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Trillion-Dollar Tech and Innovation Sector Key to California Economic Success

Loren KayeTechnology and innovation are key drivers of economic development in California, creating well-paid jobs throughout the state and producing an outsized proportion of tax revenues.

The Role of the Tech Sector in Shaping California’s Economy, released today by the California Foundation for Commerce and Education (CFCE), finds that on its own, the Tech Sector accounts for 19% of California’s gross regional product (GRP), contributing $623.4 billion to the state’s economy in 2022. The full breadth of its impact is even larger when taking into account the activity it drives in other industries via business-to-business interactions and through personal consumption spending by Tech Sector workers. Factoring in these ripple effects, the Tech Sector contributed nearly $1 trillion to California’s GRP, accounting for 30% of the state’s economy. In terms of employment, the Tech Sector supported 4.2 million jobs, or 20% of all jobs statewide.

Staying Competitive

“For California to sustain its innovation-based economy and to maintain its competitive edge, it will need to offer an environment that encourages business attraction, retention, and growth,” said CFCE President Loren Kaye.

Public Policy Impact

“California has historically been a leader in technology and innovation, but costly public policy decisions that hurt businesses—including those in the technology sector—can sink them,” said Kaye. “Policies that stifle innovation, constrain development of artificial intelligence, or overhaul of antitrust laws, can profoundly harm California’s upward economic development trajectory.”

The Tech Sector’s sizeable economic output serves as a critical source of tax revenue for California. The Tech Sector and its supported activity contributed $55.9 billion in state tax revenue during fiscal year 2022–23, which accounted for 30% of total state tax revenues. Most of the sector’s fiscal contribution comes from personal income and corporate taxes, which account for 22% and 44% of these taxes’ total revenues, respectively. A strong Tech Sector will play the definitive role in uplifting the state from its current—and future—fiscal situation.

About Study

The study was prepared by CVL Economics, an economic consulting firm that takes a data-driven, human-centric approach to equitable development and sustainable growth.

CFCE is affiliated with the California Chamber of Commerce and serves as a think tank for the California business community. CFCE is a nonprofit corporation organized under Section 501(c)(3) of the Internal Revenue Code.

Loren Kaye

This post was originally published on this site

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