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‘High-Tech Concentration of State Economies’ Study Brings Mixed Results

The most recent edition of the National Science Foundation’s Science and Engineering Indicators presents some mixed results on the significance of high-tech companies and jobs in the U.S. economy. In 2003, 8.17 percent of all U.S. businesses were classified as high-tech, based on NAICS codes. By 2008, that share had risen to 8.52 percent. The increasing representation of high-tech companies in the economy was driven by a rate of high-tech business formation that kept growing year after year until 2008, when more high-tech businesses were eliminated than created.

During the same period, employment at high-tech businesses decreased as a share of total U.S. employment from 11.96 percent in 2003 to 11.47 percent in 2008. The discrepancy may indicate the impact of outsourcing during that period, which could decrease high-tech employment even as new businesses proliferated.

SSTI has assembled tables of the state data provided in the NSF report including high-tech business formationhigh-tech business establishments and high-tech employment and the proportion they represent in the state economy. These tables include the share of all companies and jobs that fall under high-tech NAICS codes. This data is also available on the NSF site, along with a tool for comparing various indicators among the states. Together, these indicators provide a way to compare the importance of high-tech economies in various states.

High-Tech Business Formation High-tech business formation in most states was adversely affected by the recession that began in 2008. That year, the U.S. lost 2,768 companies that were classified as high-tech. Thirty-one states lost more high-tech businesses than they created that year. Even in the 19 states that created new companies, the rate of company creation declined. Only Arkansas increased its growth rate over 2007. Only Colorado maintained a consistently high rate of high-tech company throughout the period from 2004 to 2008.

High-Tech Business Establishments Washington, D.C., has a higher percentage of high-tech companies than any other state. In 2008, 14.78 percent of D.C.s companies had high-tech NAICS codes. Delaware ranked second, followed by Colorado and Virginia. California and Florida had the greatest growth in total number of technology companies between 2003 and 2008.

High-Tech Employment Virginia, Washington and New Jersey have the highest percentage of jobs within high-tech industries. In Virginia, about 15.95 percent of all jobs fall under high-tech NAICS codes. Even there, the number of high-tech jobs fell in 2008 and decreased as a share of total employment. Texas, Virginia, Florida and Georgia posted the largest net gains in high-tech employment between 2003 and 2008.

View an index of NSF’s Science and Engineering Indicators 2011 and the State Data Tool at:

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