Technology has changed the nature of recent job growth and the composition of the workforce. From 1970 to the mid-1990’s, high-tech information processing equipment grew from seven percent to more than 50 percent of business equipment investment. As a result of the proliferation of personal computers and the technology boom, analysts initially forecasted a shrinking workforce, arguing that jobs would be mechanized and computers would replace people in the workplace. This forecast, if true, would have been potentially devastating to the real estate market.
While computerized information has replaced many administrative and clerical personnel (administrative jobs have grown at below average rates and are expected to do so throughout the next decade), these losses have been overwhelmingly offset by the unexpected, exponential growth of high-tech jobs and by the boost that technology-driven productivity has given to the economy. We forecast that the high-tech revolution will have long-term economic implications similar to those of the industrial revolution. In fact, contrary to initial expectations, the demand for space has increased, as different types of office-using jobs have been created.
The rapidly evolving high-tech world has stimulated demand for increasing amounts of information and has spawned brand new industries, including e-commerce and high-tech telecommunications. It has also triggered advances in existing industries, such as biotech and healthcare, thereby stimulating new job growth. This has resulted in a tremendous demand for technology-related jobs. For 1996-2006, the United States Bureau of Labor Statistics (USBLS) forecasts that the three fastest growing occupations will all be computer-related: (1) computer scientists (including database administration and computer support specialists), (2) computer engineers, and (3) systems analysts. Although overall average job growth is expected to slow to 1.4 percent per year for the next decade (from 1.9 percent), the top three occupations all computer-related will grow by over 100 percent. This is seven times the average growth rate across all occupations.
Technology and Downtown America
Another prediction that has not come to fruition is the demise of traditional downtowns, as office users were expected to flee to lower cost suburbs or cheaper metropolitan areas. While it is true that many back-office operations have relocated out of high-cost CBDs, the fact remains that downtown markets are thriving, as technology jobs have clustered in certain cities and “tech corridors.” The uneven and clustered geographical distribution of high-tech growth has left many social and economic observers puzzled. Technology was supposed to make geography less relevant to business growth and allow rural areas to compete with central cities.
How is it, then, that in a world where large CBD’s like New York, San Francisco, Boston and Los Angeles were supposed to become irrelevant, high-tech and computer-related businesses are recording huge job gains in these cities?
The key is the supply of labor. With both local and national unemployment at or near record lows, businesses of all kinds are finding their ability to expand hampered by a shortage of qualified workers. In high-tech and computer-related employment, where demand outstripped supply even during the recession of the early 1990s, the shortage is particularly severe. With such a labor shortage, qualified “techies” can write their own ticket and work where they please.
This article, by Janice Stanton and Jason Spicer, originally appeared in “Technology Beat,” a publication of Cushman & Wakefield Research Services.
