Los Angeles County's broad range of software, telecommunications, aerospace and other high-tech firms produced nearly one out of every eight dollars generated in the local economy, making it the third-ranked community in a new study of the country's technology hotbeds.
In the study, "America's High-Tech Economy," released Tuesday by the Milken Institute in Santa Monica, San Jose easily captured the top spot, thanks to its location in the heart of Silicon Valley. Dallas, home to six of the nation's 20 largest telecommunications services companies, edged Los Angeles for the No. 2 ranking.
California communities dominated the list of 50 high-tech centers: Orange County ranked No. 13, followed by Oakland at No. 14, San Diego at No. 17 and San Francisco at No. 22.
That bodes well for the Golden State. Technology is not only driving the current U.S. economic expansion but is expected to continue doing so for the next decade. Since 1991, the high-tech sector has grown four times as fast as the national economy as a whole, and cities with strong high-tech economies have benefited the most, according to the report.
"High-tech industries are critical in gauging the health of the U.S. economy," the report states. "They are determining which metropolitan areas are succeeding or failing. Without growth in high-tech sectors, metros will be left behind."
Nevertheless, an economy based on technology has its drawbacks, the report notes. Technology manufacturing sectors are vulnerable to downturns in the business cycle, a lesson Southern California learned from the aerospace industry contraction a decade ago.
Moreover, since high-tech employees earn more than most other workers, communities that rely on the industry must deal with the social consequences of income inequality, said Ross DeVol, director of regional studies at the Milken Institute and lead author of the study.
The study was based on government data from the Bureau of Labor Statistics and the Bureau of Economic Analysis that measured employment and output of high-tech firms in more than 300 U.S. cities. Its rankings are based on a combination of the regions' contributions to the nation's high-tech output and the degree to which each region has embraced technology industries. It is the first study to compare the technology prowess of different regions of the country since high tech became an integral part of the national economy.
