|
 |
ECONOMIC UPDATE
|
By Bryan
Bezold, RCGA Director of Research and Chief Economist
St. Louis: growing
a new economy
The year 2001 was a challenging one in many ways, and one in which
the perception of a “new” economy in the U.S. took a beating. The
US economy slid into a recession, and the technology sector suffered
to a greater extent than the rest of the economy.
At the same time, however, the importance of the application of
technology, and more specifically information technology (IT), to
traditional business practices cannot be denied. Businesses, be
they in services, manufacturing, or even retail, that fail to incorporate
technology into their operations will have trouble competing in
the national and increasingly global economy. That’s just as true
here in St. Louis as it is in Silicon Valley, Austin or Boston.
Given the importance of technology, how then can we assess St. Louis’
adoption of information and other technologies? In recent years,
universities and think tanks have released a plethora of studies
anointing various metropolitan areas as leaders of the new economy
in the U.S. The usual suspects are the Silicon Valley area of Northern
California, Austin, Texas, and even Raleigh-Durham, N.C. Often,
though, such metros are one-industry or one-company boomtowns. St.
Louis, on the other hand, has been one of the largest and most economically
diverse cities in the U.S. for more than 100 years. Today, St. Louis
is the 18th largest metropolitan statistical area (MSA) in the country,
home to more than 1.3 million workers. So according to scales that
judge a region based on the percent of its work force in a specific
sector, or on the concentration of labor in such sectors, St. Louis
might appear to be a bit of a laggard. But a deeper look in the
numbers presents a more accurate picture. Greater St. Louis has
a base of high-tech skills and infrastructure, and growth in high-tech,
knowledge-based employment.
The Progressive Policy Institute (PPI) ranked St. Louis the 27th
new economy metropolitan area in their Metropolitan New Economy
Index. This ranking is based on the region’s score in five different
categories: knowledge jobs, globalization, economic dynamism, transformation
to a digital economy, and technological innovation capacity. These
categories sound vague, but the study’s authors, Robert Atkinson
and Paul Gottlieb, did a good job of quantifying some important
trends that are difficult to measure. They quantified the economic
dynamism by counting the number of small, fast-growing companies
and the rate at which workers voluntarily switch jobs, and measured
economic transformation by looking at Internet capacity and the
use of computers in schools. Among many of the report’s sub-indices,
St. Louis performed remarkably well. The region ranks second in
computer use in schools, sixth in weighted academic R & D funding,
12th in Internet backbone, 15th in venture capital, 15th in degrees
awarded in science and engineering and 20th in voluntary job “churning.”
Our weakest area in the PPI’s study was commercial Internet domains,
or the number of “dot-coms” as a percent of total firms. St. Louis
ranked 45th. Since St. Louis is home to 150,000 businesses, however,
we’d need a lot of Internet start ups to score the same as some
smaller MSAs. In another area where our region performed poorly,
41st in export focus of manufacturing, the cause is obvious: our
largest manufacturing employers are Boeing’s aerospace division
and the big three automakers, which primarily produce goods consumed
in the US.
Another case in point is a study produced by the University of Minnesota’s
Humphrey Institute for Public Affairs. The study, High Tech and
I-Tech: How Metros Rank and Specialize, was released in August
2001 and ranked the top regions for high-tech industry jobs. St.
Louis doesn’t make the top 30. Again, some closer investigation
is warranted. The authors of the study selected a pool of cities
that experienced rapid total employment growth, and then counted
the number of jobs in fields identified as high tech. They chose
not to include St. Louis in the sample because the region’s total
employment growth in the 1990s did not rank in the top 30.
Anyone who lived in greater St. Louis during the ’90s is aware of
the tremendous dislocation that occurred due to defense industry
cutbacks in the early ’90s. So even with our successful addition
of 100,000 net new jobs in the late ’90s, we didn’t grow as much
as many other metro areas did during the study period of 1991 to
1999. That’s why St. Louis didn’t make the cut for this particular
study. But when we use the University of Minnesota study’s criteria
to count St. Louis’ total high-tech jobs, the results are encouraging,
to say the least. By that methodology, St. Louis had roughly 92,000
high-tech jobs in 1997. This total puts St. Louis in 16th place,
between San Diego and Denver. Keeping in mind that we are the 18th
largest metro, it is encouraging that by this measure we appear
to be ahead of the game when it comes to high-tech jobs.
Moreover, the region’s growth in these high-tech jobs was roughly
5.7% during the last half of the ’90s.
A recently released report by the Battelle Memorial Institute offers
further evidence of St. Louis’ transition to a high-technology based
economy. Among its conclusions are that St. Louis is home to more
than 45,000 IT professionals, and that we are regional specialists
in fields like telecommunications services, and computer software
systems engineering. Combined with our regional specialty in plant
and life sciences, we are developing a new economy that is as diverse
as our “old” one.
St. Louis is becoming a center for high technology and new economy
activity, but that isn’t always clear in some academic studies.
When these studies rank metro areas by percent share, or concentration,
of high-technology employment and activity, St. Louis is, in effect,
punished for being a mature and diverse economy. It’s important
to remember, though, that there are a variety of ways to judge the
region’s progress. When viewed through the appropriate lenses, the
region’s course ahead is clearly in the right direction. |
|
|
|
|
-
- - - - - - - - - - - - - - - - -
-
- - - - - - - - - - - - - - - - -
-
- - - - - - - - - - - - - - - - -
-
- - - - - - - - - - - - - - - - -
|
