Moving the Needle in Northeast Ohio’s High-Tech Sector
(Cleveland, Ohio) February 6, 2008—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 confirm 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 project 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: www.nortech.org.
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