Thread: California’s information industry: $50 billion in pay raises

California’s information industry: $50 billion in pay raises


OCRegister · 13 hours ago

Is California’s economy simply lucky? Or good? Here’s a $50 billion hint!


U.S. workers’ earnings have risen by $2.7 trillion to $11.7 trillion from 2010 through 2017. That averages to 3.8 percent annualized growth. Californians’ compensation in the same period jumped at a 4.9 percent yearly rate totaling $472 billion in seven years. And in Texas, earnings rose at a 4.7 percent yearly pace that added up to $271 billion in extra compensation since 2010. (Photos compiled from the public domain)

By JONATHAN LANSNER | jlansner@scng.com | Orange County Register
PUBLISHED: June 4, 2018 at 8:00 am | UPDATED: June 4, 2018 at 10:21 am


It is way too easy to take truly Californian things for granted. The climate. The ocean culture. The wine.

Oh, and the economic power of the state’s information industries.

Just after the Great Recession was ending, as the grand Golden State-Lone Star State economic war of words was in high gear, I recall verbally sparring with a Texas booster.

The man, a transplant from California no less, warned that my state’s economy had been “lucky.” The waves of technology innovation coming from California — such as Internet-based information-sharing wunderkinds — were a bad fit for a solid business climate.

Now, I found this logic odd coming from a paid spokesman for a state whose key economic muscle comes from an industry that digs holes in the ground and prays that money pops out. Oops. I mean oil!

That “lucky” comment reverberated in my mind recently while reviewing some state-by-state data on the respective contributions various industries had on overall economic growth. My trusty spreadsheet tells me California’s information “luck” is continuing in a huge way.

One yardstick measuring what’s up in worker compensation comes out of gross domestic product math, the broadest count of business output. This tracking of “earnings” — wages and salary plus the cost of various benefits — also includes income for folks who work for others and the self-employed.

By this math, U.S. workers’ earnings have risen by $2.7 trillion to $11.7 trillion from 2010 through 2017. That averages to 3.8 percent annualized growth.

Californians’ compensation in the same period jumped at a 4.9 percent yearly rate totaling $472 billion in seven years. And in Texas, thinking of my pal, earnings rose at a 4.7 percent yearly pace that added up to $271 billion in extra compensation since 2010.

How much of these California gains were “lucky,” by my pal’s thinking?

Ponder what the Bureau of Economic Analysis defines as the information industry — from employees at giant information disseminators like Google and Facebook to smaller social media shops to software creators to movie makers and even newspaper people like myself.

This is not a huge California industry, employee-wise, with roughly a half-million employed in 2017.

Information’s cash flow is another story: Compensation for California’s information workers jumped by $50 billion in seven years, nearly a $100,000 pay boost per worker.

How big is the California information industry’s slice of the pay pie? For starters, this industry has roughly 3 percent of the state’s jobs, but it accounted for 11 percent of statewide pay gains since 2010!

From a national perspective, nearly $2 of every $100 paid out in higher compensation for U.S. workers since 2010 came from California’s information industries.

Or, simply put: Earnings gains for California’s information workers roughly equals all pay hikes in all industries in Utah and Arizona during the last seven years.

Meanwhile, 285,000 Texas workers toil in the state’s signature energy industries — tracked by government data crunchers to include oil and gas extraction plus mining and quarry work. Collective Texas earnings in these crafts rose by $17 billion since 2010, a respectable $60,000-a-worker jump.

Just so you know, there’s no California-vs.-Texas debate here. The performances of these key sectors in both economies are remarkable.

But I will note that California’s information trades have not had a single year of falling worker earnings since the recession ended. The Texas oil and gas trades suffered two years of bad luck — compensation declines in 2015 and 2017.

Look, nothing is a given. And California’s information industry battles in an ultra-competitive world where fortunes can be fleeting. But history and momentum suggest this isn’t just a lucky streak.

The wealth-creation machine that is California’s information industry, the envy of the world, has created its own financial havoc within the state. Information’s success distorts everything from government budgets to traffic patterns to real estate.

For example: Ever wonder who can “afford” California housing?

It’s a good bet the buyers peddle “information” for a living.

https://www.ocregister.com/2018/06/0...in-pay-raises/

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