California Leads Way In Tech Industry
California continues to employ far more technology workers, pay higher wages and attract more venture capital than any other state. But the overall U.S. tech sector is also growing at a surprisingly brisk clip — for now.
That's the conclusion of a highly anticipated annual report by AeA, formerly the American Electronics Association, the country's largest technology trade association. Researchers relied on data from the U.S. Bureau of Labor Statistics, mostly from 2006.
According to the 2007 "Cyberstates" report, to be published Tuesday, the U.S. tech industry employed 5.8 million people last year — up 2.6 percent from 2005. The industry gained nearly 147,000 positions in 2006, compared with 87,400 jobs added in 2005.
The strongest subcategory of technology in the 10th annual AeA report was software, which employed more than 1.5 million people and created 88,500 new jobs last year.
The average technology worker nationwide earns $75,500. That's short of the $78,691 average income in 2000, the peak of the dot-com boom. But it's 86 percent more than the average private sector wage of $40,500.
The federal data that AeA uses define tech workers broadly, including engineers, computer programmers, technology executives, many scientists and academics. Also counted are administrative assistants, salespeople, human resources employees and other non-technical people who happen to work at tech companies, from Google Inc. to obscure startups.
However, researchers do not count contract workers, including janitors and landscapers who work for independent agencies hired by bigger technology companies.
Despite two straight years of job creation and salary gains, William T. Archey, President and CEO of Washington, D.C.-based AeA, warned that trouble lurks behind the rosy facade.
The unemployment rate for computer scientists last year was 2.5 percent, and for electrical engineers it was 1.9 percent. The low rates signal a dramatic worker shortage that will prompt more U.S. companies to open offices abroad.
"This is called full employment, folks," Archey said. "Our own kids are not going into math and science, and we can't hire foreigners like we did for the 50 years before 2001. This could be a disaster."
Archey and other tech executives are urging Congress to make it easier for U.S. companies to hire highly skilled foreign workers under the so-called H-1B visa system.
Earlier this month, the U.S. Citizenship and Immigration Services reached its 65,000 limit for 2008 H-1B petitions in a single day and would not accept any more, to the dismay of tech companies.
Tech executives are also backing a federal bill moving through the Senate seeking more math and science teachers in poor schools.
A recent federal study found 40 percent of high school seniors failed to perform at the basic level on a national math test. On a national science test, half of 12th-graders didn't show basic skills.
"Our big tech companies would like a lot of their employees to be here, but policies and the education system say to them, 'Don't do it,"' said Archey, whose members include tech blue chips such as Intel Corp. and IBM Corp., and hundreds of startups and mid-sized businesses from Boston to Silicon Valley.
On the positive side, the newest report concluded that the upswing wasn't limited to any region; tech companies created new jobs in 40 states.
California added 14,400 tech jobs and employed 919,300 tech workers last year, more than double No. 2 Texas and more than triple No. 3 New York. California's tech workers were the highest paid nationwide, averaging $95,300 — 109 percent above the states average private sector wage.
California also led the nation in venture capital. VC investments statewide increased 14 percent to $12.2 billion in 2006. California — home to Silicon Valley and a growing number of biotechnology companies in and around San Diego — got 48 percent of all venture capital in the country last year.
The state with the fastest rate of tech job growth was Florida, where the sector employed 276,400 people — mostly at software companies spread from Tallahassee to Miami.
"It's diffused and there's no identity to go along with it — you don't think of Florida as a high-tech state," Archey said. "I keep thinking the Florida Chamber of Commerce needs to get its act together and start promoting this."