Studies Tout Massachusetts Tech Scene, But Talent Issues Loom

Several days after one study ranked Boston as the U.S. city best positioned to capitalize on the transition to a digital economy, a new report bolsters Massachusetts’s tech credentials—but with some important caveats that could hinder the Bay State’s growth.

Last week, a report titled “Innovation That Matters” drew national attention with its somewhat surprising conclusion that Boston—not the San Francisco Bay Area—has the most complete set of ingredients to lead in the tech-focused economy. The report examined 25 cities’ talent, available capital, industry specialization, density of startups and city residents, connections between startups and other key stakeholders, and culture. The report was produced by the U.S. Chamber of Commerce Foundation; Free Enterprise, a publication produced by the chamber; and 1776, a startup incubator and seed fund based in Washington, DC.

The Bay Area came in second in the report’s rankings, followed by Denver, the Raleigh-Durham area in North Carolina, San Diego, and Austin, TX. New York was 10th.

“While the San Francisco Bay Area is the clear leader in total startup activity, its lack of a cohesive community and declining quality of life for residents helped move Boston to the top spot,” the report said. “Denver and Raleigh-Durham were surprise stars: They have fewer startups than larger cities like New York and Los Angeles, but stronger ties between the startups and institutions in the community. San Diego performed well thanks to its strong talent and capital base, dense community, and growing specializations in health and IT.”

Massachusetts fares well in comparison with other states, in a different study released Tuesday by the Mass Technology Leadership Council (MassTLC). The trade group’s annual State of the Technology Economy report shows the state ranks first for concentration of tech jobs, echoing the Boston area’s top ranking for startup density in the Innovation That Matters report. Massachusetts is also tops in tech manufacturing, second in tech services concentration, and fourth in the number of tech jobs and tech firms added in 2015, according to MassTLC’s study. Those stats could get a boost with the relocation of GE’s corporate headquarters to Boston.

But both reports also point out weaknesses in Massachusetts’s high-tech workforce. In the Innovation That Matters study, Boston got high marks for the percentage of educated residents and its influx of international residents, but it ranked much lower on measurements of its citizens’ tech skills and in efforts to attract people from other U.S. cities.

Women and minorities are underrepresented in tech firms nationwide, and that problem plagues Massachusetts as well, the MassTLC report shows. Minorities hold 28 percent of the state’s computer and mathematical jobs, including just 5 percent held by Latinos and 3 percent by African-Americans. Women hold just 23.5 percent of the tech jobs and only 12 percent of the board seats at tech companies. Although Massachusetts fares better than some peer states in several diversity metrics, its overall rate of diversity growth in tech jobs lags the national average, according to MassTLC stats.

The state will need to solve these issues if it wants to meet its goals for tech job growth. In 2010, MassTLC set a goal of adding 100,000 net new high-tech jobs by 2020. Five years in, the state had only met a third of its goal, adding around 34,000 tech jobs in that period. MassTLC blamed a talent crunch that it said makes it difficult to fill the more than 123,000 tech job openings posted in the state last year.

“Our region has a responsibility to take a leadership position in training and retaining a workforce with 21st century skills, especially among women and underserved minorities, in order to meet the tech community’s critical need for talent,” MassTLC president and CEO Tom Hopcroft said in a prepared statement. “Furthermore, we must continue to tell our many success stories and boast of our state’s numerous competitive advantages. That’s how GE was convinced to move here, and that is what is needed in order to attract and retain the most talented innovators if we are to expect more companies to start, stay, and relocate to Massachusetts and put down deep roots.”

Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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