Electronic Design

AeA Announces Job Growth Despite Decline In U.S. Competitiveness

Within a few days of each other, AeA (formerly the American Electronics Association) released two reports—one with good news and the other with bad news. The good news is that the United States’ high-tech industry followed 2005’s turnaround with continued growth in 2006. The bad news is that despite this growth, the U.S. is losing its ability to compete globally.

The AeA’s tenth anniversary Cyberstates report details job growth trends in high-tech employment, wages, and other key economic factors. Cyberstates 2007: A Complete State-by-State Overview of the High-Technology Industry covers all 50 states, the District of Columbia, and Puerto Rico—or 52 "cyberstates." And according to the report, the high-tech industry added nearly 150,000 net jobs for a total of 5.8 million jobs in the U.S. This growth is faster than the 87,400 jobs added in 2005, and these two years of growth represent an increase of 4%.

The Cyberstates report is based on U.S. Bureau of Labor Statistics (BLS) data, which is collected from all businesses in the U.S. as required by law for the state unemployment insurance program. The data on national employment, unemployment, and venture capital investments are for 2006. The national and state wage, payroll, and establishment data are for 2005, as well as state rankings and state employment data, as a result of a nine-month lag in the reporting of the data from BLS.

The average tech industry wage is 86% more than the average U.S. private sector wage. In fact, the average high-tech wage is at least 50% more than the average private sector wage in 48 cyberstates, and this differential is over 90% in 10 cyberstates.

"While we are encouraged by the pickup in tech employment, we are committed to the long-term health of the industry, the economy, and our nation," said AEA’s president and CEO, William T. Archey. "We have some serious challenges ahead. Companies of all sizes continue to have problems recruiting highly qualified and educated individuals to work for them, whether those individuals are foreign or domestic. This was reflected in the 2.5% unemployment rate for computer scientists and the below 2% unemployment rate for engineers in 2006."

The AeA attributes this problem to two factors. First, not enough American students are enrolling in and graduating from math, science, and engineering programs. Second, the U.S. high-skilled visa system is broken. Within two days of the start of taking applications this April, the U.S. government received 133,000 applications for 65,000 H-1B visas, which are reserved for high-skilled individuals, for jobs starting this October.

The high-tech manufacturing industry added 5100 net jobs in 2006. Software services and engineering and tech services employment were up in 2006 for the third year in a row, increasing by 88,500 jobs and 66,300 jobs, respectively. Only the communications services industry continues to struggle, losing 13,300 net jobs in 2006.

On a state-by-state basis, Cyberstates 2007 shows that tech employment gains occurred in 40 cyberstates in 2005, the most recent data available. The last year that so many states saw this much tech job growth was in 2000. While it is no surprise that California led the nation in net job creation, Florida saw the second largest gain, adding 10,900 tech jobs in 2005. This is the second year in a row that Florida was among the top five states by tech employment creation.

An examination of the 10 leading cyberstates by employment reveals that Florida was also the fastest growing state by rate of growth (+4.1%), followed by Virginia (+3.0%). Also, Virginia surpassed Colorado to lead the nation with the highest concentration of tech industry workers as a percentage of the private sector workforce (8.9%). Until now, Colorado had owned this distinction ever since AeA began publishing the Cyberstates report.

The report also found that after dropping slightly in 2005, venture capital investment in the technology industry rose by $285 million to $12.7 billion in 2006. High tech accounts for half of all venture capital investments in the nation. R&D expenditures by high-tech companies jumped by 22% in 2004, the most recent data available, totaling $70.6 billion, which is a record-breaking amount of R&D.

But what about the bad news? One of the organization’s Competitive Series of reports claims the U.S. is losing its competitive edge on the global stage. "As our case studies show, countries around the world are moving beyond economic reforms to invest in the factors that spawn innovation and propel nations to become global competitors," the report says. "While this is a net plus for the world, it is only a net plus for the United States if we maintain our competitiveness. But we are not. For example, South Korea has passed the United States in engineering bachelors degrees awarded. And we have slipped from 11th to 16th internationally in broadband diffusion."

Going further, "Thousands of technology jobs continue to go unfilled because not enough Americans possess the requisite skills. And on top of this, the United States continues to close our workforce safety valve: highly skilled and educated foreign nationals. These best and brightest do not come here and take American jobs; they create literally thousands of jobs by developing intellectual property, spawning innovation, and founding companies."

If the U.S. is truly losing its competitive edge in technology, which is probably true, why is there job growth? Is the growth at the low end of technology jobs? Is the growth production-oriented rather than R&D? Are the added jobs being taken by foreign nationals with H-1B visas? It would be interesting to ask the AeA why there may be a contradiction between the two reports. Or is it necessary to define which jobs are growing? Want more information?

This tenth edition of Cyberstates provides a comprehensive review of the high-tech industry nationally and state by state in terms of high-tech employment, wages, payroll, and establishments. Cyberstates also offers data on venture capital investments and R&D expenditures. A national and state-by-state analysis of the technology industry and international trade will appear in a forthcoming AeA report entitled Trade in the Cyberstates 2007: A State-by-State Overview of High-Tech Trade in the United States.

AeA members can purchase the report for $125; non-members for $250. Visit www.aeanet.org/cyberstates to purchase the report, or call 408-987-4200. The AeA’s Competitiveness Series is an array of concise, four-page reports that combine rigorous data with careful analysis to provide readers the information they need to assess an issue. To date, AeA has published 13 installments of the series and is continuing to add to this collection. Reports currently in preparation address issues such as e-health, international trade, and the rise of China. All reports can be downloaded for free at www.aeanet.org/cs.

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