Industry Market Trends

U.S. High-Tech Industry Adds Jobs

Apr 30, 2007

The high-tech industry continued to grow in 2006, adding nearly 150,000 net jobs for a total of 5.8 million in the United States, according to the American Electronics Association and based on U.S. Bureau of Labor Statistics data. This growth is faster than the 87,400 jobs added in 2005. The high-tech manufacturing industry alone added 5,100 net jobs. Here are some highlights and key challenges.

The high-tech industry in general continued its growth in 2006, adding 150,000 jobs for a total of 5.8 million in the United States, according to American Electronics Association (AeA), the nation's largest trade association representing all segments of the high-tech industry.

According to the association's 10th anniversary Cyberstates report, Cyberstates 2007: A Complete State-by-State Overview of the High-Technology Industry, this growth is faster than the 87,400 jobs added in 2005. Moreover, these two years of growth represent an increase of 4 percent.

The high-tech manufacturing industry alone added 5,100 net jobs.

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.

Some of the report's highlighted trends:

• Tech employment was up in 2006 by nearly 147,000 or by 3 percent.

• This is on top of the growth of 87,000 tech jobs added in 2005.

• U.S. high-tech employment totaled 5.8 million in 2006.

• High-tech manufacturing employment rose by 0.4 percent, gaining 5,100 jobs between 2005 and 2006.

• Five of the nine tech manufacturing sectors gained jobs in 2006; four of the sectors lost.

• The software services industry added 88,500 jobs, up for the third year in a row.

• The engineering and tech services industry added 66,300 jobs in 2006, putting it at an all-time high.

• The semiconductor industry grew significantly in 2006, gaining 10,900 jobs.

• Only the communications services industry continued to shed jobs last year, losing 13,300 net jobs in 2006, compared with a loss of 37,200 in 2005.

• The unemployment rate for electrical engineers was 1.9 percent in 2006 and, for computer and math occupations, 2.5 percent.

• The tech industry paid an annual average wage of $75,500 in 2005, 86 percent more than the average private sector wage of $40,500.

• California led the nation in net job creation, adding 14,4000 jobs, with Florida seeing the second largest gain, adding 10,900 tech jobs in 2005.

• The leading states by high-tech employment in 2005 (most recent data available at the state level) were California (919,300), Texas (445,800), New York (299,900), Florida (276,400) and Virginia (261,000).

• For the second year in a row, Florida and Virginia were two of the fastest-growing tech states. Florida was the second fastest-growing state with a net increase of 10,900 jobs, and Virginia was fourth with a net increase of 7,700 in 2005.

• Virginia surpassed Colorado to lead the nation in concentration of high-tech workers in 2005, with 89 high-tech workers per 1,000 private sector workers. Until now, Colorado had owned this distinction since AeA started the Cyberstates report in 1997.

"This is the second year in a row that tech industry employment has added jobs," AeA President and CEO William T. Archey said in an announcement of the new report. "Not only do these jobs make critical contributions to the U.S. economy, but they also pay extremely well. The average tech industry wage is 86 percent more than the average U.S. private sector wage. In fact, in 48 cyberstates the average high-tech wage is at least 50 percent more than the average private sector wage, and in 10 cyberstates this differential is over 90 percent."

However, Archey warns that there are serious challenges ahead, saying:

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 percent unemployment rate for computer scientists and the below 2 percent unemployment rate for engineers in 2006.

The problem, he says, is twofold: 1) the lack of American kids enrolling in and graduating from math, science and engineering programs and 2) a U.S. high-skilled visa system that is broken.

This April, within two days of the start of taking applications, the U.S. government received 133,000 applications for 65,000 H-1B visas — those visas reserved for high-skilled individuals. "And this is for jobs starting in October of 2007," notes Archery.

Do you see high-tech jobs continuing to grow through 2007? What impact will H-1B visas and fewer young people interested in math, science and engineering have on potential for growth in the industry?