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Traditional Tech States Maintain Dominance
California, Texas and New York continue to lead the nation in high-tech employment, as the industry continues to surge nationally, with a workforce topping 5 million in 1999, according to a new study by the American Electronics Association (AEA).
AEA's fourth CyberStates study finds that California continues to have the largest technology workforce with 835,000 workers in 1998, more than twice the number of Texas tech workers at 410,955. New York has 328,782 technology workers, while Illinois and Massachusetts round out the top five with workforces of 217,617 and 216,654, respectively.
"Today's U.S. high-tech industry is not only invigorating and sustaining the American economy but that of most states as well," said AEA President William Archey in a statement.
Colorado edged out New Hampshire, and now boasts the most highly concentrated technology workforce, with 84 high-tech workers per 1,000 private sector workers in 1998. New Hampshire comes in second with 83 tech workers per 1,000, and Massachusetts ranks third with 79 per 1,000. California and Virginia complete the top-five list with 70 and 64 tech workers per 1,000, respectively.
For the first time, AEA also looked at venture capital and research and development investments in each state, as another measure of tech industry growth.
Only the construction and financial services industries employed more people in 1999, with 6.2 million workers in construction and 5.9 million in financial services. Auto manufacturing and the services industry employed 2.6 workers and the chemical industry employed 1 million workers.
California received nearly half of all U.S. venture capital investment, with $16.9 billion in 1999. Massachusetts attracted $3.7 billion, New York, $1.9 billion, Texas $1.5 billion, and Colorado, $1.3 billion. The figures represent all venture capital investments and are not limited to technology, since, AEA says, all capital investments help fuel new start-up companies that benefit the states' economies.
High-tech venture capital, though, still far exceeds investments in other business sectors, according to the AEA study. In 1999, high-tech venture capital totaled $20 billion, while investments in business services was $5 billion, investment in retailing was $4 billion and $2 billion was put into financial services.
Earlier this month, Gov. Michael Leavitt, R-UT, issued a new National Governors' Association study focusing on how state policymakers could attract new business and venture capital to their states. The study recommends that states expand their knowledge of seed and venture investing, promote the visibility of local entrepreneurs and investors, create investment capital for specific industry sectors and create investment capital to start a venture capital industry.
While California leads the nation in R&D, with $42 billion spent on research in 1997, the District of Columbia, with its proximity to federal government agencies, has the highest concentration of R&D spending. That concentration of $5,200 in R&D per capita in 1997 is a leading factor in attracting high-tech businesses to Maryland and Virginia, AEA says.
Leavitt, Kirk Take Their Internet Tax Tales To Washington Utah Gov.
Michael Leavitt, R, and Dallas Mayor Ron Kirk, two outspoken members of the Advisory Commission on Electronic Commerce, spread the word in Washington this week that federal policymakers need to be mindful of state and local government tax bases when considering Internet tax policy.
"It will be politics of the old style between federal and state governments," Leavitt said at a Bureau of National Affairs conference on Internet taxes.
Leavitt said that since the current three-year moratorium on Internet taxes doesn't expire until October 2001, Congress should not be in such a rush to extend it without addressing the issue of how state and local sales taxes could or should be applied to the sale of online goods and services.
"The moratorium lasts for another 18 months, so it's not like we're in a rush to extend it," said Leavitt, who added he could support a two-year extension. "If it were to be extended, there would be value in having something in there to solve the problem itself. I'm anxious to have discussions to extend the moratorium and solve the problem."
The House last week voted to extend the current moratorium for five years, but divisions among Senate Commerce Committee members make it unlikely that that other chamber will act quickly on the issue.
Kirk, who addressed the House Judiciary Commercial and Administrative Law Subcommittee Wednesday, said that if the local sales tax issue is not addressed, Internet sales could erode their tax base and force them to reduce essential services, such as police and fire protection.
"It would result in a serious erosion in the goods and services we provide," he said. "The fact that we are not now facing a diminution of sales tax does not take into account the consideration of the future. It's inescapable that those losses will occur."
While the House has a handful of bills that address both business and state and local concerns about the sales tax system and the Internet, Subcommittee Chairman George Gekas, R-PA, didn't expect any immediate action on the issue. He added that states' rights would be considered in any plan forwarded by his panel.
"I don't see any thing we've done or will do to impinge on states' rights," he said. "This is a giant step in trying to sort out the complexities of the Internet problem."
The House GOP leadership has been rushing through a package of three Internet-related tax bills this month to show their commitment to the high-tech industry and tax cuts. Last week, the House passed a five-year extension of the current three-year Internet tax moratorium. This week, the House approved a plan that would prohibit the Federal Communications Commission from applying access fees on Internet service providers, and on Wednesday, the House Ways and Means Committee approved a repeal of the federal 3 percent telephone excise tax.
- by Rebecca Weiner
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