High technology sectors are valuable to local economies because of their disproportionate effects on private sector output and patent production—with the latter benefit particularly strong in regions with high concentrations of these firms. Recent data from the Census Bureau provides counts of high tech and all firms by metropolitan statical areas (MSAs) for more than 40 years, enabling us to both see which metros have strong current concentration of tech companies, and how they evolved over the recent decades.
National trends
Figure 1. Share of high-growth firms among all firms by MSA, 1982-2022.
Across all 387 MSAs identified in the Census dataset, the number of all firms grew by 54% from 1982-2022, while the number of high-tech firms grew by 229%, yielding a 97% increase in the share of high-tech firms. As of 2022, 5.1% of firms located in MSAs throughout the country were high-tech.
Regional variation
At the individual MSA level, there was tremendous variation in the expansion and concentration of high-tech firms.
Provo, UT had the most remarkable growth over this period, and is the only MSA with increases in total firms (300%), high-tech firms (1,128%), and high-tech share (207%) that exceeded the national average plus two standard deviations for each of the three metrics. Of course, Provo is a smaller market, with just under 12,000 total firms recorded in 2022. (Bend, OR came close, with 907% high-tech firm growth and 238% total firm growth for an increase in the share of high-tech firms by 198%).
Austin-Round Rock-San Marcos, TX, Las Vegas-Henderson-North Las Vegas, NV, and Raleigh-Cary, NC are the largest markets to experience double-standard deviation growth from 1982-2022 along any two metrics (all three for growth in total firms and high-tech firms, but not share of high-tech firms).
Several metros are experiencing greater concentration of high-tech firms in part due to modest growth in total firms. For example, San Francisco-Oakland-Fremont, CA increased concentration by 220% and total firms by 33%, and Albany-Schenectady-Troy, NY increased its share of high-tech firms by 217% while total firm growth was just 24% (less than half the U.S. metro rate).
Figure 2. Share of high-tech firms for the 50 MSAs with the most firms, 1982-2022.
Note: Enter one or more MSA names in the series list to see historical data for specific regions — or “MSA totals” to see the trendline for all metros.
Using the data
Digging into data about the presence, growth, and concentration of high-tech firms can help regions better understand their current status and historical performance, particularly compared to other regions.
For example, the metros of Cleveland, OH and Cincinnati, OH-KY-IN are separated by just a several hour drive and have a comparable number of high-tech firms in 2022, with 1,555 and 1,497, respectively. However, their economic experiences since 1982 tell different stories. Cleveland experienced a decline of 2% in total firms since 1982, while Cincinnati increased by a modest 23%. Cleveland increased its number of high-tech firms by just 108%, while Cincinnati was close to the median rate at 217%. As of 2022, the Cleveland metro’s share of high-tech firms is 4.5%, and Cincinnati’s is 4.8% (the U.S. MSA total rate is 5.1%). Neither region has realized particularly strong growth, but Cincinnati’s is much closer to the median U.S. metro experience, even though it remains behind Cleveland in its total number of high-tech firms.
One way for Cleveland to put this data to use is to not only better understand that the high-tech concentration of its economy its falling behind its in-state peers (something that practitioners there doubtlessly know), but to look for broader peers that can provide positive and negative comparisons for further investigation. In 1982, the Pittsburgh, PA, St. Louis, MO-IL, and Baltimore-Columbia-Towson, MD metros had similarly-sized high-tech economies with 709-770 of these firms at a concentration of 1.9-2.2% (national MSA total high-tech share was 2.4%). By 2022, Cleveland had experienced the worst total growth in firms and high-tech firms among the four metros, although Cleveland has a higher share of high-tech firms than St. Louis (3.7%). Baltimore-Columbia-Towson has eclipsed the other three, experiencing 394% growth in its number of high-tech firms and growing its total firms by 44% (slightly below the national pace), to reach a share of high-tech firms at 7.6% in 2022. Cleveland’s JumpStart, Pittsburgh’s Innovation Works, and St. Louis’s BioSTL all have initiatives that can be held up as effective national practices—not to mention each region’s excellent research institutions. However, the historical firm data suggests that Cleveland should look at Baltimore’s success for potential lessons in achieving high-tech growth. Going forward, Cleveland may want to benchmark itself against Kansas City, MO-KS, Las Vegas-Henderson-North Las Vegas, NV, Nashville-Davidson-Murfreesboro-Franklin, TN, and Cincinnati, as metros that now have similarly-sized total and high-tech firm bases.
Extending the data
This article explores the high-tech firm data in its own right, but the measure is particularly powerful when used with other indicators to provide a more fulsome picture of economic growth. Information about domestic product, wages, employment, research, and investment. Regions that are developing benchmark tools or conducting strategic planning should leverage a broad set of measures to gain a better understanding of their economy—as well as stakeholder interviews to add information about strengths and weaknesses that no national dataset alone can reveal.
Methodology
The Bureau’s definition of a high-tech industry is based solely on the concentration of science, technology, engineering, and math employees at the four-digit industry classification level but does not incorporate an assessment of industry research activity, as some other measures do. Still, the definition encompasses more than software sectors, with five manufacturing sectors, three information sectors, and three professional services sectors included among the 11 industries identified as high tech.
To read more about the Census Bureau’s methodology and to access the data underlying these figures, visit: “Business Dynamics Statistics of U.S. High Tech Industries.”