OPINION – California’s rich history as an innovator dates back to the late 1800s when the port of San Francisco helped make the state a hub of the early telegraph and radio industries. A century later, Hewlett-Packard, Google, and Apple were founded in Bay-area garages. Today, California is the global leader in technology innovation and entrepreneurship with a GDP of $3.6 trillion fueled by the tech industry giants such as Apple, Google, and Meta.
Now, the industry faces a well-publicized down cycle. Tech stocks have seen a significant decline in valuation. Tech firms have announced employee layoffs. Monetary policies aimed at reducing stubbornly high inflation are resulting in less investment in startups. The cost of living in California is making it increasingly difficult to support a large, local workforce.
In the face of these challenges, it is important to consider who will be hurt and who can help.
First, California’s recent college graduates will be hurt by a prolonged downturn. According to market data firm Statista, 22.1 percent of California residents aged over 25 years held a bachelor’s degree and 14 percent held a graduate or professional degree. California’s higher education institutions play a critical role in nurturing a pipeline of talent for the technology industry. A downturn will narrow the technology industry onramp for thousands of recent college grads.
Second, non-tech industries, from manufacturing to healthcare to homebuilding, will be hurt. According to the state of California, California’s tech workforce is 1.88 million people. On top of that, U.S. Bureau of Labor Statistics data suggests industries most impacted by technology include healthcare, retail, construction/homebuilding, and hospitality – all dominant industries in California. The overall California economy is more dependent on the tech industry than anywhere else in the nation. Because of its sheer number of higher wage jobs, the impact of a diminished tech industry will be felt far and wide.
Third, advocacy organizations risk losing a valuable supporter. California’s most progressive policies are supported by the technology industry. CEOs and other tech leaders are at the forefront in areas such as immigration, LGBTQ+ rights, social services for the poor, universal healthcare, climate change, gun control and opposition to the death penalty. If California is to maintain its position as the vanguard of progressive ideas, advocacy organizations need the technology industry’s influence and support.
California is the global leader in technology innovation and entrepreneurship with a GDP of $3.6 trillion fueled by the tech industry giants such as Apple, Google, and Meta.
Who can help? The California Legislature can play a key role in safeguarding the technology industry. The state legislature can work with industry on realistic solutions to issues such as data privacy and child protection. Protecting the industry also involves safeguarding intellectual property rights and preventing trade secret theft. This can be achieved through stronger enforcement of intellectual property laws and implementing measures to protect against cyberattacks and data breaches. Now would also be a great time to clear the weeds in California’s excessively confusing regulatory environment.
Make no mistake, the tech industry contributes billions each year to the state in tax revenue. These taxes are the basis for public initiatives that benefit those who live here. Protecting the technology industry is vital for the state’s economy as it contributes significantly to job creation, tax revenue, and economic growth.
However, protecting the technology industry cannot come at the expense of competition and innovation. Dominant tech companies must work alongside smaller competitors and protecting tech cannot unfairly favor certain companies, which could damage public trust and negatively impact the state’s reputation. Any policies implemented to safeguard the industry must also balance the need for competition and consumer protection.
Protecting California’s technology industry is crucial for the state’s economy and continued innovation. Without a strong technology economy, California would need to find new ways to ensure the economic, social, cultural, and overall health of its communities – including funding critical programs and public services. Policymakers and other influential organizations must recognize this and start making sure tech’s cherished history is also part of California’s future.
Charla Griffy-Brown, PhD is a Senior Associate Dean and a Professor of Information Systems and Technology Management at Pepperdine Graziadio Business School