One of the important themes of this year’s presidential campaign is the need for economic growth to move beyond the tech hubs and coastal urban areas that have prospered in recent years. To some degree, this is already happening. Our latest analysis shows that the top 10 App Economy states include Illinois (4) and Michigan (9), where jobs developing, creating, and maintaining mobile apps are partially replacing lost employment in manufacturing.
Similarly, the hydraulic fracturing (fracking) revolution created a new wave of job growth in areas such as Pennsylvania, North Dakota and Texas–not just oil and gas drilling workers, but transportation and construction jobs as well. The exact number is a contentious subject, but even skeptics agree that the added employment has been significant in some areas. One even-handed report noted that
Pennsylvania’s shale boom was enough to ease — but not erase — the state’s pain during the recession. BLS reports the state shed a net total of 74,133 jobs between 2007 and 2012, while the oil and gas industry added roughly 21,000 jobs.
Taking into account spillover jobs, it’s clear that Pennsylvania’s downturn would have been a lot worse without fracking. Once again, innovation creates new industries and new jobs.
Still, apps and fracking by themselves are hardly enough to revive some of the hardest-hit areas of the country, especially those which have suffered from the loss of manufacturing jobs. Local officials ask, quite naturally, where the next innovation job boom will come from. And here the glass is both half-empty and half-full. There are plenty of candidates for the “next big thing,” ranging from the Internet of Things to additive manufacturing to artificial organ factories to autonomous cars to space commerce to Elon Musk’s hyperloop. Each of these has the potential to revolutionize an industry, and to create many thousands or even millions of jobs in the process–not just for the highly-educated, but a whole range of workers.
Yet the problem–and the beauty–is that technological innovation is fundamentally unpredictable, even at close range. Consider this: The two most important innovations of the past decade, economically, have been the smartphone and fracking. The smartphone transformed the way that we communicate and hydraulic fracturing has driven down the price of energy, not to mention shifting the geopolitical balance of power.
Yet a decade ago, in 2006, the major business press wrote precisely two (2) stories about fracking–one in the New York Times, and one in the Wall Street Journal. BusinessWeek, Fortune, Forbes, The Economist, and the Financial Times had not a mention, even though fracking as a technique had been around for years. Even though production was already ramping up, few people saw the profound economic impact of being able to tap into shale oil and gas reserves.
And while in 2006 journalists and analysts were writing about the possibility of an Apple phone, it was more with an air of bemused skepticism. Nobody forecast that the the iPhone, followed by Android-based phones, would quickly make all other phones obsolete. More importantly, nobody foresaw the introduction of an App Store that created millions of app-related jobs around the world.
What does this history tell us? First, the next big job-creating innovation isn’t likely to announce itself in bold letters before it arrives. Just because the next big thing isn’t obvious today doesn’t mean it won’t be obvious a year from now.
Second, when the next big job-creating innovation occurs, there will be a chance to spread the wealth by boosting growth in areas that are lagging today. The geographic pattern of tech jobs need not be replicated for additive manufacturing or space commerce. Innovation doesn’t just create jobs, it creates opportunities for local economic revival as well.