How Did We Do That?

We’ve all heard “high tech” jobs pay well and are the inner ring of economic development targets.  Where is high tech Nirvana?  Silicon Valley, once called the Santa Clara Valley, home to San Jose California and surrounding communities.  The crown jewel:  Stanford University.  But what other communities are attracting these bull’s-eye jobs, and why?

A recent article in The New Yorker magazine cites a study that adds an interesting Utah angle to this question.  The study was done by Mark Muro and his team at Brookings.  They identified what they called “advanced industries” with two simple criteria:

The industry’s Research and Development spending must be in the 80th percentile or higher of all industries, and must be at least $450 per worker.

The share of “high STEM knowledge” workers in the industry must be at least 21 percent.

This criteria generated 50 advanced industries, all investing heavily in technology and employing lots of skilled technical workers.  The list of industries includes some that wouldn’t leap immediately to mind, like Metal Ore Mining and Clay Products.  But it also includes the usual suspects like Semiconductors and Data Processing.   Brookings observed: “Modest in size, the sector packs a massive economic punch”.  They employ nine percent of the US workforce but produce 17 percent of our GNP.

Where are these advanced industries primarily located, and what can we learn from them?  If you guessed Seattle is number two, you’d be right.  Here’s the result The New Yorker finds “surprising and instructive”:  Salt Lake City, Ogden and Provo are all in the top fifteen.  How did we do that?  And how can we do more of it?

After the hackneyed and obligatory caveat about how Utah’s characteristics are shaped by religion (“a certain cultural knack for salesmanship and entrepreneurship among Mormons”) the article points to Utah’s technology elder statesman, Novell, as the seed for the technology flowering we are now experiencing.  Nurturing factors include favorable tax policy, affordable real estate, well educated and available workforce, foreign language skills, and vibrant, nearby major universities.  The wisdom of the Burger King site selection team is “go to lunch at McDonalds and look out the window for a real estate sign”.  Burger joints beget more burger joints and Novell begets more technology firms.  Still, the garden must be tended.

What tools would Brookings say are available to the gardener?  Government should create an environment that provides for expansion of research and development, as well as the availability of capital.  Improve the pipeline of STEM workers through the educational system.  Build collaborative efforts to encourage the natural clustering of advanced industries.  If high R&D budgets plus a bunch of STEM graduates equal an economic juggernaut, add more of both.

The Wasatch Front has a head start, momentum and fertile soil.  Hopefully we also have the wisdom to plant further seeds.

The New Yorker magazine article contains a sprinkling of factual errors, but it’s still a good read.  Find it here.

The Brookings website provides a well-written abstract of the study.  Find it here.

Download the 88 page study here.  Fascinating.

 

Steve Pluim

Steve Pluim is the president of TalentTeam, a Salt Lake City based staffing and recruiting firm.

Steve can be reached by email at steve.pluim@talentteam.com

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