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By W. Gardner Selby May 17, 2013

Barack Obama says Austin's tech sector drives more than a quarter of local economy

Austin rocks, President Barack Obama indicated during his May 9, 2013, swing through the area, thanks in great part to its technology-related businesses.

After listing plans by Apple, Visa and General Motors to add jobs, Obama told students and teachers assembled at the Manor New Tech High School: "According to one report, the tech sector now drives more than one-quarter of Austin’s economy. And all of this has helped to make Austin one of the fastest-growing cities in America."

We know tech is big in these parts, but does it drive more than a quarter of Austin’s economy?

By email, White House spokesman Bobby Whithorne pointed out a press release issued earlier in May by the Austin Technology Council, a trade association for companies working in and around technology and life sciences. The release said the council had released results of its "Technology Economic Impact Report" finding that "technology is generating billions of dollars annually and driving more than a quarter of Austin's local economy."

But the May 6, 2013, report doesn’t exactly say that, though it quantifies the area’s tech boom in various ways.

The report says: "While a respectable 9% of total employment is in technology (more than 100,000 jobs), more than one third of all jobs in the Austin economy are supported by the technology sector, including direct hiring and spin-off hiring activity."

Reference No. 2: "The sector accounts for a whopping 21% of Central Texas’ gross regional product (GRP) and contributes $21 (billion) in direct value to the local economy." Researcher Brian Kelsey later told us by email that the government sector swept in about 12 percent of local output.

The council put us in touch with Brian Kelsey, a principal at Austin-based Civic Analytics, which conducted the research behind the report.

By email, Kelsey told us the president’s claim is true if one assumes he was talking about Austin tech’s share of jobs plus spin-off jobs.

For the research, Kelsey said, he defined Austin’s "tech sector" starting from the "high-tech" definition in TechAmerica Foundation’s annual "Cyberstates" publication. Its list encompasses 52 industries, among them communications equipment such as radio and TV broadcasting and wireless communications equipment; software services; engineering services; computer training; and space and defense systems. Kelsey said his firm added another industry, computer and computer peripheral equipment and software merchant wholesalers, "which captures a significant portion of business activity at some of Austin's larger companies such as Dell, IBM, etc."

All told, Kelsey said, the 53 industries "contribute an estimated $20.9 billion to Austin's total Gross Regional Product," meaning the economic output in the five-county metropolitan region, "of approximately $97.4 billion, or roughly 21 percent, a bit under ‘one-quarter.’"

Kelsey said total estimated employment (full-time, part-time, and self-employment) in Austin's tech sector accounted for 105,667 jobs in 2012, roughly 9 percent of all jobs in Austin. "That's direct jobs--i.e. people employed in the 53 industries. If you look at the direct employment and the spin-off activity it creates in other industries (the multiplier effect), the tech sector supports an estimated one-third of total employment in Austin--so a bit more than ‘one-quarter,’" he said. He added that most of the data behind the report, including the jobs multiplier of 3.5, came from Idaho-based Economic Modeling Specialists Intl., a company that specializes in economic impact studies.

Finally, we asked Jon Hockenyos, president of Austin-based TXP, Inc., an economic consulting firm, to look over the council’s study. Hockenyos said by email that the results looked accurate. Regarding Obama’s reference, Hockenyos said: "I’d say the verb ‘drives’ (which to me implies more than the direct effect) makes the president’s remark consistent with the study’s findings."

By telephone, the White House’s Whithorne stood by Obama’s wording, saying it was supported by the press release announcing the study and the study itself.

Our ruling

Obama said a report says the "tech sector now drives more than one quarter of Austin’s economy."

The cited report doesn't directly declare this, estimating instead that high-tech companies in the Austin region directly supplied about 9 percent of the area’s jobs in 2012 and accounted for roughly 21 percent of the region's economic output.

Then again, the report also says jobs in the tech sector plus spin-off jobs amounted to more than a third of the region’s total jobs, which strikes us as sufficient to make Obama's claim partly accurate. We rate it as Half True.

Our Sources

Email (excerpted) and telephone interview, Bobby Whithorne, assistant press secretary, The White House, May 14 and 16, 2013

Press release and report, "Austin Economic Study," Austin Technology Council, May 6, 2013

Emails (excerpted), Brian Kelsey, principal, Civic Analytics, May 14 and 15, 2013

Email, Jon Hockenyos, president, TXP, Inc., May 15, 2013

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Barack Obama says Austin's tech sector drives more than a quarter of local economy

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