North American Tech Talent Grew in 2022 but Reduced Hiring by Tech Firms Creates Opportunities for Non-Tech Companies

Tech talent employment continued to grow in the first half of 2022 but hiring by major tech firms in North America slowed due to economic headwinds in the second half of the year, according to CBRE’s annual Scoring Tech Talent report.

The number of U.S. tech talent workers increased 7.3% from May 2021 to May 2022, which is significantly higher than the 5% growth in total U.S. employment in May 2022. U.S. job postings for tech talent roles from large tech companies declined earlier and more sharply (-86% from June 2022-February 2023) than large non-tech employers (-42% from November 2022-February 2023) based on CBRE’s analysis of labor data from Lightcast. Both have recovered in recent months, but non-tech employer job postings have recovered faster (43,008 as of June 2023) compared to tech employers (9,919).

For the first time this year, CBRE’s report examines tech talent wages paid by tech companies based on geography. The San Francisco Bay Area and Seattle had the highest average wages, while Sacramento and Jacksonville were the highest among small markets. The tech sector also has more workers earning over $150,000 per year than any other industry, according to CBRE’s findings from IPUMS census data.

“The labor market for tech talent is still very competitive, even amid a slower economy and layoffs, however it’s loosened enough to create hiring opportunities for non-tech companies,” said Colin Yasukochi, Executive Director of CBRE’s Tech Insights Center in San Francisco. “As tech talent gets redistributed across other industries, our economy becomes more digital and that could spur new growth for the tech industry. Artificial intelligence has seen a surge in venture capital funding, a positive indicator for the future growth of tech.”

CBRE’s annual Scoring Tech Talent report covers 75 North American markets, ranks the top 50 tech markets in the U.S. and Canada and outlines tech talent labor market trends amid economic shifts and increased remote hiring. Overall, the U.S. and Canada added a net 760,000 tech talent jobs since 2020 across established hubs such as the San Francisco Bay Area, New York, Seattle and Vancouver as well as smaller markets like Nashville, Cleveland and Canada’s Waterloo Region.

The top five North American tech talent markets are consistent with last year’s report: San Francisco Bay Area, Seattle, New York Metro, Washington, D.C. and Toronto. New York Metro moved up two spots; it had the most tech degree completions in 2021 (22,719) and the third-highest average annual tech wage.

Among the Canadian markets, Toronto maintained the lead in total tech talent, but Vancouver was the fastest growing (68.6% growth of tech talent occupations from 2017-2022), followed by Calgary (60.6%) and the Waterloo region (51.5%).

CBRE also analyzed emerging markets in Latin America. Latin America tech talent grew 32% between 2017-2022. The three largest Latin American tech talent markets were São Paulo, Mexico City and Santiago, while the fastest growing was San Jose, Costa Rica.

Layoffs and Remote Job Postings

The economic slowdown led the tech industry, among others, to reduce headcount beginning in mid-2022. A quarter of layoffs in the past year targeted tech talent while the other 75% involved non-tech roles such as recruiting, marketing and finance, CBRE found based on layoffs.fyi data.

Job postings for remote positions were 20% of the 593,000 total tech talent job postings in May 2023, on par with the share of remote job postings a year ago, according to CBRE’s analysis of Lightcast data.

Real Estate Considerations

Total operating costs for tech companies increased in 2022 due to higher average wages, even as many organizations reduced their real estate footprint. The total annual labor and real estate cost for a 500-person tech company occupying 60,000 sq. ft. of office space ranged from $33 million in Quebec City to $79 million in the San Francisco Bay Area.

Macroeconomic headwinds caused a significant decline in leasing activity in the second half of last year as many tech employers implemented cost containment measures and evaluated the impact of hybrid work arrangements on their workplace strategy.

Diversity & Demographics

CBRE also found diversity is increasing in the sector’s younger ranks. The share of tech degree graduates from underrepresented groups (25.3%) exceeded existing workers (22.2%), as did female tech degree graduates (26.1%) compared with existing workers (24.3%). This is a positive indicator of future tech talent diversity.

Over half of the top 50 tech markets saw the total number of residents in their 30s increase by more than 10% since 2016. Meanwhile, Salt Lake City, Madison and the Waterloo Region had the highest total concentration of residents in their 20s.

To download the full report, click here.

Additionally, CBRE’s latest tech talent analyzer provides an interactive, in-depth comparison of tech talent in different markets. For more information, click here.