In efforts to lure Amazon to the Midwest, Missouri officials sent three proposals to the tech-giant by Oct. 19 to be considered for the location of its second headquarters. Kansas City and St. Louis officials threw their hats into the ring, and state officials proposed an innovation corridor along I-70, which would link the two metro areas.
Missouri’s brochure released on the MakeMOHQ2Home website claims the state ranked third in “average yearly growth of high-tech industries.”
When you think of a “high-tech” state, California and New York may be the first states to come to mind, but not Missouri. We wanted to find out how high-tech Missouri really is, and how it ranks in the country.
We spoke with the researchers behind the data and economic experts who all agreed that rate of growth can be misleading.
What’s a high-tech industry?
The Bureau of Labor Statistics notes that defining high-tech is a moving target. Generally, though, it considers jobs with lots of workers in science, technology, engineering and math fields to be part of the high-tech industry.
Missouri officials used a 2016 Milken Institute study in their claim. The Milken Institute is a nonprofit and nonpartisan think tank.
The Milken Institute has a “free-market slant,” said Michael Leeds, chair of the economics department at Temple University, “but (is) a credible group of scholars.”
Minoli Ratnatunga, director of regional economics research at the institute’s Center for Regional Economics, was a researcher in the study. Ratnatunga said the group considered 19 industries it thought were high-tech.
A few of these industries include: pharmaceutical and medicine manufacturing, commercial and service industry machinery manufacturing, medical equipment and supplies manufacturing, telecommunications and computer systems design.
The Milken Institute’s 2016 State Technology and Science Index shows that Missouri ranked third in average yearly growth of high-tech industries from 2010 to 2015.
However, this is just one component that makes up Missouri’s overall placement.
In 2016, Missouri ranked 28 out of 50. Two years prior, Missouri ranked 34 out of 50. In 2012, Missouri ranked 29 out of 50. These scores are based on several factors: human capital investment, research and development, risk capital, technology and science workforce, and technology concentration.
Massachusetts, Colorado and Maryland were ranked the top three states overall in 2016. Kansas, Tennessee and Oklahoma ranked behind Missouri, with West Virginia rated last.
“That tells us where Missouri ranks relative to its peers,” Ratnatunga said. “It’s improving, and things like (high-tech) growth is one aspect that’s impacted its overall ranking, but it’s not in the top tier.”
Ratnatunga said it’s easy for Missouri’s high-tech industry to look as if it’s grown exponentially.
“If you have a relatively small sector, it’s easier to get a higher growth rate,” Ratnatunga said. “The same 500 jobs added in California would be a smaller growth rate.”
Leeds also said the rate of growth can be deceiving.
“If you have a very small base, twice a very small number is 100 percent growth, but it can be a very small number,” he said.
Ratnatunga said companies like Amazon need to look at the index overall when considering a state’s economy. This means recognizing qualities like overall growth in the economy, the quality of the workforce, universities, capital investments and research and development inputs.
“If it doesn’t meet Amazon’s requirements, it might be a great choice for other companies that are looking to grow in high-tech,” Ratnatunga said.
Missouri officials claimed Missouri ranked “3rd (in) average yearly growth of high-tech industries.”
While Missouri high-tech industries may have seen growth, the size of base matters. Missouri has seen a growth in high-tech jobs, but the claim can be misleading when you don’t consider the size of the base. Overall, Missouri is about average in the rankings.
We rate this Mostly True.
Among states, Missouri has the “3rd average yearly growth of high-tech industries.” proposal to Amazon prepared by the Missouri Department of Economic Development and released Oct. 19