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Monday
Jan072013

While Some Cities Conquer Economic Issues with High Tech Masters Programs, Others Struggle. (Guest Post)

[Realitybase has posted about the grim job prospects for recent college graduates and the failure of a trained labor force to cause the creation of jobs. Education researcher Bree Hernandez brings some new numbers and subtlety to these issues in this guest post. According to Bree, jobs are growing in certain sectors and in certain places, but the shift is by no means universal. Bree most often compiles statistics on accredited graduate education for interested students, and has a comprehensive knowledge of higher education today.]

In recent years, analysts have noted a connection between universities that offer cutting-edge, technology-oriented academic programs and thriving economic activity within the surrounding community. Likewise, universities that emphasize traditional industries often correspond to cities that are not conducive to tech-savvy businesses and organizations.

A 2011 report published by the Brookings Institute highlighted the long-standing relationship between economic prosperity and technological innovation. According to a recent survey of 120 countries over a 26-year period, each broadband penetration increase of 10-percent contributed to a 1.3-percent increase in a country's GDP. Additional studies have shown a strong link between "telecommunication investment and economic growth," particularly during post-recession periods. Many of today's industrial sectors are heavily reliant on technology. Physicians and nurses use telemedicine to exchange ideas and information with one another, energy companies supply power using smart grids; and higher learning institutions allow students to enroll in e-courses, among other things. "Technology fosters innovation, creates jobs, and boosts long-term economic prosperity," the report states. "By improving communication and creating opportunities for data-sharing and collaboration, information technology represents an infrastructure issue as important as bridges, highways, dams, and buildings."

According to an April 2012 report by IBISWorld, the U.S. GDP is expected to increase annually by 3.3 percent over the next five years; comparatively, the GDP grew by an average of 0.6 percent between 2007 and 2012. Much of this projected growth is attributed to industrial sectors that are concentrated in the fields of science, technology, engineering and mathematics (or STEM). One burgeoning field is 3-D printing technology, which grew 8.8 percent between 2007 and 2012, and is expected to increase 14 percent over the next five years.

Online technology and social media is another sector expected to grow considerably between now and 2017; this is especially true of the social network game development sector, which grew 128 percent in the last decade and is projected to increase another 22 percent in the next five years. Other STEM-related fields with high projected growth include pharmaceutical manufacturing, green construction, and solar panel development/manufacturing.

In order to succeed in the tech sector, Forbes contributor Jacquelyn Smith urges college and graduate students to choose programs that correspond to fields with high levels of projected job growth. Computer science majors, for example, earn a median mid-level salary of $109,000, while the sector is expected to grow 22.3 percent over the next eight years. A similar field, information systems, awards a median mid-career wage of $95,000, and is expected to grow 23.3 percent between now and 2020. Other lucrative programs include electrical engineering, mathematics and physics. "In a technology driven world, the need for those who not only understand, but can improve upon technology is high," said Katie Bardaro, a lead economist for Payscale.

However, the college or university a student chooses to attend can be just as crucial as the major he or she chooses. Academic experts advise students to choose their campus based on the strength of the local tech sector. A July 2012 report by Simply Hired found that two established tech hubs – Seattle and Portland, Ore. – were among the best cities in which to find a job related to the field of technology. Other cities, such as Newark and Birmingham, Ala., were listed among the "worst cities to find a tech job," due to a low ratio of available technology positions to workers who are currently employed in that field. Not surprisingly, the local economies of these cities reflect the strength of their tech sector. The unemployment rates of Seattle and Portland average around 7.1 percent, while the averaged unemployment rate of Newark and Birmingham exceed 12 percent. Furthermore, businesses in Seattle generated taxable income worth $58.6 billion in 2011, while Portland's job market grew by more than 10,000 jobs between September 2011 and September 2012. Meanwhile, the Newark labor force has been in decline each month since July and the Birmingham job market has lost roughly 2,700 jobs over the previous year.

A recent report by Rick Mattoon highlights the role that colleges and universities play in local economic development and prosperity. He notes that academic institutions are often the catalyst for regional economic shift. In some cases, a local school is the genesis point for a form of technology that evolves into an emerging industry. Other times, academic research and development aid an existing industry and enable it to further expand. In recent years, the University of Washington has exemplified this latter point within the city of Seattle; cutting-edge technology and engineering programs have yielded graduates who are able to contribute to the existing local workforce, while software development and business management programs have allowed graduates to thrive within the city's expansive startup sector. In Newark and Birmingham, on the other hand, academic programs are more geared toward traditional industries because the respective local economies have such weak tech sectors.

In order to bolster the local economy through technological innovation, city officials should encourage colleges and universities under their jurisdiction to adopt cutting-edge tech programs. Not only will these programs yield skilled graduates who are able to productively contribute to the city's workforce, but these institutions can also aid local industries through research and development, as the University of Washington has done in Seattle. Technology is a standard of modern business – no longer a mere luxury – and the varying economic strength between American cities effectively reflects this shift.

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Reader Comments (2)

Thanks, Bree. I agree that a dearth of qualified workers can limit local (and national) business expansion, but I don't buy the suggestion that creating a surplus of qualified recent graduates can--by itself--stimulate growth. Sometimes, as your data and others show, you get more unemployment and falling wages or out-migration instead of an increase in appropriate jobs and higher wages. Skilled workers are necessary--but insufficient--for job growth.

Unfortunately, a shortage of talent in software and systems engineering and other fields is being met by well-trained guest workers. In a recent conversation with a systems manager for a large insurance company, I was told that they are meeting their employment needs almost exclusively with guest workers from India because the talent is adequate and the wages are low. Also, they observe that Americans have avoided training for this field because they saw a shortage of jobs and declining wages in the early 21st Century and assessed that other fields such as financial services offered more opportunities for employment and advancement. Perhaps Wall Street does not look so attractive now that mass layoffs are occurring, but there doesn't seem to be any limit to outsourcing and guest workers for information systems jobs. Others are reporting the same trends, for example here and here.

January 7, 2013 | Registered CommenterSkeptic

Except for the one general number for "jobs" in Portland, the author of this post gives no hard numbers about what her percentage figures actually mean in terms of jobs. For something to grow by 20% sounds good...unless that only means 100 new jobs. I am unclear about the significance of her statements.

January 9, 2013 | Unregistered Commenterchristine

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