At Tech Alliance’s annual lunchtime event, rigorous analysis and calls to action

It’s a tough time in Washington, our home state, where technologists are strong, satellites abound, and economic growth may not be above average.

That was the sentiment from the Technology Alliance’s annual State of Technology luncheon on Tuesday, where a deep dive into Amazon’s Leo business and optimism for the future of the region’s satellite industry was preceded by a McKinsey analysis that provided a sobering picture of the country’s overall economy.

Washington’s economy has grown 30% over the past decade, double the national average and the highest rate in the country, according to statistics presented by McKinsey partner Sarah Miller.

But three hurricanes threaten to cut that growth nearly in half, Miller warned in his remarks to the crowd: domestic migration has worsened, living costs are outpacing incomes, and the country’s economy is unusually dependent on minority employers.

The result: the Federal Reserve projects Washington’s growth will slow to about the national average. That means about 300,000 fewer jobs than the state would otherwise create, based on McKinsey’s analysis of the 3.6 million people in non-government jobs nationwide.

“Growth built on a small foundation, focused on a few companies, one industry, one region, has a real risk and the conditions that sustain that growth are changing,” said Technology Alliance CEO Laura Ruderman in her opening remarks before the launch.

The Technology Alliance was founded nearly 30 years ago when a group of business and academic leaders realized that Washington had the resources to become a center of innovation but needed to organize or risk being left behind.

“That’s still our job,” Ruderman told the crowd, “and it’s more important now than ever.”

Two clear messages emerged: the state needs a comprehensive strategy for economic development, and it needs to invest heavily in building a rural workforce, with strong funding for education.

A larger background: The report comes amid a broader debate about Washington’s economic direction. The legislature passed a 9.9% tax on income over $1 million in March, and some top founders and executives have been moving to lower-tax states, raising questions about whether the state is taking advantage of the benefits that have made it an economic powerhouse.

Miller’s analysis noted that Texas has attracted more than 300 corporate headquarters over the past decade with low taxes, affordable housing, and a friendly business environment.

He also cited Minneapolis, which has tripled its construction of affordable housing to support population growth, and Illinois, which has invested heavily in the community in a quantum and microelectronics park on the south side of Chicago.

While the state has “a lot to celebrate” about its overall economic situation, Miller told the crowd that the company hopes “these facts will create a fiery platform for all of you to work together to create a sustainable economic development strategy for Washington.”

Important statistics: McKinsey analysis went into each wind. In the five years before the pandemic, Washington added nearly 150,000 people through domestic migration. In the five years since the epidemic began, that number has increased to 24,500 – meaning that more people are traveling to other parts of the US than coming to Washington from other states.

Immigrants to the state are now responsible for the nation’s population growth, a risk given by the state’s current immigration policies.

Housing costs increased by 59% and transport by 62%, both outpacing income growth of 33%. Four companies — Boeing, Microsoft, Amazon, and Providence — account for nearly one in 10 non-government jobs, a concentration two to three times greater than peer states.

Roots in education: Ruderman linked the data to what he calls the talent pipeline problem. Less than half of Washington high school graduates earn a high school diploma within eight years, ranking the state in the bottom five nationally. The Washington Roundtable projects a shortage of 120,000 to 135,000 skilled STEM workers over the next decade.

“You can’t build a world-class creative economy in a state that graduates half of its children,” Ruderman said in his opening remarks.

The Tech Alliance is piloting a program called STEM360 this fall in South Seattle that puts STEM professionals in high school classrooms for a full day of work immersion. Ruderman asked the chamber to help raise $100,000 to expand to all four grades at the high school.

Space as a light source: Another luncheon program offered some hope for the state of the space industry. More than 10,000 satellites have been built in Washington, two-thirds of all the world’s operational satellites are produced here, and private investment in the state’s space launch has reached $1.6 billion in the past 18 months, according to the presentation.

Amazon Leo VP Rajeev Badyal told the crowd that the program began in 2018 with six engineers behind black curtains in an office building in Bellevue. Today the company has launched more than 300 satellites at its Kirkland plant, which can produce dozens a week, and plans to begin commercial operations later this year.

But even the space economy discussion circled back to the central theme of the lunch. Badyal said the industry needs to do a better job of reaching students early.

“Actually, children don’t know much about our industry,” he said.

Kent Mayor Dana Ralph, who moderated a keynote panel with Badyal and Chris Weber, Amazon Leo’s vice president of business and product, noted that the Kent Valley alone has more aerospace manufacturing workers than the entire state of Colorado, yet Colorado is better known as an aerospace state.

“We don’t tell the story,” said Ralph.

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