By Brice Wallace
Last month, Lt. Gov. Spencer Cox decried Utah’s slip in a Milken Institute ranking of states based on technology concentration and dynamism. Utah had fallen to 13th in 2016 despite holding the top spot for a decade.
Well, Utah has regained its No. 1 ranking.{mprestriction ids="1,3"}
In the institute’s biennial State Technology and Science Index (STSI) listings for 2018, Utah was once again top-ranked for technology concentration and dynamism, nudging ahead of second-ranked California.
Cox used Utah’s lower ranking as proof that the state’s technology sector is out of balance and in need of greater diversity. The growth in the state’s information technology and software sector, embodied in Silicon Slopes, needs to be duplicated in other tech sectors like aerospace, life sciences, automation and robotics, and clean tech, Cox said.
The Milken study is a biennial assessment of states’ capabilities and competitiveness in a tech-focused economy. Overall, Utah finished No. 5, behind Massachusetts, Colorado, Maryland and California. Utah was the only new state in the top five, rising from 2016’s eighth-place ranking. The report indicated the rise was based on the strength of rapid employment growth in technology and science.
“Utah’s move to fifth was driven by tech-sector employment growth — the fastest in the nation — averaging 4.3 percent annually,” the report said. “The state also had the most university graduates with degrees in science and engineering — 15.4 per 1,000 students. Utah stood out for the success of its universities in spinning research into commercial ventures.”
The report cited the University of Utah, the top school in the U.S. for commercializing university research and development, as “exemplifying the state’s focus on building its knowledge economy.”
In other breakout rankings, Utah was No. 11 in research and development inputs, up from 14th in the most recent study; No. 1 in risk capital and entrepreneurship infrastructure, up from sixth; No. 5 in human capital investment, up from 11th; and No. 9 in technology and science workforce, down from sixth.
Utah has a “buoyant economy” and features two areas in Milken’s 2017 list of the “best-performing cities” in the U.S.: top-ranked Provo-Orem and No. 10 Salt Lake City, the report said.
The technology concentration and dynamism index featured various measures, including the percentages of establishments, employment and payrolls that are in high-tech categories and growth in a number of technology categories.
“A large, dynamic and diverse high-tech sector points to a fertile environment for similar firms,” the report said. “Alongside the advantages of industry clusters, strengths in a variety of high-tech sectors suggest a more-robust economy less vulnerable to obsolescence and external economic shocks. Growth in these industries generates effects throughout the economy, stimulating additional economic activity through employee spending and supply-chain impact.”
Among factors boosting Utah in the tech concentration and dynamism list are third-place rankings in the net formation of high-tech businesses and rate of Fast 500 companies, while its average yearly growth in those categories rank No. 1 in the nation.
“These indicators show the state has been growing a high-tech sector with a strong entrepreneurial foundation. … The state has generated tech unicorns and has earned a reputation as a good place for startups,” the report said.
Utah’s rank in the sub-index of concentration of computer and information science experts, which fell five ranks to 13th, could rise in part through the Utah Pathways program, supported by the private and public sectors and aimed at addressing workforce needs in aerospace, energy, life sciences and software, the report said.
The STSI is designed to be a benchmark for policymakers to evaluate their state’s capabilities and formulate strategies for improving STEM education, attracting businesses, and creating jobs in the tech sector.
“The success stories of states profiled in this year’s index reflect sustained efforts to not only build but to maintain their ecosystem,” said Kevin Klowden, executive director of the Milken Institute Center for Regional Economics. “Making the changes that are necessary to perform well on the State Technology and Science Index can contribute to stronger long-term economic performance.”
“Investing in human capital and developing a STEM workforce is crucial for regional economies that want to attract large technology companies and the jobs they bring,” said Minoli Ratnatunga, the institute’s director of regional economics research.
The report recommended four steps that policymakers nationwide could take to improve their state’s competitiveness:
• Increase scholarships and other financial aid to lower the cost of higher education for in-state students who plan STEM careers.
• Better align STEM curriculums to make it easier for students to transfer credits from lower-cost two-year colleges to four-year institutions.
• Encourage partnerships between higher-education institutions and private companies to provide students with work experience to improve workforce readiness and job placement.
• Make employee noncompete laws less restrictive to encourage a freer exchange of ideas and talent among tech companies.{/mprestriction}
