https://www.businessreport.com/article/tech-workers-ibm-shortfall-reflects-struggling-industry
IBM’s failure to fulfill its promise of creating 800 jobs this year is an unsurprising reflection of a local technology sector that struggles to recruit and retain workers, experts and industry leaders say.
The company has so far created 572 jobs, well short of its goal. But the Gov. John Bel Edwards administration extended the deal for two more years, giving IBM another chance to meet the 800-job mark.
“Am I surprised? No,” Research Park Corporation CEO Byron Clayton says of IBM’s struggles. “We feel the (workforce) shortage. The shortage exists.”
Louisiana—and specifically Baton Rouge—has a dearth of qualified tech workers, according to numbers from Emsi, a firm that provides labor market data. Baton Rouge—by one metric, the number of software developers and programmers—has just one-third of the workers typically found in a comparable city.
And the workforce that is here gets paid significantly less than what they’re worth elsewhere. Emsi found the median salary for software developers in Baton Rouge is just over $66,000, while the national median salary approaches six figures.
IBM did not respond to requests for comment. But two sources who formerly worked for IBM say the company did a poor job of retaining the workers it did have, offering starting salaries, in some cases, as low as $35,000 to $40,000. Also, says one source, many of the positions it advertised, like software development, were actually jobs for quality assurance or administrative work.
Couple these factors with quality of life issues that make it difficult for Baton Rouge to attract and retain young, educated talent and what you get is a local tech industry that’s frequently seen as a stepping stone for workers looking to leave for greener pastures after a short period of time.
“In talking to students who have actually decided to leave Louisiana and go elsewhere that’s one of the things they have said,” says Kalliat Valsaraj, vice president of research and economic development at LSU. “They’ve been able to negotiate a higher salary somewhere else.”
While the cost of living in Baton Rouge is lower than places like Silicon Valley, the often wide disparities in income level for programmers and other workers is not enough to make up the difference.
Valsaraj also says IBM’s job numbers could simply be a timing issue. LSU began updating its curriculum when the company moved here four years ago and is still working with executives to funnel more students to the company. Extending the deal was probably the right move, he adds.
Former Gov. Bobby Jindal, along with groups like the Baton Rouge Area Foundation and the Baton Rouge Area Chamber, brought IBM here in 2013 with the promise of eventually creating 800 well-paying tech jobs.
In return, the state offered the company nearly $30 million in performance-based tax incentives, tens of millions more in other public funds, and $500,000-per-year “lease assistance” payments for its downtown offices in Baton Rouge.
Along with extending the deal, Edwards’ administration added increased penalties for the company if it again fails to meet employment benchmarks. Matthew Block, the governor’s executive counsel, emphasized the state is not giving IBM any additional tax dollars. Block pitched the move as a strong alternative to scrapping the agreement and risking IBM leaving.
“It’s the nature of the competition among states,” says economist Loren Scott. “For somebody as big and prominent as IBM to get them to come here … This is the kind of agreement we have to have.”