Innovative U.S. Jobs, Startups Not Only a “Tech Center” Phenomenon

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The tech sector may be driving the economy where you least expect. Today, in collaboration with the Bay Area Council Economic Institute, or BACEI, Engine launches its first major research project, demonstrating the importance of technology and entrepreneurship across the American economy. We invite you to explore the data and see where innovation is happening

Engine is San Francisco-based and we hear from people in business and government alike that startups and technology are centered in Silicon Valley, where a small network of innovators, investors, and entrepreneurs build the “new economy.” But in Engine’s effort to connect policymakers to entrepreneurs, we have worked with startups located across the country ranging from Kansas to Georgia to Michigan.

Our work with BACEI aims to tell the whole story. Using data from the Bureau of Labor Statistics and the National Establishment Time Series Database, BACEI calculations show that tech jobs and startups aren’t isolated. In fact, as BACEI economist Ian Hathaway told us last week, growth “is not only a ‘tech center’ phenomenon.” Communities including Dayton, Ohio and Troy, Michigan, and Columbia, South Carolina have experienced growth in technology employment exceeding 10 percent in 2011.

What BACEI observed:

  • Since the dot-com bust, jobs in the high-tech sector have performed better than for the private sector as a whole. 
  • A minimum of 61% of counties had at least some high-tech jobs in 2011 -- data limitations prevent a truer and larger estimate because data are suppressed in sparsely populated counties to protect the identity of individual companies. Estimates for many counties are not available.
  • Metro areas with the fastest growing high-tech jobs are geographically and economically diverse.
  • In 2009, more than 72% of counties had at least one new business establishment in the high-tech sector.
  • High-tech startups have held relatively steady during the economic downturn, even while new business establishments across the entire private sector have declined.

Let’s unpack this a little bit. Based on Department of Labor definitions, technology industries are those that include a very high share of technical disciplines -- those in science, technology, engineering, and mathematics fields (STEM). If you’ve been following Engine, you’ll know STEM employees play a critical role in startups and technology and that the need for STEM professionals has led to calls for new legislation to bolster startups.

Second, our data visualization tracks jobs in the private sector. This means we’re looking at all the jobs at companies in technology industries, not just workers with these professional skills. These industries include computer hardware, software, systems design, and information; high-technology communications and electronics equipment; internet publishing and web search portals; data hosting and processing services; pharmaceutical and medical manufacturing; aerospace manufacturing; architecture and engineering services; and research and development services. We aim to show that technology doesn’t just create jobs for engineers and computer scientists, but managers, designers, salespeople, and executives as well.

Finally, the startup data we track reflects new business establishments -- first-year startups -- in the same technology industries. This includes businesses across the board, including sole proprietorships that are not captured by Labor Department or Census Bureau data. It’s a broad net and captures a comprehensive picture of tech startup growth.

Our research aims to think critically about how technology, the internet, and entrepreneurship shape our economy. The first step is to dispel a few misconceptions about the location of tech jobs. Going forward, the analysis will provide insight into labor trends and their impact on public policy.

We want consumers, entrepreneurs, and policymakers to dive into the data -- looking at their own backyard or at the national level -- to gain a better understanding of how technology influences jobs. We think you might be surprised.