The Economic Impact of Innovation
The Idaho Department of Commerce defines "innovation industries" according to the national Bureau of Labor Statistics’ "high-tech" industries based on the North American Industry Classification System (NAICS). Using NAICS, an industry is considered high-tech if employment in technology-oriented occupations within that industry is at least twice the average percentage for all industries, or 9.8 percent of the total employment.
The Importance of Innovation to Idaho’s Economy
Idaho’s innovation industries currently employ 8.5 percent of the state's workforce and earn 16 percent of the total wages. Economists use multipliers to illustrate the downstream and upstream jobs and wages associated with various industries. Applying the most conservative multiplier to innovation industry wages indicates that almost 30 percent of Idaho's wages are in the innovation sectors. In 2006, 56,017 people, worked in Idaho's innovation industries, earning average annual wages of $66,000--more than twice the state's total average wage. Similarly, applying a conservative jobs multiplier of 2.9 to the number of innovation jobs, results in a total of 163,000 jobs directly and indirectly attributable to the innovation economy--more than 25 percent of the state's workforce. These jobs represent Idaho's best opportunity to impact not only our state average wage, but our economy as a whole.*
The innovation industries contribute 18.4 percent of Idaho’s $45 billion Gross Domestic Product (GDP), or $8.4 billion. In fact, the GDP contributed by the innovation economy is higher than the combined GDP of all of our traditional industries.
Innovation Tax Revenues
Innovation companies represented 5.3 percent of all corporations and partnerships that filed Idaho income taxes in 2006. These companies paid 10.7 percent of the total income taxes collected. 2,144 innovation companies filed income tax returns and paid more than $11.2 million in income tax in 2006. When this figure is compounded by the income taxes paid by the innovation workforce, a clear picture of the Idaho tax environment begins to emerge. On average, the innovation industry and its employees pay significantly more in taxes than the cost of government services they consume.
Comparisons
National Comparison
According to the U.S. Bureau of Labor Statistics (BLS), Idaho ranks 23rd in high-tech employment vs. total employment at 8.5%. Idaho’s innovation industries continue to grow, and the Department of Commerce is working diligently to keep that growth on pace with the rest of the nation.
Idaho's average per-capita income ranked 44th in the nation in 2006. However the state's ratio of high-tech average wages to total average wages was 188%, ranking 3rd nationally.
Comparison to the Seven Surrounding States
The following comparison data refers to high-tech occupation employment as defined by the BLS rather than industry employment. High-tech occupations cut across all industries and are not limited to just the high-tech industry.
Compared to its seven surrounding states, Idaho ranked number three in the percent of high-tech occupations to total jobs. Average annual earnings in the innovation industries ranked 4th among the seven northwestern states at $66,107. Among these same states, Idaho ranked 4th in ratio of innovation companies to total companies.