The tech sector has made “extensive and far-reaching contributions” to Washington’s economy and the state’s fight against COVID-19, according to findings of a study conducted by Seattle’s High Peak Strategy and commissioned by the Washington Technology Industry Association (WTIA).
The report calls the sector a pillar of the state’s economy.
The study updates an economic and fiscal impact study done for WTIA in 2015 and illustrates the growing impact of the Information and Communications Technology (ICT) sector in the state.
Much of that impact is centered on the Eastside, where large companies like Microsoft are based, and others like Amazon, Facebook, and Google have significant growth plans.
The ICT sector “creates significant economic wealth and job creation across the state through both its sheer size and the multiplicative impacts of tech industry purchases and tech worker household spending,” according to an executive summary of the study that notes “the large and growing role of the tech sector as an economic driver for Washington state, including over the past two recessions.” The report also details what it calls “the essential role of the tech sector in efforts to combat COVID-19 and economic relief, and why it is important to nurture and cultivate the sector in order to remain globally competitive.”
Among findings in the study’s executive summary:
— The ICT sector last year directly employed 278,900 workers in Washington state. The sector nearly doubled from the low point of the Great Recession in 2009-10, growing 84 percent by 2019, adding 120,100 jobs. Statewide employment across all other sectors was 19 percent.
— Tech workers earned 24 percent of all wages earned statewide in 2020, up from 10 percent in 2007. Between 2015 and 2020, ICT was responsible for 46 percent of all wage and salary growth and 66 percent of net job growth.
— During the 2020-21 pandemic and global recession, ICT continued adding jobs, growing by 20,300 workers in 2020, nearly matching the 21,800 added in 2019. By contrast, statewide employment fell by 180,800 jobs in 2020, or 5.3 percent versus 7.8 percent growth for ICT.
— With indirect and induced impacts, more than 1.2 million jobs in Washington last year were traced to ICT, with each tech job associated with four others across the state economy.
— In 2020, ICT contributed nearly $415 million in business and occupation taxes and $829.4 million in sales and use taxes to the state. By comparison, the aerospace sector contributed $83.5 million. Adjusted for inflation, ICT paid 69 percent more in state business and occupation taxes than in 2007, almost double the rate of growth for Washington state overall during the same period.
— ICT workers spent an estimated $35.5 billion on personal consumption in the state last year, providing more than $1 billion in state sales tax revenues, or more than 9 percent of the statewide total.
— The tech sector played a critical role supporting efforts against COVID-19 with digital infrastructure to support small business, collaborative research and open data, remote work solutions, and philanthropic work. ICT’s COVID-fighting efforts included supporting testing, diagnostics, treatment, and broad-based, eco-system-based support; tech solutions to support vaccination drives; and tech firms transitioning to remote work.
— Tech also helped many small businesses better connect to customers during the pandemic, including app-based technology platforms for restaurant food deliveries and digital marketplaces for small businesses to transact sales online.
— Tech firms have provided solutions for online learning with tools including Zoom, WebEx, Microsoft Teams, Google Classroom, Canvas, Blackboard and Proctorio. Companies also provided laptops, tech support, hotspots, and more.
— The tech sector continues to drive growth in leases of commercial space, with the Seattle area in 2020 No. 1 in the U.S. for new commercial lease space, according to CBRE.
There’s an inherent fragility to that growth, the study cautions.
‘”… Talent pools and relocation investments by large companies have always been the driver behind every tech hub,” the executive summary concludes. “Recruiting by tech is no longer constrained by geography or relocation logistics. Companies in Washington are increasingly recruiting talent that permanently resides in other states.”
It continues, “For Washington to remain attractive to employers in an increasingly remote-work industry, we cannot rely solely on a higher education system whose STEM tracks cannot keep pace with demand. The public sector must join the private sector as investors in successful adult worker reskilling programs. … Other states like Pennsylvania, Ohio, and Massachusetts are already making those investments, which means in the near term, more jobs created in Washington will be filled by residents of other states. Longer term, the state must join the private sector in recruiting entrepreneurs and tech talent to live and work in Washington. … The tech sector helped rescue Washington state from the past two recessions and it remains one of the largest contributors of jobs and state revenue. The state must continue to find ways to cultivate and nurture this sector, as well as expand pathways for Black, Indigenous, and People of Color (BIPOC) into the sector, in order to retain and grow the sector for the benefit of all residents. “