WC’s IT Industry

Industry Outlo ok:

Wilson County’s Information Technology Industry

Information Technology (IT) is an important part of the nation’s economy as well as for Tennessee (TN) and Wilson County (WC). In terms of economic impact, the IT industry ranked third nationally in 2018 with a $1.8 trillion (10.2%) contribution to the U.S. economy6 . In Tennessee, IT companies contributed $17 billion (5.2%) to the state economy. 174,346 people were employed in Tennessee in 2018, either as IT workers or as business professionals working in IT companies6 . For the Nashville Metropolitan Statistical Area (MSA), which includes Wilson County, IT companies contributed $7.5 billion (6.2%) to the Nashville MSA economy6 . Relative to non-tech employment, working in IT is generally a lucrative occupation. The median wage of $81,900 for the nation’s 7.3 million IT workers was almost double that of the general median wage of $42,7007 .

The economic importance of the Information Technology (IT) industry to Wilson County is twofold. First, IT is important as an industry in and of itself, a component of WC’s local economy which, along with other industries (e.g., retailing, financial services, transportation, warehousing, etc.), trains and employs workers, contributes to the local tax base, etc.

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Second, WC’s resident IT industry 1) provides IT products (e.g., hardware, software, etc.), 2) offers voice and data services (e.g, telecommunication services, cloud computing and data storage, etc.), and 3) provides for-hire technical expertise. These three product/service outputs from WC’s IT industry serve as important technical inputs that enable and support the operations and business activities of WC’s other local industries.

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IT Industry Defined

Dictionary.com defines information technology (IT) as the development, implementation, and maintenance of computer hardware and software systems to organize and communicate information electronically. From this statement, we will infer that an “IT Industry” consists of businesses which are involved in the manufacture, installation, support and operation of computer-based components and systems.

We will assume that “computer based systems” refers to both single standalone computer devices as well as computer network (aka cloud) configurations. We also assume that “support” involves such esoteric 3rd party services as computer design, system design, training, repair, and planning.

The following IT data discussion focuses on companies and personnel who produce or offer IT products and services - excluding 1) consumer retailers

6 Source: U.S. Bureau of Labor Statistics 7 Cyberstates 2019- The Definitive Guide to the U.S. Tech Industry and Tech Workforce publication produced by Computing Technology Industry Association (CompTIA), pages 8-10, March 2019T these figures include employment counts and wages for all IT workers in the U.S. as well as non-IT business professionals employed by IT companies.

and 2) IT workers employed by companies whose primary line of business is decidedly non-tech (e.g., retailers, restaurants, law firms, fitness gyms, etc.). Specifically, WC’s IT industry is defined as consisting of nine industrial areas, as defined by the following NAICS industry subsectors, industry groups and industry types8 .

• Computer Manufacturing (334)

• Computers, Peripherals, & Software Wholesalers9 (42343) • Software Publishing10 (5112)

• Telecommunications (517)

• Data Processing, Hosting & Related Services (518)

• Internet Publishing & Broadcasting, Web

Search Portals11 (51913) • Computer Systems Design & Related12 (5415) • Computer Training13 (61142), and

• Electronic & Precision Equipment Repair &

Maintenance14 (8112).

WC’s IT industry Trends

Recent, but preliminary US Department of Labor estimates show that 114 IT companies resided in Wilson County in 2018, employing a total of about 353 workers. Currently, WC’s IT industry is a fairly small part of the county’s total economy, representing about 4% of the total 2,907 firms residing in WC that year and employing less than 1% of WC’s total 40,772 private sector workers15 . Destaco, Mt Juliet TN

Table 1 depicts changes which have taken place in WC’s IT industry during 2008-2018. In this past decade, we observe that while the total number of businesses in WC grew by a healthy 34% (from 2,170 firms in 2008), WC’s IT industry increased by 119% (52 to 114 firms), making WC’s IT industry one of the fastest growing segments of the local economy.

While Wilson County made significant gains in the total number of IT firms taking up residence in the county, the total number of IT industry workers employed in WC decreased 73% during this 10 year period. This employment drop was largely due to structural changes taking place in the microcomputer industry at the time, prompting Wilson County’s largest IT manufacturer, Dell Computer Corporation, to transfer and consolidate much of its WC-based workforce.

Significant employment increases, however, are noted in WC’s non-manufacturing IT industries. Total workers employed in WC’s non-manufacturer IT sectors (excluding NAICS 334 subsector) was 207 in year 2008, increasing to 277 in year 2018, a 34% increase for the decade. Table 1 lists non-manufacturer IT sectors as including computer support and cloud related services, IT distribution and computer consulting.

With a few notable exceptions, the majority of IT firms currently operating in Wilson County are small businesses, including several that are home-

8 In the North American Industry Classification System (NAICS), types of industries are classified into increasingly more specific and detailed industry categories as the number of digits increases i the NAICS coding. Thus, 2 digit NAICS codes refer to industry sector, 3 digit codes refer to industry subsector, 4 digit codes refer to industry group, and 5 digit codes refer to industry. 9 The Computers, Peripherals, & Software Wholesalers industry is part of the NAICS 423 industry subsector Merchant Wholesalers, Durable Goods. 10 The Software Publishing industry group is part of the NAICS 511 industry subsector Publishing Industries (except Internet). 11 The Internet Publishing & Broadcasting, Web Search Portals industry is part of the NAICS 519 industry subsector Other Information Services. 12 The Computer Systems Design & Related industry group is part of the NAICS 541 industry subsector Professional, Scientific, and Technical Services. 13 The Computer Training industry is part of the NAICS 611 industry subsector Educational Services. 14 The Electronic & Precision Equipment Repair & Maintenance industry group is part of the NAICS 811 industry subsector Repair & Maintenance. 15 Source: U.S. Bureau of Labor Statistics

Figure H1

Number of Establishments by IT Industry Type in Wilson County TN, 2008-2018

Source: US Dept of Labor

based. The presence of many small IT firms in WC is not unusual for the industry and in part due to low startup and operating costs.

Which IT industry subsectors are growing the most in Wilson County? First we note that WC is experiencing an IT industry growth surge across almost all of the subsectors. The one exception is in private firms which offer computer training (NAICS 61142). This IT category is essentially non-existent in WC due largely to the number of public supported higher education institutions that provide various kinds of low cost computer training programs (e.g., Tennessee Board of Regents’ Technology Centers, TBR community college satellite campuses, University of Tennessee extension centers, etc.).

WC’s fastest growing IT industry subsector over the recent past decade, 2008-2018, was Software Publishing (NAICS 5112) which grew 475%, expanding from 4 firms to 23. The second fastest growing IT subsector was Data Processing, Hosting & Related Services (NAICS 518) which grew 250%, expanding from 2 firms to 7. The third fastest and largest growing subsector was Computer Systems Design & Related (NAICS 5415) which grew 128%, expanding from 25 to 57 firms. In 2018, we note that Computer Systems Design & Related (5415) firms and Software Publishing (5112) firms accounted for 70% of Wilson County’s entire IT industry, the former subsector at 50% and the latter at 20% of the total. See Table 1 and Figure H1.

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IT Industry Subsectorsc : Computer Manufacturingd Computers, Peripherals, & Software Wholesalers

NAICS Number of All Employees 10 yr. % changea

Subsector Establishments

Code 2008 2018b 2008 2018b Estabs Empls

334 4 5 (2009) 1109 (2016) 76 25% -91% 42343 3 6 7 8 100% 14%

Software Publishing 5112 4 23 25 39 475% 56% Telecommunications 517 6 7 73 80 17% 9.6% Data Processing, Hosting & Related Services 518 2 7 (2009) 9 7 250% -22% Internet Publishing &

Broadcasting, Web

Search Portals 51913 2 2 (2016) 4 (2017) 3 0% -25% Computer Systems Design & Related 5415 25 57 78 101 128% 31% Computer Training 61142 (2014) 1 1 n/a n/a 0% n/a Electronic & Precision

Equipment Repair &

Maintenance 8112 5 6 11 39 20% 254%

TOTALS

52 114 1316 353 119% -73%

Table 1: No. of Establishments and Employees by IT Industry Type in Wilson County TN, 2008 vs 2018 Source: US Dept of Labor

a In cases where nondisclosure restrictions are in effect, % change is for less than ten years. b 2018 data are preliminary US Bureau of Labor Statistics estimates. c In cases of 2008 (2018) federal nondisclosure restrictions, oldest (most recent) available data is reported. d WC’s 2008 NAICS 334 employee total is before Dell Computer restructuring.

Figure H2

Average Weekly Wage by IT Industry Type in Wilson County TN, 2008-2018a

Source: US Dept of Labor

a Due to federal disclosure restrictions, the line graph for Software Pub. Industry is extrapolated for years 2011-12.

NAICS Average Weekly Wages ($) 10 yr. %

Code changea 2008 2018b

IT Industry Classificationsc : Computer Manufacturing 334 (2009) 1020 (2016) 2045 100% Computers, Peripherals, &

Software Wholesalers 42343 753 1072 42% Software Publishing 5112 1158 2355 103% Telecommunications 517 1050 1406 34% Data Processing, Hosting &

Related Services 518 (2009) 434 1745 302% Internet Publishing &

Broadcasting, Web Search

Portals 51913 n/a n/a n/a Computer Systems Design &

Related 5415 1371 2349 71.3% Computer Training 61142 n/a n/a n/a Electronic & Precision

Equipment Repair &

Maintenance 8112 875 956 9.3%

Table 2: Average Weekly Wage by IT Industry Type in Wilson County TN, 2008 vs 2018 Source: US Dept of Labor

a In noted cases where nondisclosure restrictions are invoked, changes are for less than ten years. b 2018 data are preliminary US Bureau of Labor Statistics estimates. c In cases of 2008 (2018) federal nondisclosure restrictions, oldest (most recent) available data are reported.

Average weekly wage growth in WC’s IT industry has largely been in the double digits range for most of the past decade. Table 2 compares wage growth for WC’s IT sectors during 2008-2018.

In comparison with the $807 average weekly wage for all WC businesses in year 2018, the county’s IT industry pays its workers well indeed. WC’s largest average weekly wages in 2018 are found in Software Publishing at $2355 per worker. In very close second place is Computer Systems Design ($2349). In third place is Computer Manufacturing ($2045)16 .

Which Wilson County IT industry sectors have experienced the largest wage growth in the past decade? The highest change in worker wages for WC was in Data Processing, Hosting & Related Services at 302%. Second and third highest wage changes occurred in Software Publishing and Computer Manufacturing, at 103% and 100% respectively. Computer Systems Design and Related also saw significant wage growth at 71.3% for the decade. See Table 2 and Figure H2.

16 As explained in Table 2, the latest publicly available wage figure for WC computer manufacturing is for year 2016.