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The Honolulu Advertiser
Posted on: Tuesday, April 24, 2007

1,328 new high-tech jobs for Hawai'i

By Sea Hao
Advertiser Staff Writer

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The state tax department yesterday released draft numbers showing that 111 qualified high-tech businesses benefiting from state tax credits reported creating 4,234 jobs between 2001 and 2004.

That figure includes jobs created at technology and performing arts businesses, but excludes potential job loses during that period. Tax Director Kurt Kawafuchi said the department expects to release final job-creation figures this summer.

Advertiser Staff

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Hawai'i added 1,328 high-technology jobs between 2000 and 2005, which was the fourth highest number of new tech jobs in the nation, according to a survey released yesterday.

That 10 percent growth rate in tech jobs during the five years ranked fifth among all states, said the American Electronics Association in its annual Cyberstates report.

However, Hawai'i's high ranking had a lot to do with massive job losses in technology on the Mainland since 2000.

"Definitely Hawai'i was not affected as much from the technology bubble as other states were," said Matthew Kazmierczak, AEA's vice president for research. "You didn't have the massive run-up the Mainland had and then the massive rundown" in tech jobs.

Still, "Given your population size and the size of the tech community ... it's not bad" to see 1,328 new technology jobs created since 2000, Kazmierczak said.

Hawai'i also had one of the smallest technology sectors in the country ranking 47th among the 50 states, the District of Columbia and Puerto Rico with 14,024 technology jobs.

Growth in Hawai'i's tech employment came during a period when Hawai'i was offering one of the nation's most generous technology industry tax incentives Act 221 from 2001. The aim of the program, now known as Act 215, is to diversify Hawai'i's economy and create high-paying jobs that would keep the state's most talented youths from moving to the Mainland.

An estimated $311 million in credits were generated since 2001, though that loss in revenues is spread out over multiple years. Supporters of the incentives point out that in recent years, local companies such as Hawaii Biotech, Hoku Scientific and Hoana Medical have grown with help from the credits. They maintain that the cost of the credits is more than offset by the economic activity they generate.

However, measuring the impact of the credits is difficult because the state doesn't release the identities of the companies or track the number of jobs they create. It's impossible to know how many new tech-sector jobs would have been generated without the credits.

Still, the Cyberstates study supports the notion that technology jobs are highly lucrative, averaging $63,862 in annual wages statewide in 2005. That was enough to rank Hawai'i 27th among the states in terms of average high-tech wages.

In addition to ranking low in terms of technology industry employment, Hawai'i ranked 38th in per capita research and development spending and 34th in venture-capital investments.

The Cyberstates job figures are based on Bureau of Labor-provided figures for 49 high-technology industrial sectors. However, the study does not account for some sectors that qualify for Hawai'i technology tax credits such as the performing arts, biotechnology, astronomy and ocean sciences.

As a result, the survey may not completely account for tax-credit-related job growth, said Jeff Au, managing director for Honolulu venture capital firm PacifiCap Group LLC.

"Thirteen hundred jobs over five years sounds very low. I think it's undercounting," he said. "Surveys are useful and they give you a sense (of trends), but it's hard to get exact data."

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