AeANET : AeA Monthly News, May 2007

AeA Releases Cyberstates 2007 Report: U.S. High-Tech Industry Adds Jobs for Second Year in a Row; Unemployment Rate for Engineers is Below 2 Percent

On April 24 AeA released its 10^th anniversary Cyberstates report detailing national and state trends in high-tech employment, wages, and other key economic factors. The report, Cyberstates 2007: A Complete State-by-State Overview of the High-Technology Industry covers all 50 states, the District of Columbia, and Puerto Rico. It received coverage in hundreds of media outlets including BusinessWeek, Forbes, USA Today, and an AP article that ran in the Washington Post and the San Jose Mercury News to name a few (click here for a full list of media coverage on Cyberstates).

The report shows that in 2006, the high-tech industry continued growing, adding nearly 150,000 net jobs for a total of 5.8 million in the United States. This growth is faster than the 87,400 jobs added in 2005. These two years of growth represent an increase of four percent.

The Cyberstates report is not based on survey data or extrapolations, but on U.S. Bureau of Labor Statistics (BLS) data, which is collected from all businesses in the United States as required by law for the state unemployment insurance program. The data on national employment, unemployment, and venture capital investments are for 2006. The national and state wage, payroll, and establishment data are for 2005, as well as state rankings and state employment data, as a result of a nine month lag in the reporting of the data from BLS.

In the 10 years of publishing this report, we have always used a conservative definition of the high-tech industry. We probably underestimate the size of the industry to a slight degree. Year after year, we have illustrated how critical the high-tech industry is to the nation and to each and every state as it generates economic growth, innovation, and high paying jobs wherever it develops.

We are pleased to see the rebounding of the tech industry. This is the second year in a row that tech industry employment has added jobs. Not only do these jobs make critical contributions to the U.S. economy, but they also pay extremely well. The average tech industry wage is 86 percent more than the average U.S. private sector wage. In fact, in 48 cyberstates the average high-tech wage is at least 50 percent more than the average private sector wage, and in 10 cyberstates this differential is over 90 percent.

An examination of the sectors reveals that the high-tech manufacturing industry added 5,100 net jobs in 2006. Software services and engineering and tech services employment were up in 2006 for the third year in a row, increasing by 88,500 jobs and 66,300 jobs, respectively. Only the communications services industry continues to struggle, losing 13,300 net jobs in 2006.

On a state-by-state basis, Cyberstates 2007 shows that tech employment gains occurred in 40 cyberstates in 2005, the most recent data available. The last year that so many states saw this much tech job growth was in 2000. While it is no surprise that California led the nation in net job creation, Florida saw the second largest gain, adding 10,900 tech jobs in 2005. This is the second year in a row that Florida was among the top five states by tech employment creation.

An examination of the ten leading cyberstates by employment reveals that Florida was also the fastest growing state by rate of growth (+4.1 percent), followed by Virginia (+3.0 percent).

Virginia surpassed Colorado to lead the nation with the highest concentration of tech industry workers as a percent of the private sector workforce (8.9 percent). Until now, Colorado had owned this distinction ever since AeA began publishing the Cyberstates report.

The report also found that after dropping slightly in 2005, venture capital investment in the technology industry rose by $285 million, to $12.7 billion in 2006. High tech accounts for half of all venture capital investments in the nation. R&D expenditures by high-tech companies jumped by 22 percent in 2004, the most recent data available, totaling $70.6 billion, a record breaking amount of R&D.

While we are encouraged by the pickup in tech employment, we are committed to the long term health of the industry, the economy, and our nation. We have some serious challenges ahead. Companies of all sizes continue to have problems recruiting highly qualified and educated individuals to work for them, whether those individuals are foreign or domestic. This was reflected in the 2.5 percent unemployment rate for computer scientists and the below 2 percent unemployment rate for engineers in 2006. This problem is twofold: 1)The lack of American kids enrolling in and graduating from math, science, and engineering programs and 2) a U.S. high-skilled visa system that is broken. This April, within two days of the start of taking applications, the U.S. government received 133,000 applications for 65,000 H-1B visas � those visas reserved for high skilled individuals. And this is for jobs starting in October of 2007.

AeA has been actively lobbying for a legislative fix that addresses America's competitiveness challenges and we have been extremely supportive of the House Democrats' Innovation Agenda: A Commitment to Competitiveness to Keep America #1 since it was introduced in November 2005. Speaker Pelosi reintroduced the agenda on April 24, 2007, and we are currently on the way to such a fix for many of these issues as two competitiveness votes passed the House with a resounding bipartisan support of 389 to 22 (for math and science education) and 397 to 20 (for basic research funding) on the same day.

When Mrs. Pelosi came to AeA's headquarters this past November, she stated that she wanted to see the competitiveness bills passed with bipartisan support with votes approximating 350 members of the House. AeA emphatically applauds Speaker Pelosi�s leadership, not in just pushing the Innovation Agenda, but also in her raising the consciousness of members of the Congress about the competitiveness challenges facing America. We are well along now in facing those challenges and we would not be where we are without her leadership and direction.

This 10th edition of Cyberstates provides a comprehensive review of the high-tech industry nationally and state-by-state in terms of high-tech employment, wages, payroll, and establishments. Cyberstates also offers data on venture capital investments and R&D expenditures.

A national and state-by-state analysis of the technology industry and international trade will appear in a forthcoming AeA report entitled Trade in the Cyberstates 2007: A State-by-State Overview of High-Tech Trade in the United States.

AeA members can purchase the report for $125; non-members for $250. Please visit www.aeanet.org/cyberstates to purchase the report, or call 408.987.4200.

Cyberstates 2007 Key Facts

U.S. Tech Industry Adds Jobs in 2006

U.S. high-tech employment totaled 5.8 million in 2006.
Tech employment was up in 2006 by nearly 147,000 or by 3 percent.
This is on top of the growth of 87,000 tech jobs added in 2005.
High-tech manufacturing employment rose by 0.4 percent, gaining 5,100 jobs between 2005 and 2006.
The semiconductor industry grew significantly in 2006, gaining 10,900 jobs.
At the sectoral level, 5 of the 9 tech manufacturing sectors gained jobs in 2006, 4 of the sectors lost.
The communications services sector continued to shed jobs in 2006, losing 13,300 compared to a loss of 37,200 in 2005.
The software services industry added 88,500 jobs, up for the third year in a row.
The engineering and tech services industry added 66,300 jobs in 2006, putting it at an all time high.
The unemployment rate for electrical engineers was 1.9 percent in 2006 and 2.5 percent for computer and math occupations.
The tech industry paid an annual average wage of $75,500 in 2005, 86 percent more than the average private sector wage of $40,500.

U.S. High-Tech Employment

	2005	2006	Percent Change	Numeric Change
Electronics Manufacturing	1,321,500	1,326,600	+0.4%	+5,100
Communications Services	1,372,300	1,359,000	-1.0%	-13,300
Software Services	1,433,300	1,521,800	+6.2%	+88,500
Engineering and Tech Services	1,500,300	1,566,600	+4.4%	+66,300
Total High Tech	5,627,300	5,773,900	+2.6%	+146,600

Note: Data are rounded.

40 Cyberstates Added Tech Jobs in 2005

The leading states by high-tech employment in 2005 were California (919,300), Texas (445,800), New York (299,900), Florida (276,400), and Virginia (261,000). 2005 data are the most recent available at the state level.
California led the nation in net tech job creation in 2005, adding 14,400 jobs. For the second year in a row Florida and Virginia were two of the fastest growing tech cyberstates. Florida was the second fastest growing state with a net increase of 10,900 jobs and Virginia was fourth with a net increase of 7,700 in 2005.
Of the top ten cyberstates by employment, Florida had the fastest growth rate at 4.1 percent, followed by Virginia at 3.0 percent between 2004 and 2005.
Virginia surpassed Colorado to lead the nation in concentration of high-tech workers in 2005, with 89 high-tech workers per 1,000 private sector workers. Until now, Colorado had owned this distinction since AeA started the Cyberstates report in 1997.
Forty-eight cyberstates have annual average high-tech wages that are 50 percent or higher than the average private sector wage in their respective state, and 10 cyberstates have wages that are 90 percent higher.

U.S. Venture Capital Investments and R&D Expenditures Are Up

U.S. high-tech venture capital investments were up 2 percent or $285 million in 2006, totaling $12.7 billion.
Five out of seven technology sectors saw an increase in venture capital investments between 2005 and 2006. Software services was the largest sector with $5 billion in 2006.
High-tech R&D expenditures were up 22 percent in 2004, the most recent year available. The $71 billion in high-tech R&D accounted for 38 percent of all industry R&D.

Note: National data on high-tech employment and venture capital investments are for 2006. The state employment data are for 2005, the most recent year available at time of publication. Likewise, the data for wages, payroll, and establishments are for 2005.

Source: Cyberstates 2007 based on U.S. Bureau of Labor Statistics data.

Sincerely,
William T. Archey (bio)
President & CEO, AeA

AeA and SEMI Host 3rd Annual Trade Compliance Seminar in Shanghai, China

On Friday, March 23rd, AeA and SEMI hosted the program �Is Your Company Prepared to Manage Emerging Supply Chain Risks?" in Shanghai. The all day event took place at the Shanghai New International Exhibition Center (SNIEC) and drew over 180 attendees from Shanghai, Beijing, and other high-tech regions in China.

The program was designed to educate Chinese companies and U.S. subsidiaries on trade compliance risks and how to effectively manage these risks. The agenda included a government panel and two industry panels. Topics addressed included emerging U.S. and China customs and export regulatory changes, China�s interpretation and implementation of the HS2007, the U.S. Embassy�s role in license and pre-license checks, China�s export licensing process, and strategies to manage supply chain risks in reverse logistics processes.

The program included speakers from the U.S. Bureau of Industry and Security, U.S. Embassy in Beijing, China�s Ministry of Commerce and the Shanghai Customs Classification Division. Industry speakers included representatives from AeA member companies Applied Materials, Baker & McKenzie, Cymer, Ernst & Young, QUALCOMM, Texas Instruments Incorporated, and National Semiconductor.

For more information on the program contact Ken Montgomery at ken_montgomery@aeanet.org or to learn more about all of AeA�s International committees contact Rob Mulligan at rob_mulligan@aeanet.org.

Ken Montgomery, Director, Trade Compliance, AeA

180+ Attend the AeA/Semi Conference in Shanghai

Rob Mulligan (bio)
Senior Vice President, International

For more information on the International Issues affecting your company, visit:

AeA Launches H-1B Grassroots Program -- Tell Your Congressman & U.S. Senator to Support High Skilled Visa Reform

On April 3, the U.S. Citizenship and Immigration Services (USCIS) office at the Dept. of Homeland Security announced that they received enough H-1B petitions to meet the congressional mandated cap for FY 2008. This cap was reached on the first day that applications were being accepted and USCIS will not be reviewing any new applications until April 1, 2008 for the 2009 application cycle.

According to AeA's Cyberstates 2007 report, U.S. engineers have an unemployment rate below two-percent, which is considered full-employment. With thousands of jobs in your companies being left unfilled this indicates that something must be done to increase the number of high skilled workers available for your companies. Therefore, please join AeA in telling your U.S. Representatives and Senators to support H-1B visa and green card reform.

To become involved with this grassroots initiative, please visit AeA's Online Legislative Action Center. AeA recommends that you customize the attached letter in the tool to explain how the shortfall in high-skilled workers has affected your business. The tool will automatically match you to your elected officials in Congress and will send the letter via-email to your elected officials.

For more information on this initiative or on AeA's work on immigration contact Alan Vazquez, Manager, Domestic Policy, at 202.682.4439 or contact your local council Executive Director.

John Palafoutas (bio)
Senior Vice President for Domestic Policy & Congressional Affairs

View the Proclamation

Sign the Proclamation

Support American Innovation!
Through signing the American Innovation Proclamation, 270+ leading corporations, universities, and industry groups told the U.S. Congress on March 13, to:

Improve Student Achievement in Math and Science;
Renew America's Commitment to Government Funded Basic Research;
Welcome Highly Educated Foreign Professionals; and
Make Permanent a Strengthened R&D Tax Credit.

Join Craig Barrett, Chairman, Intel; Richard K. Templeton, President & CEO, Texas Instruments; Robert C. Dynes, President, University of California; and the other leaders of U.S. business and education and sign the American Innovation Proclamation today.

New Manager of AeA State Government Affairs Program, State Activities Across the U.S., and Upcoming Events

Ben Aderson joins AeA as counsel and manager of the State Government Affairs program and technology policy. His bio and contact information can be found below. The following is a summary of state activities across the U.S. and upcoming events.

Massachusetts SB 208 (Morrissey): An Act Relating to Security Freezes and Notifications of Data Breaches
Anne Doherty Johnson, Executive Director, AeA's New England Council, testified to the Joint Committee on Consumer Protection and Professional Licensure of the Commonwealth of Massachusetts General Court on April 28th regarding SB 208. Read AeA's Testimony or get more information on it in the April AeA New England Legislative Alert.
AeA Midwest Council Launches a Grassroots Initiative Opposing the Illinois Gross Receipts Tax (GRT)
Support AeA's efforts in opposing the Illinois Gross Receipts Tax (GRT), which violates the principles of fair taxation. The imposition of such a tax would have a negative economic impact on Illinois consumers and businesses. To take action and send an email or letter to your Illinois State elected officials and Governor Rod R. Blagojevich in opposition to the GRT visit AeA's Online Legislative Action Center.
AeA Symposium on Advancing Health IT & Interoperability Draws 100+ Government and Industry Leaders
On April 13, the AeA Mountain States Council hosted a symposium in Denver, CO, on promoting interoperability and standards in the health care industry through Electronic Medical Records and Health IT. Speakers included the Colorado Lt. Governor; the Chief Information Officers of Colorado and Utah; the Chairman of the Colorado Senate Health and Human Services Committee; and many more.

Upcoming Events

State Policy Action Network (SPAN) Conference Visits DC in June
By popular demand, AeA's semi-annual SPAN conference will be coming to Washington, DC on June 5. High-tech state government affairs professionals from all over the nation will be attending this event. Register today!
California State Government Lobby Day
AeA's Sacramento government affairs office will be holding its annual California State Government Affairs Tech Summit Lobby Day on May 16. Sponsors for this event include Applied Materials, Dell, DriveCam, InCom, Intel, HP, Manatt, Motorola, National Semiconductor, and NXP. Register today to participate in these important meetings with California's leading legislators.
California State Government Procurement Opportunities
AeA is proud to announce opportunities for members to get involved with numerous events throughout California. Events include meetings with Clark Kelso, CIO, State of California (May 7); Matthew Bettenhausen: Executive Director, Governor's Office of Homeland Security (May 9); Frank McCarton, Chief Deputy Director; the CIO of Office of Emergency Services (May 15); Ms. Lucinda (Cindy) Ehnes Director, Department of Managed Health Care (June 19); P.K. Agarwal: Director, Department of Technology Services (July 11) and a series of four regional events throughout the state on "How to Win Business in CA." For more information contact Debra Calevro at 916.443.9059.

For more information on AeA's State Government Affairs program please contact me at 202.682.4428 or at benjamin_aderson@aeanet.org.

Ben Aderson (bio)
Manager & Counsel, State Government Affairs and
Manager of Technology Policy

Sponsor or Attend the Annual AeA Technology 4 Government Dinner

Time is running out to sponsor AeA's Technology 4 Government Dinner. This annual dinner -- to be held on June 5 in Washington, DC -- has become the premier networking event that brings the government's leading CIOs, CTOs, Procurement Officials, Program Managers, Members of Congress, and the White House together with high-tech industry leaders from around the country.

This year's dinner will be a first rate event as 50+ government contracting officials from the top defense and civilian agencies have already RSVP'd to attend. Do not miss this opportunity to speak with your companies top federal government clients and prospects.

The keynote speaker at the dinner will be Jonathan Schwartz (bio), President and CEO, Sun Microsystems, Inc. For more information on sponsorship or to register to attend please visit www.aeanet.org/t4g2007 or contact Goldy Kamali, Director, Federal Government Market Group, at 202.682.4432 or goldy_kamali@aeanet.org

Pictures from Previous AeA Technology 4 Government Dinners

Cheryl Watkins, Symantec; and
Scott Charbo, CIO, DHS at the 2006 dinner

General Steven Boutelle, CIO, Army
speaks with guests at the 2005 dinner

AeA Health! Program through UnitedHealthcare
A Total Solution for Your Benefits Needs

Endorsed by AeA, the AeA Health! program offered by UnitedHealthcare provides a total solution for high-tech companies. The program includes medical and specialty benefit plans to help improve your organization�s bottom line. In addition, AeA Health! value-added wellness programs let employees make healthier choices in their lives. Some of the many advantages of the new program include:

Competitive pricing for groups with more than 50 employees. Additional savings offered for bundling medical, dental, vision, and disability.

Favorable rate band credits for accounts subject to small group reform in California (typically companies with fewer than 50 employees).

Preassigned claims advocate for escalated claims resolution.

COBRA and Section 125 "Pre-Tax Plans" administration services at no additional cost.

AeAHealth! "Plug and Play" Wellness program focused on exercise, diet and smoking cessation.

On-site Wellness counselors available for eligible sites

A Healthy Pregnancy program and special Disease Management services

Aggressive renewals based on overall AeA trends

24 hour employee assistance toll free hotline (Care24^SM) providing specially trained nurses and professionals to help employees and their families with medical, mental health, and financial issues.

For more information on how to participate in the AeA Health! Insurance Program, please contact AeA�s Product Manager Veronica Franco at 202.682.4459.

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OSI Systems Founder & CEO to be Honored at
AeA/Stanford Executive Institute, August 12-23

Deepak Chopra Founder and CEO
OSI Systems, Inc.

AeA and Stanford University will award Deepak Chopra, the Founder, President and CEO of OSI Systems (bio)