The Rebalancing Of The California Economy: How Internet/Tech Jobs Are Spreading Across The State

By / 5.14.2013

Over the last year, California has added jobs faster than the country as a whole, in large part because of the booming Internet/tech sector.

Indeed, the latest official figures still show the Bay Area driving California’s economic growth, while the rest of the state lags behind. According to data from California’s Economic Development Department, the number of jobs rose by 2.2% in the Bay Area in the year ended March 2013, compared to 1.5% for Southern California and only 1.2% for the Central Valley, the region that stretches from Redding in the north to Bakersfield in the south.

However, something new and very encouraging is starting to happen: The economic benefits of Internet/tech growth are spreading outside the Bay Area to other regions of California. These gains are so recent that they don’t show up yet in the official government data.

So how do we know Internet/tech growth is spilling over to other areas? To put it simply, we look at the want ads. Internet/tech-related want ads have surged across California. For example, want ads for computer and mathematical occupations in the Central Valley are up by almost 12% over the past year, compared to a smaller 3% gain in the Bay Area. Want ads for media and communications workers—many of them related to social media, websites, and other online activities— are up by 34% in Southern California and 42% in the San Diego region. And want ads for web developers and related occupations are rising in the Central Valley and Central Coast, albeit off a very small base.

What’s more, each of these jobs tends to have a significant multiplier effect on the local economy, creating jobs for everybody from plumbers and janitors to accountants.

This suggests that the California economy may be approaching a critical inflection point. If the Internet/tech growth continues at its current pace, it may be enough to lift the whole state out of its economic doldrums, including hard-hit areas such as the Central Valley. It also suggests that state government policy should be directed toward encouraging Internet/tech growth, rather than suppressing it.

Download the policy brief.