Washington's Increasing Economic Role in the Tech Sector

by Keri Austin | Aug 17, 2022

According to the conclusions of Seattle’s High Peak Strategy Research and commissioned by the Washington Technology Industry Association, the IT industry has made “substantial and far-reaching contributions” to Washington’s economy and the state’s fight against COVID-19 (WTIA).

According to the research, the industry is the foundation of the state’s economy. The report updates an economic and fiscal impact assessment completed for WTIA in 2015. It demonstrates the state’s rising reliance on the Information and Communications Technology (ICT) industry. Much of that effect is concentrated on the Eastside, where huge corporations like Microsoft are headquartered. Others such as Amazon, Facebook, and Google have ambitious development ambitions.

According to an executive summary of the study, “the ICT sector creates considerable economic wealth across the state through both its sheer altitude and the multiplicative effects of tech industry purchases and tech worker household spending. The paper also discusses “the critical role of the technology sector in efforts to tackle COVID-19 and economic alleviation, as well as why it is critical to foster and promote the industry to stay internationally competitive.”

Among the executive summary’s findings:

In Washington state, the ICT industry employed 278,900 people last year. Since the Great Recession’s low point in 2009-10, the industry has nearly doubled, expanding 84 percent by 2019, generating 120,100 employment. Statewide employment in all other industries was 19%.

  • In 2020, IT employees earned 24% of all earnings earned in the state, up from 10% in 2007. ICT was responsible for 46 percent of all pay and compensation increases and 66 percent of net job growth between 2015 and 2020.
  • Despite the 2020-21 pandemic and global recession, ICT employment increased by 20,300 in 2020, virtually equal to the 21,800 added in 2019. In contrast, statewide employment is expected to fall by 180,800 jobs in 2020, or 5.3 percent, compared to a 78 percent increase in ICT.
  • With indirect and induced effects, ICT supported more than 1.2 million employment in Washington last year, with each tech job supporting four more across the state economy.
  • ICT paid about $415 million in business and occupation taxes and $829.4 million in sales and used taxes to the state in 2020. By contrast, the aircraft industry contributed $83.5 million. ICT paid 69 percent more in state business and occupation taxes in 2007 than in 2007, nearly double the pace of increase for Washington state generally during the same time.
  • Last year, ICT employees spent an estimated $35.5 billion on personal consumption in the state, generating more than $1 billion in state sales tax income, or more than 9% of the total.
  • The technology industry was crucial in supporting COVID-19 activities by providing digital infrastructure to help small businesses, collaborative research and open data, remote work solutions, and charitable activity. ICT’s COVID-fighting initiatives included testing, diagnosis, treatment, broad-based, eco-system-based assistance; digital solutions to help vaccination drives; and migrating tech enterprises to remote employment.
  • During the epidemic, technology also assisted many small companies in better connecting with clients, such as app-based technology platforms for restaurant meal delivery and digital marketplaces for small enterprises to process transactions online.
  • Online learning systems such as Zoom, WebEx, Microsoft Teams, Google Classroom, Canvas, Blackboard, and Proctorio have been developed by technology companies. Companies also supplied laptops, technical support, hotspots, and other services.
  • According to CBRE, the tech industry continues to drive growth in commercial leases, with the Seattle area ranking first in the United States for new commercial lease space in 2020.

The study warns that economic growth is inherently fragile. The executive summary says, “talent pools and relocation investments by major corporations have always been the driving force behind any IT center.” “Technology recruiting is no longer bound by region or relocation issues.” Companies in Washington are increasingly hiring people who live in other states.”

“To stay appealing to employers in an increasingly remote-work environment, we cannot rely simply on a higher education institution whose STEM programs cannot keep pace with demand,” it says. The public and commercial sectors must collaborate to invest in successful adult worker reskilling initiatives. Other states, such as Pennsylvania, Ohio, and Massachusetts, have already made such investments, implying that more positions produced in Washington will be filled by citizens of other states shortly.

In the long run, the state must join the private sector in attracting entrepreneurs and IT talent to live and work in Washington. The technology industry helped Washington state recover from the previous two recessions and remains one of the greatest employment and state income suppliers. The state must continue to nourish and nurture it to retain and develop the sector for the benefit of all people and provide avenues for Black, Indigenous, and People of Color (BIPOC) within it.

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