The Failure of Idaho IT and Computer Technology Business Climate

Idaho offers quite a bit in terms of a relaxed outdoor enthusiast setting, great weather, and generally a good safe place to raise a family.  What it isn’t is a high-tech hub no matter how much the Treasure Valley and other regions tout the startup vibe.

The history of high-tech in Idaho can be attributed to Hewlett Packard in 1973.  At the time Bill Hewlett and Dave Packard were running a healthy and expanding computer and testing company out of Palo Alto.  The company looking to expand opened facilities in Colorado, Oregon, and Washington.  Idaho was attractive since some of the executives would come to the region to flyfish or ski.  There was no local university offering engineering degrees nor was the infrastructure around to support high tech manufacturing.  So HP built it.  They even put in the electric infrastructure surrounding their campus on Chinden Blvd.  Originally the site hosted the storage group and building mass storage devices for test and measurement equipment.  They then ventured into hard copy print for testing machines.  Both expanded into what would become the compute side of the business and eventually the successful LaserJet products.

This was the catalyst of all other high-tech that grew in Boise.  This was also the first high tech hub built in Idaho and the LAST!

Every other company located in the Boise area are either organizations that have been bought out by larger multi-national firms (Intuit purchasing T-Sheets or Emerson buying PakSense) or are homegrown companies that have started here.  There is quite a list of startups:

  • Tsheets
  • Mark Monitor
  • Clearwater Analytics
  • Keynetics
  • Metageek
  • Truckstop.com
  • Alertsense
  • Bodybuilder.com
  • Micron Technologies

 

Yes, Micron (a $40B leader in global semiconductor DRAM and NAND manufacturing) was at one time in the late 1970’s a startup in the basement of a Boise dental office.  They are essentially an Idaho native startup.

However, when was the last time a multi-national opened shop in Boise?

We don’t see R&D hubs for Google, Microsoft, Amazon, Ford, Samsung, IBM, Tesla, and Dell.  We aren’t talking about call centers here.  Call centers are a disappearing industry anyways with AI and chatbots replacing many workers.  We are talking about true research and development of things, products, and services.  Yet other cities have attracted leaders in technology to open multi-million dollar facility and provide great jobs and cash flow.  For example, Google has R&D hubs in obvious municipalities like Cambridge, New York, and Seattle.  They also have R&D facilities in smaller cities like Madison Wisconsin and Boulder Colorado.

The Ground Truth

It is depressing being a newly graduated computer scientist, computer engineer, web designer, SaaS developer, or DevOps engineer in Idaho.

Idaho has the single worst pay of any Pacific Northwestern state for anyone seeking employment in the IT and computer fields.  Data obtained from the US Department of Labor and Bureau of Labor Statistics reveals the issue.  If we examine all IT jobs from web developers to embedded systems engineers across the US in 2018 we get a picture of their yearly salary, how many jobs exist, and other statistics of the industry.

To no one’s surprise, IT and engineering jobs are on average highly compensated in the US. There are roughly 600,000 IT-related jobs and about 400,000 engineering and architecture positions.  IT jobs were just short of lawyers and managers in average compensation of $106,240 per year. So we have established an average baseline for salary for IT professionals.

When we focus on Idaho and the Pacific Northwest region we see a different picture.  The data below captures the percentile distribution of salaries for only IT professionals across the US.  The data capture salaries for everyone in their IT career whether they are a fresh new graduate with a computer science degree or a 30-year veteran chief architect and Fellow at HP.  We should assume that a 30-year research fellow at HP probably will have higher compensation than a new Boise State University computer science graduate.

If we sort the data based on the 25th percentile, or those individuals towards the bottom of the pay ladder we see Idaho down at the bottom of the list with Montana, Lousiana, and Guam.

This means you can expect to be paid the worst as a new IT professional starting their career in Idaho.

There are also few jobs to chose from. As of today (5/31/18), indeed.com lists the following job vacancies for computer professionals:

  • Idaho: 233
  • Washington: 8798
  • Oregon: 1536
  • Colorado: 3225
  • Utah: 1469
  • Montana:109

Idaho has the same order of magnitude in computer professional vacancies as Montana but is sizably less than the surrounding Western states.  This has been consistent and obvious for years, but Idaho has failed to grow it’s computer professional base by any significant factor.

Employers take advantage of this situation and rely on few local options for IT professionals so they can perpetuate the low pay and miserable benefit mantra.

We come back to why are there so few opportunities?  Why hasn’t a Samsung or Microsoft opened some R&D function here?  There are many reasons:

  1. Idaho is an academically poor state.  According to Don’t Fail Idaho our state ranks 50th in average teacher wages and 48th in terms of average test scores.
  2. Our colleges are also weak.  US News and World Report ranks the University of Idaho overall at position 90/100 for US public universities.  For computer science programs, Idaho universities didn’t even make the list.
  3. The workforce is aging and not diverse.  Take HP for example.  After numerous downsizings and layoffs, the workforce is a fraction of what it was and almost singularly focused on 2D electrophotographic print imaging.  Many of these skills are transportable to a company working on automated driving and driverless cars.  The workforce has stagnated because of lack of employment options.
  4. The infrastructure is poor.  Idaho relies on developers and industry to build infrastructure for them.  Think of the Gowen Road bridge across the Boise River.  The state didn’t fund that – Micron did.  In some ways it’s good for local industry giants to help build up their community, it’s another matter to expect it.
  5. The workforce isn’t educated.  Only 30% of the entire state workforce has an associates degree or higher.
  6. Idaho has an image and stigma of not being racially, ethically, or sexually diverse.  This is a cultural gap between the values of the states and the values of technical giants from Apple to IBM to Intel.

So if I’m running a large or small IT-related business – why would I want to open shop here?  Education is lacking, talent is lacking, and infrastructure is poor.  My only advantage is taking advantage of the low pay for IT workers.  Even startups that were formed here have moved their corporate headquarters out of state: Mark Monitor.  Most of Micron’s execs are in Milpitas California now.  There is hardly a presence of exec talent at the mainstay of Boise tech: HP.

 

The true cost of living in Idaho

Sure the pay sucks, but isn’t the cost of living in Idaho low?

One will often cite that Idaho boasts some of the nation’s lowest tax rates and a much lower cost-of-living.  When you look at the overall tax picture in the form of a bar chart it may seem that way.  Compared to Washington state Idaho has 2.5% less sales tax.  Compared to Oregon Idaho has 2.5% less Income Tax:

Other factors impacting cost of living include sin taxes for beer or alcohol, taxes on wireless communication, taxes on vehicle sales and registration.  All these contribute to the overall cost-of-living.  To be fair we need to normalize against an average IT salary in Idaho of $100,000.  We also need to include the average cost of a home in each region.  A $200,000 home in Idaho buys you a lot less in Seattle (if at all).  The data was based on 2018 data from several cost-of-living calculators such as BankRate.com and Nerd Wallet. 

The result is the less than obvious.  Idaho touts a low tax rate and low cost of living, but for the salary and the taxes you actually pay it is the worst in the region.  Washington state, on the other hand, has a perceived extreme cost-of-living adjustment, especially for housing.  However, even based on housing and associated property taxes you will come out ahead in terms of overall taxes coming out of your paycheck.

The Money Shot…


 

Millenials Are Already Leaving

As reported by the Idaho Statesman educated millennials are already leaving.  They based their data on the findings of Ethan Mansfield  (an economist at the Idaho Department of Labor).  Idaho doesn’t collect data on individuals moving to or moving out of the gem state.  Ethan used forfeited driver’s licenses to gain a picture of migration patterns across age groups.  If we term millennials in their post-graduate (21 to 30-year-old) age group, we can see that most Idaho millennials move regionally to where the jobs are.  The data below show the number of Idaho citizens in the 21 to 30-year-old bracket that have left the state in 2014.  Many have gone to states with higher tax brackets.

Final Recommendation

Seriously, do yourself a favor.  Seed your career and most importantly your well being and livelihood just about anywhere else (maybe not Montana).  The fact is:

  1. Wages will be low.  Employers appreciate that and rely on that.
  2. There are few options and opportunities to move which again feeds on the appetite of the local employers.
  3. Education is lacking.  If you have are rearing a child here through a university degree, they will be falling short compared to their peers in nearly every other state.
  4. No tech employers are migrating here to open up new opportunities.

There is plenty to do in terms of recreation and outdoors just about everywhere else.  Idaho is a place to retire and in many ways Idaho as a state has already “retired”.

This is not a blossoming tech community.