Technology Works for Startups and Our Economy


We are proud to announce the launch of Technology Works today, a study demonstrating the pervasive and important growth of the tech workforce across the United States. Engine is committed to tracking the close connection between innovation and entrepreneurship. This new research, which we commissioned from the Bay Area Council Economic Institute, demonstrates the connection between high tech employment and overall economic prosperity.

Today’s study is an expansion on the data visualization we launched during the party nominating conventions that illustrates the geographically diverse nature of technology hubs in the U.S.

More than ever, startups harness technology to achieve their goals. This means hiring more people with skills in the science, technology, engineering, and mathematics (STEM) fields, the definitive factor in the Bureau of Labor Statistics’ defintion of high tech industries. Tech-focused startups tend to start small and grow rapidly, becoming the drivers of overall employment.

It’s easy to highlight startup success stories: Google, Facebook, Pandora, Twitter, and Yelp are just a few of the relatively young, tech-based companies that employ thousands of workers. As we better understand the multiplicative effects of hiring at these companies -- and the startups that will follow in their footsteps -- the case for supporting innovative entrepreneurs becomes apparent.

Communities experience significant benefits from high tech employment. We are able to estimate that the creation of one high tech job accounts for the creation of 4.3 other jobs in a local economy. How does that work? Technology workers tend to earn more than their peers in other industries, which they put back into the local economy by consuming goods and services. Tech companies companies also rely on local services and vendors, further driving local benefits.

So while many Americans may never work for a company like Google or a technology-focused startup, they still benefit from the impact these jobs have in communities around the country. About two-thirds of the U.S. labor force works in local services, ranging from healthcare to legal services to restaurants. As Enrico Moretti, Professor of Economics at the University of California, Berkeley, said about the study, “the dynamism of the US high tech companies matters not just to scientists, software engineers, and stockholders, but to the community at large.”

Our research with BACEI makes it clear that the economy increasingly depends on innovation. Explosive job growth isn’t likely to come from the established internet giants. It will bloom from driven entrepreneurs making the most of the technologies at their fingertips. Engine is committed to continuing analyses of startups’ impact on the economy and we’re planning further compelling research in the near future.