The tech sector in Washington accounts for 22% of the state economy and ranks first in the entire United States with 10% directly employed in the sector, according to a new report from the Washington Technology Industry Association (WTIA). The Technology Sector Economic Outlook in Washington State and the Greater Seattle Region report highlights the essential and growing role of the information and communications technology (ICT) sector and tech roles in non-tech industries, while advocating for policies to support the ICT industry’s continued vitality in Washington state.

 

Tech remains a pillar of Washington state’s economy

WTIA first commissioned a report in 2021 on the impacts of the technology sector on Washington’s economy and recovery through the first phase of the pandemic. In this subsequent study, completed in May 2023, those initial findings are updated with a look towards the future of the sector in Washington state. The 2023 study found that the tech sector remains a key driver of Washington’s economy, with the net increase in tech sector employment and tax revenue generation still far exceeding growth among other major sectors in the state’s economy.

In 2022, the ICT industry directly employed 360,900 people, making it the fastest-growing industry in the state. Tech sector employers also added 89,000 new workers to their payrolls between 2019 and 2022, an increase of 33%. Overall, Washington’s tech sector accounts for nearly 1.5 million direct and indirect jobs. Each job in the tech sector is associated with four jobs across the state economy. According to one national study, Washington’s tech sector represents 22% of the state economy, higher than any other state in the union.

The tech industry has also been a catalyst of growth and economic recovery during the last two recessions. Amid the 2020-2021 pandemic and global recession, the ICT sector in Washington added more new jobs in 2020 than it did in 2019 (20,900 new workers, compared with 20,800 in 2019 and 16,000 in 2018). While statewide employment contracted 5.3% in 2020, ICT employment grew 7.7%. Overall, tech provided 20% of Washington state’s job growth between the two recessions.

 

Some other key takeaways

Additional highlights from the WTIA report include:

• The ICT sector contributes meaningfully to the state’s operating budget revenues, via both direct tax payments and household spending. Factoring indirect and induced impacts, the ICT sector supported $4.2 billion in state taxes in 2022.

• The ICT sector layoffs of 2022 and 2023 are small relative to the sector’s net growth. However, there remain significant numbers of open tech jobs in Washington state. As of May 2023, reported tech layoffs were equivalent to 15% of net jobs growth in the sector in 2022, bringing the statewide ICT job levels back to where they were in April 2022. The tech sector in Washington state is expected to grow by 3.9% in 2023, despite the layoffs.

• Washington state remains a hotbed for emerging technologies and innovation. Thanks to our vibrant startup ecosystem and innovation by enterprise, the state is already well positioned to lead or is already leading in the development of several transformative technologies that will help advance other key industries in the region, including generative artificial intelligence (AI), 5G, edge computing and digital transformation, cloud, satellite broadband, healthcare, and clean energy.

ICT sector growth in WA requires ongoing support

To maintain our role as a global leader in technology innovation, more can be done to create a supportive environment that promotes innovation and job growth in the ICT sector in all corners of Washington state. Without sustained investments in the workforce and startup community, policy modernization and accountability that promotes innovation and growth, and cross sector collaboration, we risk our tech firms and jobs leaving the state.

• Regulatory and economic uncertainty stifles innovation. Rather than creating new policies for each emerging technology, policymakers should evaluate and modernize existing laws and regulations governing existing technologies. This approach would ease the cost of compliance and reduce the regulatory uncertainty which disproportionately impacts our startup, small, and medium sized tech businesses.

• There are still thousands of tech jobs unfilled across the sector and in other sectors that rely on science, technology, engineering, and math (STEM) talent and computational thinking skills. Policymakers should protect the use of existing resources, like the surcharge tech businesses pay into WEIA, to prioritize education of both educators and technologists in these high-demand fields.

• Washington can lead the nation in the research, development, and deployment of emerging technologies. Policymakers should consider ways to make investment in emerging technologies more equitable and stable, develop supports to encourage commercialization of products and services, and support workforce development.

To download the full report, please visit here.