U.S. High-Tech Industry Adds Jobs for Second Year in a Row, Report Says

The high-tech industry continued growing, adding nearly 150,000 net jobs for a total of 5.8 million in the United States, according to 10th anniversary Cyberstates report detailing US and state trends in high-tech employment, wages, and other keyeconomic factors. The report, Cyberstates 2007: A Complete State-by-State Overview of the High-Technology Industry, covers all 50 states, the District of Columbia, and Puerto Rico.

This growth is faster than the 87,400 jobs added in 2005, the report says. These two years of growth represent an increase of 4 percent, it adds.

The report is published by AeA, a trade association representing various segments of the high-tech industry.

The Cyberstates report is not based on survey data or extrapolations, but on U.S. Bureau of Labor Statistics (BLS) data, which is collected from all businesses in the United States as required by law for the state unemployment insurance program. The data on national employment, unemployment, and venture capital investments are for 2006. The national and state wage, payroll, and establishment data are for 2005, as well as state rankings and state employment data, as a result of a nine-month lag in the reporting of the data from BLS, AeA says.

"In the 10 years of publishing this report, we have always used a conservative definition of the high-tech industry," says William Archey, president and CEO of AeA. "We probably underestimate the size of the industry to a slight degree. Year after year, we have illustrated how critical the high-tech industry is to the nation and to each and everystate as it generates economic growth, innovation, and high paying jobs wherever it develops."

"We are pleased to see the rebounding of the tech industry," says Archey. "This is the second year in a row that tech industry employment has added jobs. Not only do these jobs make critical contributions to the U.S. economy, but they also pay extremely well. The average tech industry wage is 86 percent more than the average U.S. private sector wage. In fact, in 48 cyberstates the average high-tech wage is at least 50 percent more than the average private sector wage, and in 10 cyberstates this differential is over 90 percent."

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Does Silicon Valley Really Have 'It'?

Many observers have long claimed there is something special about Silicon Valley that promotes entrepreneurship. Are these claims true? Is Silicon Valley more entrepreneurial, and if so, is there a special "it" factor, or are the rates due to factors already known to produce entrepreneurs? A study released by the Office of Advocacy of the U.S. Small Business Administration answers these questions by showing that while high, Silicon Valley's entrepreneurship rates are not unique, although the factors that drive them may be.

"There appears to be something special about Silicon Valley," says Chad Moutray, chief economist for the U.S. Small Business Administration's Office of Advocacy. "Controlling for the factors we know contribute to entrepreneurship still doesn't explain what has happened in the Valley. While not the highest in the country, Silicon Valley's consistently high rates of entrepreneurship appear to bedriven by factors that have yet to be measured."

Entrepreneurship in Silicon Valley during the Boom and Bust, written by Robert Fairlie of the University of California Santa Cruz with funding from the Office of Advocacy, examines the reasons for the rates of entrepreneurship in the dot com boom and post-boom periods.

The study found that Silicon Valley's entrepreneurship rate, asmeasured by the Kauffman Index of Entrepreneurial Activity, was consistently higher than the national rate during the dot com boom of the late 1990s. However, several other metropolitan areas had higher rates of entrepreneurship during the same period.

The Silicon Valley rate rose in the post-boom period, suggesting thatthe tight labor market, high wages, and available stock options suppressed entrepreneurship. After controlling for factors such as education andnative/non-native birth, the Silicon Valley rate remained high, lending credence to the idea that Silicon Valley has a special, unmeasured factor that drives entrepreneurship.

The Office of Advocacy, the "small business watchdog" of the federal government, examines the role and status of small business in the economy and independently represents the views of small business to federal agencies, Congress, and the president. It is the source for small business statistics presented in user-friendly formats, and it funds research into small business issues.


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