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The Honolulu Advertiser
Posted on: Tuesday, November 12, 2002

State report provides misleading information on tech industry's size

By John Duchemin
Advertiser Staff Writer

 •  Hawai'i technology on public radio
Hear The Advertiser's John Duchemin and the latest Hawai'i technology news every Wednesday on Think Tech Hawai'i, 5 to 6 p.m. on Hawai'i Public Radio KIPO FM 89.3, with hosts Jay Fidell and Gordon Bruce.

Tomorrow: "Hawai'i's Job Market: How to Get a Tech Job." Guests are Beverly Marica, regional vice president of Adecco, and Valerie Hashimoto, branch manager of ManPower Professional. Phone lines will be open for comments or questions about Hawai'i's tech industry. On O'ahu, call 941-3689. From the Neighbor Islands, call toll-free (877) 941-3689.

Through Gov. Ben Cayetano's eight years in office, his administration has publicized the rise of a vaguely defined "technology industry" as a new economic pillar for Hawai'i.

Cayetano officials have pointed to some signs that a fledgling industry exists: the gradual awakening of an angel investing community, the occasional venture deals by small startup companies, and the passage of the Act 221 tax credit for high-tech investments.

Too often, however, state departments have promulgated misleading information on the size and scope of high-tech Hawai'i. As Gov.-elect Linda Lingle prepares her economic policies, now is an excellent time to dispel some myths.

One of the debatable statistics is the Department of Business, Economic Development and Tourism's claim that the technology industry comprises some 12,400 jobs.

That number, as described in the May 2001 DBEDT report "Hawaii's Expanding Tech Sector," is frequently used to convince observers of the tech industry's importance, and to show that the state is diversifying away from tourism.

While tiny compared to the 550,000 jobs statewide, this "sector" is big enough to seem promising when measured against the 40,000-worker hotel industry or the 35,000-employee restaurant business.

But when examined closely, many of those 12,400 jobs have little to do with a high-tech industry.

According to the DBEDT report, 53 percent of those jobs — about 6,600 — were in telecommunications, which includes residential phone service, cell phone service, paging, cable television, TV stations, and radio stations. That means morning radio disc jockeys, Oceanic Cable customer service representatives, Verizon telemarketers, and Joe Moore are all officially part of the technology sector.

Another 23 percent of the jobs — about 3,600 — were in information technology, including software development, the first "pure" high-tech category mentioned in the report. But this category also lumped in more generic services: Internet service providers, computer hardware and software stores, computer repair shops and data processing firms.

Another category is biotechnology, a sliver of an industry with about 600 employees, which includes genetic crop research — but also "food crops grown under cover," or greenhouse farming, and "animal aquaculture," or fish farming.

Finally, "research, development, and education" had about 1,600 employees — including many working as staffers in computer training schools.

The vast majority of these jobs would be eliminated in a more accurate attempt to define the size of the high-tech industry. Nothing is wrong with them, but most are service jobs that can be found anywhere.

Buried somewhere in the DBEDT estimate of Hawai'i technology employment are hundreds, perhaps a thousand or more, "real" high-tech jobs — researchers bent over lab tables, programmers hunched at computer screens — that are truly independent of tourism, and perhaps represent Hawai'i's brightest hope for creating a new source of economic growth.

But because of the lack of statistical clarity, very little is known about their true present role in the economy, which makes it hard for leaders to make informed decisions relating to the tech sector.

The governor-elect thus faces an important choice. She can choose to improve her own decision-making ability, and the public's understanding of the technology industry, by ordering her administration to produce fresher and more accurate data.

Or she can accept the old statistics — and continue to propagate the misconception that Hawai'i has a much larger high-tech industry than actually exists.

Reach John Duchemin at jduchemin@honoluluadvertiser.com or at 525-8062.