NorTech, Northeast Ohio’s leading technology-based economic development organization, today released a report that analyzes growth in the region’s high tech sector. The report entitled, “The High Tech Sector in Northeast Ohio: 2007 Update“, focuses on identifying and monitoring emerging trends in Northeast Ohio’s high tech sector between 2004 and 2006. The report was commissioned by NorTech and prepared by the Center for Economic Development at Cleveland State University’s Maxine Goodman Levin College of Urban Affairs. The 2007 Update builds on the Baseline Report, published in February 2007 that analyzed trends between 2000 and 2005.
The report identifies important strengths in Northeast Ohio’s high tech sector, as compared to the Midwest region and the U.S., from three main perspectives– high-tech industries, high-tech occupations, and research and development activity. Overall, major findings from the report indicate that the high-tech sector in Northeast Ohio began to experience some gains between 2004 and 2006 after several years of decline. While these gains have helped to move the needle for Northeast Ohio’s high tech economy, significant work lies ahead to achieve a more sustainable technology economy in Northeast Ohio, comparable with other regions in the Midwest and U.S.
Between 2004 and 2006 Northeast Ohio’s high-tech industries experienced growth (1.1%), but at a slower rate than the Midwest (2.3%) and the U.S. (3.7%), and although Northeast Ohio’s share of employees in high-tech industries is lower than in the Midwest and the U.S., the gap is narrowing.
Within the high-tech sector, three technology groups gained employment between 2004 and 2006: Science and Engineering, (over 2,500 jobs), Advanced Manufacturing (nearly 400 jobs), and Bio Science (nearly 300 jobs). When compared to the Midwest and the nation, the region has a larger concentration of workers in the Architecture and Engineering cluster.
In addition, the average wage for Northeast Ohio’s high-tech industries ($67,670) was 77 percent higher than the average wage of all industries ($38,300). Average wages in Northeast Ohio’s high-tech sector and the remainder of the economy were lower than average wages in the Midwest and U.S. However the wage gap between Northeast Ohio and the U.S. was much higher in the high-tech sector.
In 2006, the Gross Regional Product (GRP) for all high-tech industries in Northeast Ohio totaled almost $23 billion, accounting for 13 percent of the total economy. This is higher than the share of high-tech employment (8.2%). GRP in Northeast Ohio’s high-tech industries increased between 2000 and 2006 in contrast to declining high-tech employment.
Also in 2006, approximately 61,000 workers in Northeast Ohio’s metropolitan areas were employed in high-tech occupations, an increase of 4.8 percent from the previous year; however, the share of total employment is still lower in the region than across the Midwest and the nation. The region’s industry mix is reflected in the distribution of high-tech workers across occupational clusters.
“The report findings are encouraging and show improvement, but it’s important for Northeast Ohio to build and leverage its progress to take our regional high-tech economy to the next level. Northeast Ohio’s deeper employment losses and slower economic recovery between 2000 and 2005 confirms that our regional economy’s transformation has taken a large toll on both our traditional and technology sectors. However, based on the technology activity NorTech is witnessing, along with significant state and venture investments, we are very optimistic about Northeast Ohio’s high-tech future,” said Dorothy Baunach, president and chief executive officer of NorTech.
Another major finding of the report relates to technology research and development activity. Academic R&D expenditures in Northeast Ohio increased 42 percent between 2000 and 2005, higher than the Midwest (33%) and the U.S. (34%). Although Northeast Ohio experienced solid growth in both industry and academic R&D, Northeast Ohio significantly lags the state, the Midwest, and the U.S. in R&D when examined in relation to employment levels (calculated as R&D dollars per employee to reflect the relative size of these economies).
“Although R&D has been growing in Northeast Ohio, levels of university and industry R&D per employee are still low relative to the U.S. Since R&D and skilled workforce have been shown to be associated with regional economic growth, the region needs to increase support and stimulate more research activities as well as offer competitive wages to employees in high-tech industries in order to attract and retain the best employees in these industries. Hopefully regional civic leaders and policy makers will focus their efforts and attention on these issues,” said Ziona Austrian, Ph.D., director of the Center for Economic Development at Cleveland State’s Levin College of Urban Affairs.
The Cleveland State research team used a definition of high tech industries and occupations developed by Daniel Hecker, an economist at the U.S. Bureau of Labor Statistics. This definition was used to study Northeast Ohio’s 21-county area consisting of six metropolitan regions (Cleveland-Elyria-Mentor, Akron, Canton-Massillon, Mansfield, Sandusky, and Youngstown-Warren-Boardman) and eight non-metropolitan counties.
The report complements the Dashboard of Economic Indicators project initiated and funded by the Fund for Our Economic Future. This study focuses only on the high tech sector, while the Dashboard addresses all sectors of the economy. Because of the more narrow focus, it is possible to include an in-depth analysis of the individual industries that comprise the high tech sector. In addition, this study expands the geographic scope of the analysis to 21 counties in Northeast Ohio instead of the Dashboard’s 16 county reach.
NorTech will continue to have the report updated on an annual basis and use the findings as one method of measuring technology-based economic development in Northeast Ohio over the coming years. Updates will also be used to inform strategic planning efforts, educate policy makers and inform funding sources.
The complete report can be found at: http://www.nortech.org/Docs/CSU%20High%20Tech%20Study%20Feb.%202007.pdf and http://urban.csuohio.edu/economicdevelopment/publications.shtml
For additional information about this study, please call Dorothy Baunach at 216-363-6883, Dr. Ziona Austrian at 216-687-3988 or Jill Taylor at 216-687-2248
NorTech:
NorTech, the Northeast Ohio Technology Coalition, is a technology-based economic development organization and catalyst for making Northeast Ohio a global leader in technology, innovation, and entrepreneurship. NorTech works closely with regional technology leaders to build a globally-competitive, innovation driven, technology economy by: Leading technology projects that have an impact on the region’s innovation infrastructure; Linking together regional technology leaders and innovation assets to spur collaboration and commercialization; and Leveraging public and private investments to revitalize Northeast Ohio’s economy. http://www.nortech.org/
Center for Economic Development (CED) at Cleveland State University’s Maxine Goodman Levin College of Urban Affairs:
The Center for Economic Development encompasses research and technical assistance activities aimed at furthering the development potential of the Cleveland region and Ohio. It concentrates on economic impact analyses, industry clusters, economic indicators, and investigating innovation and entrepreneurship. The CED is one of 12 research centers within the College that provide applied research, technical assistance, and training to public officials, community leaders, and the private sector with the objective of enhancing the quality of life in urban communities.
The Maxine Goodman Levin College of Urban Affairs is ranked among the top eight schools of urban affairs in the United States. The College is ranked second in the graduate specialty of city management and urban policy in U.S. News and World Report’s 1998, 2002 and 2005 issues of “America’s Best Graduate Schools.” The College offers 12 degree programs: bachelor’s, master’s, Ph.D. and dual degree programs that provide the opportunity to earn the Juris Doctor (JD) with a Master’s in Public Administration (JD/MPA) a Master’s in Urban Planning, Design, and Development (JD/MUPDD), or a JD/Master of Arts in Environmental Studies. The College is also home to Economic Development Quarterly (EDQ), the leading journal in the field of economic development. http://urban.csuohio.edu/economicdevelopment/index.shtml
The Dashboard (Produced by the Fund for Our Economic Future)
The Fund For Our Economic Future publishes The Dashboard of Economic Indicators, an annual study of the Northeast Ohio economy that mathematically analyzes economic data based on nine key factors of regional economic growth. The Dashboard Indicators for the Northeast Ohio Economy establishes statistical correlations between economic growth in per capita income, employment, productivity and output. The Dashboard Indicators are based on statistical analysis, not on anyone’s agenda or preconceived ideas. The study allows public policy makers, business people, civic organizations and the general public for the first time to see beneath the surface of an economy and to understand the full range of factors figuring in a region’s economic performance. The study will be used to guide policy makers when developing targeted programs for addressing specific factors of the economy and to track the effect of such programming. For organizations working together toward economic development across the region, the Dashboard provides a common point of reference. http://www.futurefundneo.org/