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High-tech forecast brightens

New report shows gains in jobs, wages in region, but neighboring Midwest states recovering faster

By Paula Schleis
Beacon Journal business writer

Trends in Northeast Ohio's high-technology sector suggest there's a cloud behind every silver lining.

A report released today shows the region is growing after several years of national decline in the industry, with new gains in jobs, wages, gross regional product, and research and development.

But the sparkling data lose some luster when compared with Midwest neighbors and the country overall, which are recovering at a faster rate.

Cleveland State University's Center for Economic Development prepared the annual High-Tech Sector in Northeast Ohio report for the regional economic development group NorTech.

It measures business, occupation and research activity in Northeast Ohio between 2004 and 2006, updating a report issued a year ago for the period 2000-2005.

''We were expecting to see some gains because there's so much new initiative in Northeast Ohio stimulating entrepreneurship and high tech,'' said CSU's Ziona Austrian, who helped prepare the report.

''We have a strong and viable high-tech sector in Northeast Ohio and we're moving in the right direction, but we need to do even better in the future.''

The region had 164,400 jobs in high-tech industries in 2006 — a gain of 1,800 from 2004.

That's good news, because between 2000 and 2004, Northeast Ohio lost 23,000 high-tech jobs, a period when that sector was shrinking throughout the country.

It seems everybody is recovering now, but Northeast
Ohio's growth is only half the average rate of six Midwest states, and barely a fourth of the gains made by the United States.

In Akron, high-tech companies play a significant role in the economy. By 2006, they accounted for nearly 11 percent of all jobs, compared to about 9 percent of the jobs in the Cleveland area and in the United States overall.

The report also made it clear that high-tech occupations allow workers to enjoy a good living, with the average annual salary in Northeast Ohio exceeding $67,000 in 2006. That's 77 percent higher than the $38,300 average wage of all industries combined.

But again, Northeast Ohio comes up short by comparison. High-tech workers here are making an average of 24 percent less than the United States as a whole.

The report suggests the need for an increase in Northeast Ohio paychecks, saying ''the relatively lower wages paid to employees of high-tech industries in Northeast Ohio may be a barrier to attracting the best people.''

Added Austrian: ''Hopefully, regional civic leaders and policymakers will focus their efforts and attention on these issues.''

High-tech industries make up 12.9 percent of Northeast Ohio's economy. In 2006, total output measured $22.8 billion.

That's a 2.5 percent growth rate from 2004 — similar to the Midwest, but significantly lower than the country's 10.3 percent gain in the same period.

One area where Northeast Ohio outshines its siblings: high-tech research and development.

Academic expenditures in Northeast Ohio increased 42 percent between 2000 and 2005. Our rate of growth was higher than the Midwest (33 percent) and the nation (34 percent.)

From 2004 to 2005 alone, academic research funding grew 26 percent here, compared to 1 percent in the Midwest and 10 percent nationally.

But here comes another cloud. Austrian said that's not enough.

The amount of money spent on research per employee in Northeast Ohio is lower than the U.S. average. ''Since R&D and (a) skilled work force have been shown to be associated with regional economic growth, the region needs to increase support and stimulate more research activities,'' Austrian said.

Still, there is reason to be very optimistic, said NorTech President Dorothy Baunach.

She's looking forward to next year's report, which could show the region picked up speed in the past year.

In 2007 alone, venture capital firms invested $318 million in Northeast Ohio companies — a sign that a lot of people are betting on the region's future.

''You know they're expecting a return on their investment or they wouldn't be here,'' Baunach said. ''We still have a ways to go before we see the results of that investment, but we know they've been made.''


Paula Schleis can be reached at 330-996-3741 or pschleis@thebeaconjournal.com.

Trends in Northeast Ohio's high-technology sector suggest there's a cloud behind every silver lining.

Get the full article here.


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