Technology, Innovation, and Growth in Colorado

Economic Growth

According to a brief issued by the Division of Science Resources Studies in July 1998, "the global market for products manufactured by four research-intensive industries - aerospace, computers and office machinery, electronics and communications equipment, and pharmaceuticals - is growing more than twice as fast as that for other manufactured goods and is driving national economic growth around the world. Since 1980, their inflation-adjusted growth has averaged nearly 6% annually compared with a rate of 2.4% for other manufactured goods."1

"In 1989, U.S. high-tech manufactures represented nearly 13% of total U.S. production of manufactured output, up from 10.4% in 1980." In 1995, high-tech manufactures were estimated to represent 15% of manufacturing output in the United States, representing nearly 32% of world high-tech production. 1


Technology Jobs

For the purposes of this study, Colorado ES202 data were evaluated from 1992 to 1997 using 88 four-digit SIC Codes to define technology. Based on this definition of high technology, there were 360,518 technology employees in Colorado during 1997. During this five-year period, the number of technology employees increased by 36%, or almost 95,500 jobs. The majority of the growth occurred from 1994 to 1997.

Overall, there were 375,800 more jobs in Colorado in 1997 than in 1994. The growth of technology industries represents slightly more than 25% of that growth. In 1992 technology jobs represented slightly less than 16% of the jobs in Colorado. In 1997 the total number of technology jobs was expected to exceed 17% of total employment.

There has been an increase of slightly more than 30,400 jobs in the Denver/Boulder area during the five-year period from 1992 to 1997, and an increase of slightly more than 29,800 technology jobs in rural or mountain areas. Since 1992, the number of technology jobs has increased by about 27,900 in Colorado Springs and Pueblo and by slightly more than 6,600 technology jobs in Ft. Collins and Greeley. Growth on the Western Slope was about 700 jobs.


Technology Firms

The estimated number of Colorado technology companies in 1997 was 8,157. During the period 1992-1997, the number of technology companies increased by almost 73%, or 3,438 companies. This represents almost 7% of the increase in jobs during this five-year period. During 1992, the number of technology companies represented slightly more than 3% of the companies in Colorado. By the end of 1997 the total number of technology companies was slightly less than 6% of the total number of
companies in Colorado.

There has been an increase of 2,294 companies in the Denver/Boulder area during the past five years and an increase of 423 technology companies in rural or mountain areas. Since 1992, the number of technology companies increased by 427 in Colorado Springs and Pueblo and by 204 in Ft. Collins and Greeley. The Western Slope has seen an increase of 80 companies during this period.

In 1992, a Colorado technology firm employed an average of 56 employees. In 1997, the average company size was 44 employees. Most likely, this decrease in average company size is a result of downsizing, outsourcing, mergers and acquisitions, and an increase in the number of start-up and spin-off companies.


Technology Wages

In the spring of 1999, the University of Colorado Business Advancement Center completed a technology industry survey that determined that the average annual wages for a technology employee were $52,111. If the 1998 overall average annual wages were approximately $31,250, then the average annual wages for the non-technology employees was approximately $25,200 for 1998.

Using these estimates as a base, total wages for technology employees in Colorado during 1997 can be estimated at $16.8 billion. This represents almost 29% of the state's 1997 wages of nearly $59 billion.


Technology Related Growth

The estimated growth rates during 1998 and 1999 for number of employees and number of companies are estimated to be 10.3%. Based on increased awareness and support of the technology industry, these growth rates may ultimately prove to be conservative.

In addition to growth in employment, the number of technology companies will continue to grow at a faster rate than the combined total of other sectors of the economy. Technology companies will represent approximately 20% of state total by the end of 1999. Despite overall growth in the technology area, there will be continue to be downsizing, mergers and acquisitions, and outsourcing that will encourage the growth of new companies. Growth beyond 1999 may be impacted by the ability of companies to find trained workers.