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High tech is poised to lead recovery
By Don Brunell
As federal lawmakers scramble to create jobs in the face of record unemployment, Washington may have a hometown advantage: our high tech sector, specifically information technology or IT. That includes computers, software design and development, as well as the myriad manufacturing and service industries that support the IT sector.
According to a global study released earlier this month by the International Data Corporation, the IT sector is outperforming the rest of the global economy and could potentially lead a global recovery.
Commissioned by Microsoft, the study looked at the contribution of IT to gross domestic product job creation, employment, business formation and tax revenues in 52 countries that represent 98 percent of total worldwide IT spending.
Researchers found that IT spending is expected to grow at triple the rate of GDP growth in those 52 countries and create 5.8 million new jobs between now and 2013.
Their conclusions aren’t surprising when you think about it. Virtually everyone in the developed world has a computer, and few businesses can run without them. In addition, computer technology has become an integral part of our everyday lives. We use computers at work and at home. They guide the manufacture of everything from automobiles to lawn sprinklers to surgical equipment. Mechanics use computers to fix our cars, while surgeons use them to fix our bodies. And we can now watch movies on our computers and read computer files on our televisions.
What did the study say about the U.S.?
The IDC study found that IT spending in the United States will reach $488 billion in 2009 and will increase over the next several years at a rate almost five times faster than our national GDP.
Researchers predict that IT-related activities will generate $512 billion in much-needed tax revenue this year, and IT-related employment is expected to grow 1.6 percent each year through 2013, while overall employment is expected to shrink.
What’s more, the IDC study projects that the IT market will drive the creation of nearly 13,000 new businesses between now and 2013 — most of which will be small and locally-owned companies.
The study has special meaning for us in Washington state.
While most people know that The Boeing Company is a key player in our state’s economy, IT is a major force as well. The Washington Technology Industry Association represents more than 1,000 member companies with more than 100,000 employees in the state – most of them in the IT sector. According to state employment figures, the IT sector pays out $10.5 billion a year in salaries to more than 86,000 employees. These are good-paying jobs in careers fed by strong higher education programs.
So, what does that mean to us?
It means that if we are careful, we in Washington have the tools to emerge from this recession ahead of other states. But to maintain that advantage, we must ensure that our regulatory and tax policies support our existing IT sector and encourage its growth.
In addition, we should provide incentives for companies to manufacture the high-tech devices and equipment designed in our state. Ironically, state figures show that, while computer software and design are major employers here, the number of people in Washington employed in manufacturing the computers themselves is exactly zero.
The IDC study shows that there are opportunities, even in these tough economic times. We simply need to recognize them and act on them.
As Microsoft CEO Steve Ballmer observed, “Countries that foster innovation and invest in infrastructure, education and skills development for their citizens will have a major competitive advantage in the global marketplace.”
The same holds true for Washington state.
Don Brunell is the president of the Association of Washington Business.