Ian Hathaway is a Research Manager at the Bay Area Council Economic Institute in San Francisco.
Yesterday my colleagues and I at the Bay Area Council Economic Institute published a report detailing the importance of high-tech employment to the U.S. economy. It is the first of two studies aimed at providing a better understanding of job creation and business formation in America today—in particular the role that high-tech plays in the process. Part two will focus on the job creation dynamics of high-tech startups and will be released in a few months. Both reports are made possible by a generous contribution from our friends at Engine Advocacy.
Below is the executive summary of the report as well as some key graphics. We hope you’ll find it as interesting as we do. Enjoy.
This report analyzes patterns of high-technology employment and wages in the United States. It finds not only that high-tech jobs are a critical source of employment and income in the U.S. economy, but that growth in the high-tech sector has increasingly been occurring in regions that are economically and geographically diverse. This report also finds that the high-tech sector—defined here as the group of industries with very high shares of workers in the STEM fields of science, technology, engineering and math—is an important source of secondary job creation and local economic development. The key findings are as follows:
- Since the dot-com bust reached bottom in early 2004, employment growth in the high-tech sector has outpaced growth in the private sector as a whole by a ratio of three-to-one. High-tech sector employment has also been more resilient in the recent recession-and-recovery period and in the last year. The unemployment rate for the high-tech sector workforce has consistently been far below the rate for the nation as a whole, and recent wage growth has been stronger.
- Employment growth in STEM occupations has consistently been robust throughout the last decade, outpacing job gains across all occupations by a ratio of 27 to 1 between 2002 and 2011. When combined with very low unemployment and strong wage growth, this reflects the high demand for workers in these fields.
- Employment projections indicate that demand for high-tech workers will be stronger than for workers outside of high-tech at least through 2020. Employment in high-tech industries is projected to grow 16.2 percent between 2011 and 2020 and employment in STEM occupations is expected to increase by 13.9 percent. Employment growth for the nation as a whole is expected to be 13.3 percent during the same period.
- Workers in high-tech industries and STEM occupations earn a substantial wage premium of between 17 and 27 percent relative to workers in other fields, even after adjusting for factors outside of industry or occupation that affect wages (such as educational attainment, citizenship status, age, ethnicity and geography, among others).
- The growing income generated by the high-tech sector and the strong employment growth that supports it are important contributors to regional economic development. This is illustrated by the local multiplier, which estimates that the creation of one job in the high-tech sector of a region is associated with the creation of 4.3 additional jobs in the local goods and services economy of the same region in the long run. That is more than three times the local multiplier for manufacturing, which at 1.4, is still quite high.