The technology sector increasingly underpins the U.S. economy, with signs of its growth becoming more woven into local economies far outside iconic innovation hubs like Silicon Valley and New York.
Why it matters: A new district-by-district report out today from the Information Technology Industry Council makes the case that an economy infused with high-tech workers, startups and exports is a more resilient one, with higher wages and productivity.
What’s new: Drilling into the data by congressional district yields some surprising findings:
- The average congressional district now has about 400 high-tech startups employing around 3,400 workers.
- Texas and Florida are home to four times the number of high-tech startups as the average U.S. state.
- In Alabama, startups make up 16% of high-tech employment — the highest share in the country.
- In Vermont, high-tech manufacturing exports make up 5.5% of the state economy — the largest share in the country.
“There is demand for skilled STEM workers, there is demand for public R&D funding, and even for high-tech startups in states across the country — not just in states we hear so much about,” said ITI President and CEO Jason Oxman. “Companies are looking for opportunities to find good people in new geographies.”
Yes, but: Despite shoots of green sprouting up across the country, many districts are still struggling to find a solid foothold. And there’s concern that the COVID-19 pandemic will stunt some areas’ tech-related growth even more.
- For example, the Heartland region lags far behind coastal markets when it comes to attracting entrepreneurs and startups, according to a May report from Heartland Forward.
- This is where skilled workers are key: “Knowledge-intensive young firms have a higher probability of achieving middle-market status where they can generate rapid job gains for their communities,” per Heartland Forward.
The ITI data shows a strong correlation at the district level between employment in computer and math occupations and employment in science and engineering occupations — indicating that a density of high-skilled labor makes a region more attractive for skilled workers in other sectors.
- This can impact wages.
- In the median congressional district, average annual wages for high-tech workers in the median state were nearly $79,000. That’s more than double the median U.S. personal income, which is around $31,000 annually.
There’s a clear correlation at the congressional district level between the prevalence of high-tech and STEM workers and federal R&D funding, ITI’s data analysis found.
The catch: The decades-long slide in public R&D funding has accelerated since 2009, according to the Information Technology & Innovation Foundation, which analyzed the numbers last year.
- As of last summer, the federal government invests about $125 billion per year in R&D on everything from agriculture to manufacturing to energy. But that investment as a share of overall U.S. GDP has continued to decline. Meanwhile, countries including China have increased this spending.
By the numbers: In the last two fiscal years, 250 out of 435 congressional districts got at least $50 million in federal R&D funding.
- 14 states did not get any public R&D funding.
The bottom line: The tech economy isn’t a one-size-fits-all proposition, and regions should build on their strengths.
- Smaller markets have managed to capture pieces of the innovation infrastructure needed to drive high-tech ecosystems, but many have a long way to go.
- “It is really important for states and congressional districts to focus on what they’re good at and not try to be the next San Francisco,” Oxman said.