Triple Play for New York City's Tech Ecosystem as it Generates Jobs, Increases Spending and Tax Revenue

By Joe Rizzo April 03, 2014

Ever since the Industrial Revolution, the economy has been tied into new and evolving technologies and how they affect certain industries. When the automobile because the mode of transportation instead of horse and carriage, it led to a variety of other work opportunities all designed around keeping that new automobile on the road.

This seems to be true throughout the ages. As technologies grows, evolve and change they bring with them a growth of new businesses and industry changes. This, in turn does tend to lead to economic growth. We are seeing that cities, such as New York City, are in the midst of rapid transformation, especially where the economy is concerned.

A new study released this week shows that this is, in fact the case with New York City. The study is entitled “The New York City Tech Ecosystem.” It was commissioned by the Association for a Better New York (ABNY), Citi, Google and NY Tech Meetup.

The actual study was officially conducted by HR&A Advisors. They are a real estate, economic development and energy efficiency consulting firm. Their clients include real estate owners, investors, hospitals and universities, cultural institutions, community development organizations and governments.

According to HR&A, the Internet, mobile technologies, social media and big data have all contributed to a wave of innovation that is creating thousands of new startups and is re-inventing New York City’s traditional industries. What is really interesting that while most of the impact is on the technology of keeping everyone connected, a great number of these technical jobs are found in non-tech industries.

Seven percent of the city’s workforce or about 291,000 are employed in what the author of the report, Kate Wittels, calls tech ecosystem. Of this, more than half at 150,000 of these positions are found in non-tech industries. The percentage is almost doubled when you take into account the fact that the tech ecosystem also generates another 250,000 jobs through what is referred to as the multiplier effect.

The report states that the New York City tech ecosystem generates more than half a million jobs, $50 billion in annual compensation, nearly $125 billion in annual output, and $ 5.6 billion in tax revenues. As you see these number represent a substantial investment in the city.

One major way that this study differs from just about every other study is the fact that in the past the tech industry has always been looked at separately. It has usually been a standalone piece that only reflected what was going on in the world of technology. This report considers the entire ecosystem and technology’s impact on the big picture.

Wittels, who is the director at HR&A said, “With seven percent of the New York City workforce, this study shows definitively that tech is a critical component of New York’s vibrant and diverse economy. The spectrum of tech-related occupations – from programmers to sales reps – is creating well-paying and quality jobs for New Yorkers at all levels of educational attainment. Fostering the growth of the New York tech ecosystem will increase economic opportunities for all New Yorkers.”

Some of the findings from this study include:

  • SIZE: The New York City tech ecosystem includes 291,000 jobs that are enabled by, produce, or facilitate technology. Tech industries generate 58,000 tech jobs and 83,000 non-tech jobs, while non-tech industries generate 150,000 tech jobs. In total, New York City’s tech ecosystem employs 291,000 people or seven percent of the 4.27 million people working in New York City. To put this figure into context, the retail sector employs 354,000 people or eight percent of total workers, while healthcare employs 665,000 people or 16 percent of total workers.
  • GROWTH: From 2003 to 2013, the New York City tech ecosystem added 45,000 jobs, growing faster than both total New York City employment and total U.S employment. The New York City tech ecosystem grew from 246,000 jobs to 291,000 jobs, an increase of 18 percent. In comparison, over the same period, employment increased by 12 percent in New York City and four percent nationally.
  • ECONOMIC IMPACT: The New York City tech ecosystem generates approximately 541,000 jobs, $50.6 billion in annual compensation, and $124.7 billion in annual output. Of the 541,000 total jobs, 291,000 are direct, and 250,000 jobs are generated through multiplier effects. Together they comprise 12.6 percent of New York City’s total workforce.
  • TAX REVENUE: The New York City tech ecosystem generates over $5.6 billion in annual tax revenues to the City, representing 12.3 percent of the City’s 2013 tax revenue. $2.5 billion comes from property taxes, $1.3 billion from personal income taxes, $0.9 billion from sales and use taxes, and $0.9 billion from corporation and business income taxes.
  • EDUCATION: The New York City tech ecosystem includes more than just highly-educated workers – up to 44 percent of jobs in the New York City tech ecosystem do not require a Bachelor’s degree. 128,000 jobs in the tech ecosystem do not require a Bachelor’s degree, with 11,600 of those being tech jobs in tech industries.
  • COMPENSATION: Workers in the New York City tech ecosystem earn 49 percent more than the average City-wide hourly wage. The hourly wage for the tech ecosystem is $39.50, while the average City-wide wage is $26.50.
  • Jobs in the New York City tech ecosystem that do not require Bachelor’s degrees pay 45 percent more in hourly wages than jobs with the same educational requirements in other industries. Tech ecosystem jobs that do not require a Bachelor’s degree pay $27.75 per hour, while the average City-wide hourly wage for a job with the same educational attainment requirement is $19.00 per hour.

I find it interesting that almost half at 44 percent of technical jobs do not require a Bachelor’s degree. The other figures do not surprise me, but it sort of makes me question why anyone would have to go to, much less finish college. I have to admit, that I am very proficient in what I do and have done, that includes a lot of things from installing PC Magazine’s first ever Novel network from the ground up to restoring antique light fixtures. I learned all this through experience, not my college degree, so I guess that I should not be too surprised.

There is no denying that technology plays a big part in New York City’s economy. As Bill Rudin, chairman of ABNY said, “The study makes it abundantly clear that the New York City tech ecosystem is a major economic driver for the city and that it generates opportunity for all New Yorkers. We need to continue building these opportunities for the city and its people by expanding tech educational programs, investing in tech infrastructure and spaces for startups and promoting New York City as a tech hub to attract more workers and companies.”

Edited by Cassandra Tucker

TechZone360 Contributing Writer

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