Summer 2008
New TA Report Demonstrates Growing Importance of Technology-based Industries to the Washington State Economy
At the 2008 State of Technology Luncheon, the Technology Alliance provided the audience with a sneak peek at findings from our new study of the economic impact of Washington’s technology-based industries. The report, released in June, examines in depth the level of employment, labor income, sales and tax revenues generated by our state’s innovative companies and institutions, and assesses our concentration of technology employment compared to the rest of the nation.
This year, recognizing that businesses in all sectors increasingly rely on innovation to be competitive, we raised the bar on what qualifies an industry as technology-based. The result?
Washington’s technology sector is larger and more diverse than ever, and making increasingly vital contributions to our statewide economic prosperity.
In our previous economic impact studies, we defined technology-based industries as those with at least 10% of employees engaged in research and development (R&D) occupations. After discovering a greater variety of industries today meet that threshold compared to years past – demonstrating the extent to which all sectors have been transformed by technology – the TA decided to revisit how we differentiate the industries that are truly fueling innovation. The current study includes those in which the proportion of workforce in R&D exceeds 14.6%, or twice the state average for all sectors.
In 2007, technology-based industries directly employed 343,371 people, representing 11.8% of total jobs in Washington and the fourth highest concentration of technology-based employment in the nation on a per capita basis. Through multiplier effects, technology-based industries supported more than 1.16 million jobs, or 40% of total covered employment in the state.
Altogether, Washington’s technology-based industries generated $112.6 billion in sales, $29.5 billion in labor income, and an estimated $1.06 billion in state business and occupation tax revenues last year. The cumulative impact of technology-based industry activity amounted to $205.3 billion in sales, $71.4 billion in labor income, and $5.7 billion in tax revenues across the Washington state economy.
High labor income is a key reason for these positive and far-reaching effects. Technology-based industries pay an average of $117,691 in salary and benefits per worker, which is 117% above the state average. Technology-based industries also outperform the rest of the economy in exports: Washington’s technology sector exported 80% of goods and services out-of-state in 2007, compared to an economy-wide average of 40%.
Washington is a leader in employment in industries classified as technology-intensive, meaning 30% or more of their workforce is engaged in R&D occupations. In this measure, Washington is second only to Virginia and one of only a handful of states boasting a very high concentration of heavily R&D-oriented sectors. Washington industries classified as technology-intensive include software publishing, with approximately 70% of in-state employees engaged in R&D; computer systems design, with 69%; Internet publishing, with 45%; and aerospace, with 37%. Altogether, industries meeting this higher threshold account for approximately two-thirds of technology-based employment in the state.
The TA examined the size distribution of establishments covered in the study and their share of total technology employment. The vast majority – 87% – of technology-based establishments in Washington employ fewer than 20 people. However, companies having a headcount of 1,000 or greater represent the largest share – 39% – of total technology-based employment in the state. The breakdown for Washington is consistent with that of the rest of the nation.
As in previous reports, the TA tracked the significant growth and diversification of private sector technology-based employment in Washington over the past several decades. While aerospace continues to represent the greatest share of overall technology employment, with more than 78,600 workers or 23% of the total, this represents a much smaller portion compared to 33 years ago, when it accounted for more than half of the entire private sector technology workforce in the state.
Industries such as software and other computer-related services, meanwhile, have significantly increased their share. Today, software is Washington’s second-largest technology-based industry in terms of headcount, with more than 47,200 employees or 14% of the total.
After highlighting the continuing vibrancy of Washington’s technology sector for the State of Technology Luncheon audience, Technology Alliance board chair Marty Smith sounded a note of caution about the state’s ability to build upon this success in the future.
“Clearly, our innovative industries are creating a lot of great jobs in a very competitive world economy,” observed Smith, “but who is going to fill these jobs?”
“Make no mistake: just as we had to raise the bar in how we think about what sets apart the technology sector from other businesses, we are really going to need to raise the bar in how we prepare our students for tomorrow’s economy.”
The economic impact study was prepared by William B. Beyers, professor of geography at University of Washington. Download the full report here.
Thank you to the following companies and organizations for their support of Technology Alliance research:
- AH&T Insurance
- Amgen
- Apex Learning, Inc.
- Battelle
- The Boeing Company
- Fred Hutchinson Cancer Research Center
- InfoSpace
- KPMG LLP
- Microsoft Corporation
- OVP Venture Partners
- Port of Seattle
- Trilogy Partnership
- University of Washington
- Washington State University
Information, Imagination, Ingenuity: Thank You to Our Speakers, Sponsors and Friends for a Successful 2008 State of Technology Luncheon!
On May 9th, more than 800 business, research and policy leaders from around the state gathered in Seattle for the Technology Alliance’s largest annual event, the State of Technology Luncheon. This year’s action-packed program featured a keynote conversation between TA board member Ed Lazowska and Internet pioneer Vint Cerf, opening remarks by Governor Chris Gregoire, a sneak peek at key findings of our new economic impact study, and a celebration of Alliance of Angels’ 10-year commitment to advancing entrepreneurial excellence.
TA chair Marty Smith punctuated his presentation on Washington’s growing technology-based economy by calling on audience members to express their support for increasing high school graduation requirements to better prepare students to succeed in higher education and 21st century careers. As a result, the TA delivered more than 400 postcards to the State Board of Education that call for increasing the minimum course-taking requirement in math, a key priority for the TA and our partners in the College & Work Ready Agenda.
Incoming TA board chair Jeremy Jaech recognized Dan Rosen for his stellar leadership of AoA, which he helped build into one of the nation’s most active angel investor organizations, while The Coffee Equipment Company took home the honors as AoA’s 2008 Company of the Year. All of us at the TA are grateful to the participants in this year’s luncheon program and to our sponsors and friends for your steadfast support of our mission to advance education, research and entrepreneurship in Washington.
View the luncheon program online, courtesy of TV-W, here!
Alliance of Angels Company of the Year Transforms the Cup of Coffee and Brews Entrepreneurial Success
The Coffee Equipment Company, founded in Seattle in 2004, married sophisticated product engineering with that quintessential daily ritual: the cup of coffee. Having achieved a nationwide market for its innovative Clover brewing system – and an attractive exit for investors – the Alliance of Angels’ 2008 Company of the Year is flying high.
New MBA Fellows to Share Their Talents and Learn the Secrets to Entrepreneurial Excellence
Alliance of Angels is pleased to welcome Jon Jacobson and Vandan Parikh, the University of Washington MBA candidates who will work side by side with AoA leadership, investors and entrepreneurs to support the growth of young, innovative companies in our state…and, in the process, advance their own growth as entrepreneurial leaders of the future.
It’s a Small World After All: Regional Leaders Explore Lessons of the Past, Possibilities for the Future at First-Ever International Benchmarking Conference
In early June, business, economic development and policy leaders representing eight dynamic metropolitan areas from around the globe joined Seattle for The Innovative Region, the first-ever conference of the International Regions Benchmarking Consortium.
Participants in the conference, which was initiated through a partnership involving the Technology Alliance, Puget Sound Regional Council and Trade Development Alliance, were treated to a keynote conversation with William H. Gates, Sr., who shared his perspectives on the factors that contributed to the growth of greater Seattle into a globally recognized center of innovation. Regional representatives also considered how to combine lessons of the past with lessons for the future, with a presentation by Microsoft’s Brad Smith for inspiration.
The Technology Alliance’s Discovery Series: the Breakfast of Champions!
Champions of ground-breaking research and game-changing innovation, that is. Satisfy your craving for science and technology with our exciting breakfast series showcasing innovation superstars from Washington’s preeminent research institutions and companies.
New for the 2008-2009 season: in addition to individual membership, we are offering a new category called Network Membership, which entitles your company or organization to send any four people to each breakfast. With programs in Seattle and Spokane, there’s no excuse for missing the most important meal of the day!
Important Dates
- September 12
- Seattle Discovery Series: Yoky Matsuoka, MacArthur Fellow and Associate Professor, Computer Science & Engineering/Neurobotics Laboratory, University of Washington
- 7:30 – 9:00 am
- Seattle
- September 18
- Technology Alliance Board Retreat
- 8:45 am - 3:00 pm
- Bainbridge Island
- October 10
- Seattle Discovery Series: Colleen Delaney, Clinical Research Division, Fred Hutchinson Cancer Research Center
- 7:30 – 9:00 am
- Seattle
- October 17
- Spokane Discovery Series: Kevin Cable, Executive Vice President & Founder, Cascadia Capital
- 7:30 – 9:00 am
- Spokane
