The Multiplier Factor of High-Tech Jobs
My research shows that for each additional job in a high-tech company in a local community, you create about five additional jobs outside high-tech in that community.
Enrico Moretti is Professor of Economics at the University of California,Berkeley where he holds the Michael Peevey and Donald Vial Career Development Chair in Labor Economics. He is the Director of the Urbanization Program at the International Growth Centre (London School of Economics) and Visiting Scholar at the Federal Reserve Bank of San Francisco. He is also Research Associate at the National Bureau of Economic Research (Cambridge) and Research Fellow at the Centre for Economic Policy Research (London) and the Institute for the Study of Labor (Bonn). His research interests include Labor Economics, Urban Economics and Regional Economics. His new book, The New Geography of Jobs, is available in bookstores.
The growth and the rise of jobs in the innovation sector matters to all of us whether we work in the innovation sector or we don’t work in the innovation sector. And the reason is that every time a local community is able to attract an innovation – and innovative employer, like a high tech employer or some other type of employer that generates innovation, he gains not just the jobs, not just the employees of that employer, but it gains many more jobs in the local service sectors that are supported by the jobs in the high-tech employer. It’s called the multiplier factor.
My research shows that for each additional job in a high tech company in a local community, you create about five additional jobs outside high-tech in that community. Jobs like, taxi drivers, hairdressers, waiters, baristas or doctors, lawyers, nurses.
Take Apple, for example. Apple has 30,000 workers in Cupertino, okay, but it indirectly supports 70,000 workers outside iTech in the metro area around Cupertino. So, remarkably, the most important effect that Apple has on the local labor force is not in high tech, it’s outside high tech. And these jobs are a mix of jobs for people with a lot of education, like the doctors and lawyers and nurses and teachers, as well as those with less education, the waiters, and the taxi drivers and the hairdressers.
So remarkably, from the point of view of a city, if you’re trying to generate jobs for the least fortunate of your residents, those who might have a high school degree at most, the best thing you can do today is to attract a high tech employer that hires a lot of highly educated employees. That’s the best way to generate local job growth.
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