High Tech Offers Lift to L.A.

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Advances in technology over the past decade have created a billion-dollar high-tech industry that, for many, seems to have appeared out of thin air. The high-tech industry can seem incredibly exclusive, especially if you didn’t grow up with apps and smartphones. The learning curve to understanding the digital world can seem impossibly steep and possibly not worth climbing at all – a sentiment that many L.A. businesses seem to continue to share.

However, more and more L.A. businesses are slowly overcoming this mindset. A recent study released by the Los Angeles County Economic Development Corp. revealed that high-tech jobs are the fastest-growing occupation in the county. In fact, a quarter of these high-tech professionals are in demand across all industries – not just those that are fundamentally dependent upon modern technology such as aerospace and biotechnology.

This means that a high-tech materials scientist can potentially find a profession enhancing products in the plastics industry or a software consultant can help a clothing store better market its brand. High-tech professionals, who are interested in bringing their skills to industries that have not yet fully gone digital, might be the key to growing businesses that were born long before industrial robotics replaced assembly line workers.

The LAEDC report shows that Los Angeles is starting to understand that incorporating advanced technology can help all companies profit. As more consumers socialize, buy and research online, there is an increased incentive for businesses to implement advanced technology in their marketing practices, software and hardware updates, delivery services or any number of improvements to the supply chain.

Nearly 368,000 high-tech experts are currently working in low-tech industries in Los Angeles, thus making their jobs one of the few occupations to not only rebound – but to drastically surge – since the recession.

Given L.A.’s close proximity to Silicon Valley, some economists say that these numbers are still low in comparison with the city’s technological potential. Venture capitalist Peter Thiel told the Los Angeles Times in October that the relatively low rates of investment in L.A. startups drastically “underestimate” the L.A. region, where we constantly exchange workers with the Bay Area’s best tech firms.

Rapid shift

Thiel told the outlet that this undervaluation is most likely due to L.A.’s lack of affordable housing, which tends to discourage the growth of startups. But it also likely has to do with a rapid shift within the tech industry itself. The LAEDC report points out that within the last decade, the number of high-tech manufacturing jobs has drastically decreased, while high-tech service jobs have skyrocketed. L.A.’s manufacturing sector has relied on high-tech experts to lead the nation in production, but we have less of an enviable history with stellar service startups and venture capitalist endowments.

As you consider expanding or diversifying your portfolio, remember that the opportunity to invest in high tech is amplifying. If you want to invest in high tech as this trend continues, you do not necessarily need to limit your focus to the manufacturing sector or the aerospace industry. Think instead about sectors that stand to capitalize from service improvements owed to high tech – about health care companies, for instance that might be incorporating large-scale IT changes or companies in the hospitality industry that are becoming increasingly adaptive to the prevalence of high tech.

As more businesses start to think about how engineers, consultants, R&D specialists and other high-tech professionals could be employed to improve their product or service, our local economy could reap the benefits. High-tech workers tend to be more highly educated and skilled than workers elsewhere, so their wages would be above average. This would have positive long-term effects as Los Angeles begins to cultivate and grow experts that can specifically improve the mission and services of local companies.

Trends like automation, globalization and technical progress have only newly allowed old industries to go digital. Businesses need to be equipped to incorporate high-tech experts into the service-oriented economy.

Eric W. Johnson is a financial adviser with the Private Wealth Management Division of Morgan Stanley in Los Angeles.

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