Problems Seen for High-Tech Economy

California ranks among the nation’s leading technology states, but it will have to improve the science and technology education of its citizens if it hopes to stay there, says a report to be released today by the Milken Institute.

The state is producing too few scientists, engineers and technicians to meet industry demands, according to the Santa Monica think tank. It is a gap that California so far has bridged by luring workers from other states and nations. High-tech hotbeds such as Silicon Valley have been a magnet for entrepreneurs from Indianapolis to India.

This abundance of technology talent is one reason California currently ranks near the top in the Milken Institute’s new State Technology and Science Index, which ranks all 50 states in terms of their competitiveness in the new economy. California is No. 3, behind Massachusetts and Colorado.

But with demand for skilled workers rising in competing tech centers around the world, California may be unable to import enough talent to meet its shortfall in coming years, according to Ross DeVol, director of regional studies at the Milken Institute.

“The real risk is that we can’t attract enough of them in the future,” DeVol said. “There are going to be more opportunities locally for them in their own countries.”

Meanwhile, California’s growing number of poorly educated citizens poses a huge challenge to an economy increasingly driven by knowledge and innovation, DeVol said.

California ranks 43rd nationally on the strength of the verbal SAT scores of its college-bound students, and in the bottom half of all states based on average math SAT scores.

The skills deficit is particularly acute among Latinos. Previous research has shown that only 8% of California’s adult Latinos have at least a bachelor’s degree, compared with 33% of non-Latinos.

That education gap that has proved stubborn, persisting into the second and third generations after families immigrate to the U.S., and it could have huge negative consequences for the state’s economy in the not-so-distant future, given that Latinos will make up the majority of California’s work force by 2025.

“From an economic standpoint, it’s going to place an upward limit on how fast we can grow ... and the types of industries we attract,” DeVol said. “It also will exacerbate income inequality.”

The Milken study recommends greater efforts to prepare Californians, particularly Latinos and African Americans, for science and technology careers in order to support the high-tech economy.

Milken’s first State Technology and Science Index was underwritten by TechVentures Network, formerly known as the Bay Area Regional Technology Alliance, which wanted to know how California stacked up against other states in terms of the building blocks needed to create and sustain a vibrant high-tech economy.

The index examined such components as research and development spending, educational institutions, venture capital, entrepreneurial networks, human capital and technology concentration.

The good news is that California’s science and technology assets, which Milken researchers have pegged as the main ingredients for success in the 21st century, put it near the top of the heap.

Rounding out the top 10 behind California are Maryland, Virginia, Washington, New Jersey, Connecticut, Utah and Minnesota. Arkansas trailed the pack with a 50th rank.

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The Top 10

California holds a precarious No. 3 ranking among states for competitiveness in technology, the Milken Institute said.

Technology and science index, 2002

Rank ------------- Avg. score

1. Massachusetts - 84.90

2. Colorado------ 80.58

3. California ---- 80.37

4. Maryland------ 77.86

5. Virginia------ 73.33

6. Washington ---- 71.81

7. New Jersey ---- 69.95

8. Connecticut --- 68.58

9. Utah ---------- 68.26

10. Minnesota ---- 65.87

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Source: Milken Institute