Tech Hiring Creates Other Jobs
San Francisco Chronicle, December 6, 2012
by Benny Evangelista
Tech companies like Apple, Facebook and Google are creating well-paying jobs at a fast pace, but they also generate three times as many nontech jobs – from lawyers and school teachers to shuttle bus drivers and coffee shop baristas, according to a report released Thursday.
What's more, the Bay Area Council Economic Institute report found that high-tech companies cause the same ripple effect of job creation in communities throughout the United States, not just in Silicon Valley and San Francisco.
"These kinds of jobs pack a lot of punch," said institute economist and research manager Ian Hathaway, who wrote the report, "High-Tech Employment and Wages in the United States."
For every high-tech job created, another 4.3 jobs are created throughout the community, the report said. That "multiplier effect" is higher than other industries, such as traditional manufacturing plants, which create 1.4 indirect jobs for every direct job.
Money filters out
"The Googles and the Apples of the world are bringing tremendous wealth to this region, and that money is filtering its way throughout the entire economy," Hathaway said in an interview.
"Say I'm an engineer at Google. By the time I go out and pay for my housing and my taxi rides and my dinners, and by the time Google is done spending money on lawyers and shuttle drivers and cooks, that filters through to 4.3 jobs for every one (at Google)."
The findings of the report, commissioned by Engine Advocacy, a nonprofit San Francisco public policy group that represents entrepreneurs, startups and investors, are similar to a study by Enrico Moretti, a UC Berkeley economics professor.
Moretti, who published his findings in May in his book "The New Geography of Jobs," said he found that five jobs were created for every one new tech job over the course of 10 years. Both studies, Moretti said, should dispel misconceptions that the rise of high tech will shove older jobs aside.
"Lots of people who are not in high tech see the growth of tech as a threat rather than an opportunity," Moretti said. "They look at all this job creation and feel it's changing the nature of the city, like bringing all these young tech workers into the city. Although they cannot all work for Twitter or Yelp or Google, our jobs are indirectly dependent on that sector."
The Bay Area Council report relies on federal census and Bureau of Labor Statistics data, but defines high tech in a broader way by including traditional jobs that are related to tech, such as computer, medical and aerospace equipment manufacturing.
The report said the number of high-tech jobs nationwide grew 11.1 percent from 2004 – the depths of the dot.com bust – to 2011. That compares with a 3.7 percent increase overall in private-sector jobs during the same period.
Lower jobless rate
And even through the recession of the late 2000s, unemployment rates for tech workers remained far lower than for the overall workforce.
The study also defined a category of specialized, highly trained workers in the fields of science, technology, engineering and math. Jobs in that group grew at a rate 27 times faster than jobs in all occupations from 2002 to 2011, and are expected to increase by another 16.2 percent by 2020, the report said.
Salaries were also higher in tech, with workers earning 17 to 27 percent more than their nontech counterparts.
As expected, California, particularly the Bay Area, leads in high-tech jobs. In the San Jose-Sunnyvale-Santa Clara area, 28.8 percent of all jobs were in high tech last year, tops in the nation. That percentage was 12.2 percent in San Francisco-San Mateo-Redwood City, and 9.7 percent in Oakland-Fremont-Hayward.
But Hathaway said he was surprised to learn that Boulder, Colo., was second overall with 22.7 percent of its jobs in technology, and Huntsville, Ala., third at 22.4 percent.
Delaware led all states with a 12.8 percent gain in tech jobs from 2010 to 2011.
And in Greensboro, N.C., tech jobs increased 36.3 percent in the same period, the biggest gain of any city in the country.
Granted, that city started with a smaller base, so the increase was only 2,000 jobs, low compared to the 17,500 added in San Francisco during the same time.
But the numbers demonstrate that tech jobs are spreading to all parts of the country. About 98 percent of U.S. counties had at least one high-tech business last year, the report said.
That should be a signal for elected officials to focus on attracting more tech companies, the way they used to pay attention to luring automobile assembly plants and other big employers to their regions, said Mike McGeary, Engine Advocacy's founder and chief policy strategist.
"There's been a perception that what we're creating here is a have and have-not society, with all the wealth coming from selling companies for billions of dollars, and that there's no growth happening on the outside," he said.
But technology "is also growing a whole new economy that allows people to take advantage of the wealth, whether or not they are working for a tech company," he said.