Shrinking workforce isn’t all bad for tech sector

Squeezed for workers and thirsty for growth, Minnesota’s burgeoning tech sector is already feeling the strain of a shrinking workforce that’s expected to only get smaller for the foreseeable future.
But unlike other corners of the marketplace, local tech companies are positioned to cash in on a rising demand for technologies that streamline operations and boost productivity – hot commodities as employers in a growing array of industries strive to compensate for a lack of available workers.
Minnesota added about 38,000 jobs each year during the 1990s and roughly 25,000 annually in the 2000s, despite the recession, but this decade’s yearly figures hover closer to 8,000, according to data presented Thursday at the Minnesota High Tech Association Spring Conference.
In the next decade, that number will likely shrink, dragged down mainly by a mass exodus of baby boomers hitting retirement age. Especially as more workers leave Minnesota than come to the state, companies need to adjust their emphasis on how they hire and how they operate.
“That will be the key to our economic growth going forward under these conditions,” state demographer Susan Brower told conference attendees. “The big unknown is how will employers respond? How will technologies meet productivity demands?”
The demographic shift isn’t a surprise in a marketplace that for decades has known that baby boomers – a generation 75.4 million strong, dwarfed only by the nation’s 83.1 million millennials – will eventually age out of the workforce. But the trend is quickly taking hold and redoubling demand for solutions.
“For me as an entrepreneur, you just salivate when you see [data] like that,” said Nancy Lyons, CEO of Minneapolis-based interactive agency Clockwork. “But there’s a lot of work to be done. It’s the work part that’s daunting, but I don’t think it’s beyond us.”
Still, through it all, tech companies will need to contend with their own hiring challenges.
The industry is among the hungriest for workers, even despite its high-wage jobs. Software developers and computer systems analysts are among the highest-demand occupations in Minnesota, with 7,320 combined openings expected over 10 years.
Already, the state estimates it has 12,000 tech job openings. The Twin Cities marketplace, in particular Minneapolis, is gaining steam as an understated but increasingly prominent tech nexus gunning to match industry strongholds Austin and Boston.
Code42, a prominent software company that recently announced it would move into a 65,000-square-foot office in downtown Minneapolis’ Washington Square, expects to hire 160-plus workers this year, senior vice president and general manager Steve Buege said.
But even given the company’s rising prominence and a culture that tips in favor of employees, including freedom to work remotely, it won’t be easy.
“The war for talent isn’t going away anytime soon,” Buege said at the conference. “It’s going to continue. It’s been fairly intense in the Twin Cities and I think we can look forward to more of that in the future.”
Greater MSP, a regional economic development group, has zeroed in on recruitment and retention as the cornerstones of an overall growth strategy – one that can be complicated by Minnesota’s reputation for harsh winters in “flyover country.”
Officials in Minneapolis and St. Paul have echoed the philosophy. Still, Minnesota’s signature modesty can get in the way. For the long term, that could exacerbate the workforce problems that threaten to constrain tech companies’ growth.
“I don’t think we sell our market, our state, our culture as well as we really ought to,” Buege said. “No one else is really going to do that for us.”
But in the tech space, Lyons said, the approach to workforce vitality goes much deeper than simply appealing to outsiders.
Tech companies nationally in recent years have shown their penchant for stylish offices with plenty of fringe amenities, like table tennis and free beer, designed to draw in sought-after millennial workers. Still, a fun office only does so much to keep an employee engaged and on board — particularly in a competitive hiring climate.
“We have to stop talking about millennials as if they’re an exotic bird and we don’t know how to feed them,” Lyons said. “Millennials aren’t different than any other human being on the planet. They want meaningful work.”
Though industry leaders have zeroed in on diversity issues for years, there’s been little outward progress. The vast majority of attendees at Wednesday’s conference, for example, were white. Tech sector discussions about diversity still revolve around “nice, white Minnesotans talking to each other,” Lyons said.
“We have to admit that women are treated differently. We have to talk about what it feels like to be a person of color trying to break into this space – we have to talk about why they’re not here,” she said. “We have to talk about attracting a truly diverse workforce because if we don’t, we will never change.”

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