession, leading industries increasingly rely on IT to move their businesses forward and investment in the industry has continued to grow despite the profound economic difficulties of recent years. The widespread adoption of IT has created employment opportunities for many skilled IT professionals both within and outside of the core IT industry. In Massachusetts alone, more than 50,000 IT technical professionals (technical workers contributing specific computer or mathematical expertise) are dispersed throughout other industries. Overall, IT technical professionals earn higher average annual salaries than typical workers in the state and those employed by firms within the GG industry earn substantially more than their counterparts in other industries. Taken together these developments strongly suggest that IT occupations represent solid targets of opportunity for workers seeking employment opportunities in the most difficult labor market in over a generation.

The aim of this article is to shed light on the nature of these opportunities by summarizing the results of a recent detailed study of the IT industry in Massachusetts and highlighting their implications for career development practitioners. While in many respects Massachusetts is very different from other states, particularly in terms of the educational profile of its workforce and the innovation-intensive nature of its industrial base, its experiences can provide workforce and career development practitioners in other states and regions with some insight into what they can expect should their innovation-based economic development efforts bear fruit. The data presented in the pages that follow focus on the first eight years of the past decade (2000-2008) in an effort to avoid any confounding effect of the so-called Great Recession.

The evolving structure of the contemporary IT industry

Over the past several decades, IT firms throughout the U.S. have evolved in response to consumer demand, business needs, globalization, and technology innovation. In Massachusetts, the IT industry includes a diverse group of firms and workers that support existing key industries and enable new industry growth by providing valuable consumer and commercial services to workers and firms throughout the Commonwealth. Although the impact of the IT industry is vast, and exists within a larger economic system, for the purposes of this analysis, we define the industry into four core sectors: Hardware, Network Communications, Software, and IT Services. Each of these can be further divided into multiple subsectors, based on the range of industrial activities in the sector. …