The 10 Best and 10 Worst States for High-Tech Business

By Jordan Weissmann

A National Science Foundation report tells us which states have built cutting-edge economies

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National Science Foundation

Could Delaware, that plain-Jane, highway-rest-stop-sized sliver of the map, secretly have the most high-tech economy of any U.S. state? Judging by one important measure, it just might. 

Every two years, the National Science Foundation (NSF) releases a wide-ranging assessment of America's science and technology sector, including a state-by-state breakdown of everything from patents issued to engineers employed. Nestled in the data is a single statistic that I've used to rank which state economies are most tech-centric: the percentage of their business establishments that are part of a high-technology industry. 

What precisely does that measure? A "business establishment" is a single physical location where, well, business is conducted. It could be anything from a factory to a lab to an office. The NSF combed through the most recent Census data, which was collected in 2008, and classified industries as "high-tech" if they employed twice the average number of scientists, engineers, and technicians. It's a wide net that captures 45 sectors total, including heavy machinery manufacturing, pharmaceuticals, software design, and oil and gas extraction, just to give you a sense of the variety. So, we're not just talking about states full of Facebook app designers. 

Ultimately, we're looking at the places where companies that thrive on science have put down roots, and now dominate the business climate. 

On that score, Delaware, home to chemicals manufacturer DuPont, leads the nation. As depicted on the map above, it's part of a mid-Atlantic tech-corridor, including Virginia, Maryland and Washington, DC, where science and engineering play an outsized role in the regional economy. (DC would have topped the rankings, but because it's not a state, and is such a different type of economy, I've omitted it.) And before you ask, no, government labs aren't included in the figures. Although having Uncle Sam around hasn't hurt its development into a tech mecha, the region now has a dense network of private firms.  

Which state economies are the lowest tech? You'll find them in Appalachia, the Southeast, the upper Midwest. These are the places where a computer nerd doth not go.  

Of course, this is not a perfect ranking system. The most tech-challenged state, (you'll have to click to see which it is), is in the midst of a natural resources boom that could reshape its economic identity. Meanwhile, some states perform strongly in one tech-related category, but poorly in others. Take Nevada, which ranks in the top 10 for its percentage of high-tech establishments, but near the bottom on research and development spending and science and engineering employment. Alabama, which has one the lowest numbers of private tech establishments, actually enjoys a good deal of overall R&D spending, thanks in part to NASA's presence (government spending does factor into that statistic). Or take Florida and New York, which have the third and fourth highest totals of high-tech establishments, but also large, diversified economies that are less tech-reliant than those of a small state like Utah. 

So if you can't wrap your head around a high-tech ranking where the I-95 corridor comes out on top of Silicon Valley, you can always play with the data. 

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This article available online at:

http://www.theatlantic.com/business/archive/2012/02/the-10-best-and-10-worst-states-for-high-tech-business/253043/