2000 Alaska Science & Technology Innovation Index

1. 2000 Alaska Science & Technology Innovation Index November 2000 Alaska Science & Technology Foundation 4500 Diplomacy Drive, Suite 515 Anchorage, AK 99508-5918 Ph: 907-272-4333, Fax: 907-274-6228 www.astf.org

2. Table of Contents Page Executive Summary – Where Alaska’s doing Well, Average, and Poorly 3 Population and Economic Infrastructure Population 4 Age Distribution (Alaska vs. National Average) 5 Age Distribution (Alaska 1990 vs. 1999) 6 Alaska Gross State Product 7 Employment and Earnings 8 Employment Growth Rates 9 Employment by Major Industry 10 Employment Change 11 Per Capita Personal Income 12 Earnings by Major Industry 13 Technology Industry Jobs/Wages 14 Innovation Total Patents 15 Utility Patents 16 Utility Patents Per 100,000 Population 17 Research and Development Expenditures 18 Research and Development by Performer 19 Research and Development at the University of Alaska Fairbanks 20 Sources of Federal Research and Development Dollars 21 State Government Research and Development Expenditure Per Capita 22 Financial Capacity Initial Public Offerings 23 Venture Capital 24 Small Business Innovation Research Awards 25 Small Business Innovation Research Awards Per Million Persons 26 Infrastructure and Human Resources Online Population 27 Digital State Government 28 Ph.D. Scientists and Engineers Per 1000 Workers 29 Scholastic Assessment Test Scores 30 Educational Attainment 31 University of Alaska System Headcount, Degrees Awarded, and Faculty 32 Science and Engineering Graduate Students 33 Science and Engineering Doctorate Awards 34 Appendices A - ASTF Technology Industry Standard Industrial Codes 35 B - Advisory Committee and Acknowledgements 36 C – References 37

3. Executive Summary • Welcome to Alaska’s first science and technology innovation index. High paying jobs in growth areas are critically needed to offset the decline in wealth and employment from Alaska’s North Slope. These new jobs require technical innovation, capital, management, and trained workers. By examining historical trends and comparison with selected other states and the U.S. average, this index represents a snapshot in understanding areas where Alaska is either doing well, average, or poorly in terms of science and technology innovation and potential. • Where Alaska is doing well: • Growth rate in technology industry jobs, starting from a small base (p. 14) • Patents issued to Alaskans are on an upward trend (p. 15) • Households with internet access and computers, Alaska ranks 1st in the nation (p. 27) • State government utilization of digital technology (p. 28) • Scholastic Assessment Test (SAT) scores (p. 30) • Percentage of adults with high school degrees (p. 31) • Where Alaska is average: • Per capita personal income equal to national average (p. 12) • State government research and development (R&D) expenditure per capita (p. 22) • Percentage of workforce with Ph.D.’s in Science and Engineering (p. 29) • Percentage of adults with college degrees (p. 31) • Where Alaska is doing poorly: • High outward migration of college students and younger aged workers (p. 5) • Gross state product has started to decline (p. 7) • Overall job growth is slight (p. 8) • High unemployment percentage, Alaska is 2nd in the nation (p. 8) • Relatively high percentage of non-resident workers (p. 8) • High paying jobs are on decline due to manufacturing and oil industry reduction (p. 11) • Slow growth rate of per capita personal income, Alaska is lowest of the 50 states (p. 12) • Low percentage of high-tech workers (p. 14) • Patents per capita lag the national average (p. 17) • Low R&D expenditures per capita and low share of industry R&D (p. 18) • Venture capital is essentially nil (p. 24) • Small Business Innovation Research awards are increasing but on a per capita lag the national average (p. 26) • Decline in University of Alaska student and faculty headcount (p. 32) • Low science and engineering graduate students per capita (p. 33)

4. Sources: Alaska Department of Labor and Workforce Development, Alaska Population Overview: 1999 Estimates, May 2000, and An Economic Profile of Alaska, June 2000 With a population of 622,000 in 1999, Alaska ranked 48th out of 50 states. Only Wyoming and Vermont have smaller populations. In spite of its low population density of 1.1 person per square mile, Alaska’s population in 1999 was 70% urban (places with greater than 2500 persons) with 42% living in Anchorage. In contrast, the U.S. national average is 77 persons per square mile and is about 75% urban. In 1999 Alaska’s racial makeup was 74% white, 17% Native American, 5% Asian & Pacific Islander, and 4% African American. %5 of Alaska’s population have Hispanic ethnicity. Following a rapid increase after World War II lasting until 1952 , Alaska’s population grew at about 3% from 1952-1973. Population then leaped due to the construction of the Trans-Alaska Pipeline System and then dipped with a recession in 1977-1980. In the early 1980’s Alaska’s population advanced again as oil wealth was spent building infrastructure along with private and federal investment. Overcapacity in the economy and oil price decline in 1986 created a severe recession with consequent population loss. In the last decade, Alaska’s population has averaged a 1.3% growth rate. Natural increase is currently the major component of population growth. Recent strong economies in other states that typically supply migrants to Alaska have resulted in a decline of migrants to the state. Downsizing and restructuring within the military and oil industries have also contributed to net out-migration.

5. Sources: Alaska Department of Labor and Workforce Development, Alaska Population Overview: 1999 Estimates and U.S. Census Bureau, Resident Population Estimates of the United States by Age and Sex, August 25, 2000 Versus the national average, Alaska’s peaks and valleys in age distribution are considerably more pronounced. Migration to Alaska began to sharply increase in the 1970 accounting for the dramatic increase in persons over 40. The large bulge at ages 35-45 was created by the 1980-1990 migration to Alaska. Outward migration is particularly high for 18-35 year olds and their young children under school age as they leave the state for more attractive education and employment opportunities. Many older citizens move south for retirement. In 1999, Alaska’s median age was 32.9 years compared with 35.5 years for the national average.

6. Source: Alaska Department of Labor and Workforce Development, Alaska Population Overview: 1999 Estimates, May 2000 Alaska’s population is aging due to military personnel losses and less interest in young-person migration to Alaska. The median age has increased from 29.3 years in 1990 to 32.9 years in 1999.

7. Source: Goldsmith, Scott, Alaska Gross State Product (GSP) 1961-1998, ISER, UAA, June 1999 Overall, in real 1998 dollars, after growing rapidly, Alaska’s GSP plateaued, and has recently declined. Petroleum has boosted Alaska’s economy since the 1970’s, peaked in 1988, and has been on decline. Other basic industries (seafood, tourism, logging, mining, air cargo, agriculture) contribute less to GSP than petroleum, but create more jobs. Infrastructure and support industries (utilities, communications, trade, and service industries) have grown rapidly as Alaska’s population grew and economy matured. Government remains a big contributor to GSP. Private industry has grown relative to government. State and local government have grown relative to federal government.

8. Source: Alaska Department of Labor and Workforce Development Alaska’s wage and salary employment and average annual earnings are growing only slightly. [The employee counts above are for wage and salary employment only; the self-employed are excluded.] In 1999, Alaska reported just over 20,000 persons unemployed and actively looking for work. Alaska’s 1999 average unemployment percentage (6.4%) was second highest out of 50 states. The 1999 U.S. national jobless rate was only 4.2%. Seasonal impacts on employment are unusually high reflecting construction slow-downs in winter and tourism related employment in summer. Due to the scarcity of employment opportunities in rural Alaska, many individuals do not meet the official definition of unemployed because they have not conducted an active job search.

9. Source: Alaska Department of Labor and Workforce Development In contrast to the 1960–1990 period, Alaska’s employment growth in 1995–1999 lagged the rest of the nation. Alaska’s employment growth remains in the 1-1.5% range through fall 2000.

10. Source: Alaska Department of Labor and Workforce Development, An Economic Profile of Alaska, June 2000 Employment counts are for wage and salary employment only; the self-employed are excluded. Government is the leading employer in Alaska with 17,000 Federal including military, 21,800 State, and 35,100 Local. Employment in natural resources, the source of Alaska’s wealth, is relatively small. A relatively high percentage (20%) of workers are non-Alaska residents.

11. Source: Alaska Department of Labor and Workforce Development, An Economic Profile of Alaska, June 2000 Over the 1994-June 2000 period, Alaska employment increased overall by about 20,000 jobs (7.7%). The lower paid services and trade sectors had the largest increase while higher paid and mining, oil, and gas job numbers decreased.

12. U.S. Department of Commerce, Bureau of Economic Analysis Personal income statistics reflect the kind of economic development opportunities people have, the quality of jobs people can find, and hence the quality of life. In 1999, Alaska ranked 17th out of 50 states in per capita personal income and was equal to the national average. In 1995, Alaska ranked 7th. Alaska’s per capita personal income growth rate of 2.5% from 1998 to 1999 was the lowest of the 50 states. For the nation, per capital income grew by 4.8% from 1998 to 1999, almost double Alaska’s rate. According to the BEA, Alaska personal income growth has been held back by slow growth in net earnings, reflecting weakness in all major industry groups.

13. Source: Alaska Department of Labor and Workforce Development Of the above major industry classes, the mining industry leads in the highest paying wages in Alaska. Top paying sectors within the mining industry were: 7,862 oil and gas extraction ($83,000/job) 1,185 metal mining jobs ($66,000/job)

14. Alaskan Jobs/Wages in Technology Industries Sources: Alaska Department of Labor and Workforce Development. See Appendix A for Alaskan technology industries definition used in this index. The number of technology industry jobs in Alaska, while small in absolute terms, grew 3.5 times as fast as total jobs over the 1994 to 1999 period. According to the American Electronics Association which uses its own definition of high tech, Alaska’s percentage of high-tech workers per 1000 private sector workers in 1998 was less than half of the US. national average. Alaska ranked 10th nationally in high-tech employment growth rate from 1997 to 1998. Alaska ranked 1st nationally in high-tech employment grown rate from 1990-1995 due to in part to its small base.

15. Source: U. S. Patent and Trademark Office Total patents granted to Alaskan residents is on the rise. The number of patents generated is a good indication of how active the idea creation process is. These new ideas are the basis for future products and companies. Total patents include utility patents (inventions), design patents, plant patents, and others.The origin of a patent is determined by the residence of the first-named inventor. Three patent attorneys and three patent agents with Alaska addresses are registered with the U.S. Patent and Trademark Office.

16. 1994-1998 Alaska Utility (Inventions) Patents Source: U. S. Patent and Trademark Office The oil industry led Alaska in recent new inventions, followed by the medical profession, and fishing. Only two organizations were granted five or more utility patents during this five year period: Atlantic Richfield Company with 36 and the University of Alaska with 9.

17. Sources: U.S. Patent and Trademark Office and U.S. Census Bureau Alaska’s recent utility patents (inventions) per 100,000 population compares with other low population States. However, the low population states significantly lag the national average on a utility patent per capita basis.

18. Sources: National Science Foundation and U.S. Bureau of the Census Spending on research and development is a key component of economic development and is the driving force behind innovation in the market place. In 1997 R&D expenditures in Alaska were $136 million, ranking 47th out of 50 states in R&D expenditures. Alaska and the other small population states significantly lagged the U.S. average R&D spending per person.

19. Source: National Science Foundation Alaska ranked last out of 50 States in terms of industry sponsored R&D expenditures. The percentage of R&D performed by industry in Alaska significantly lags other states and the national average. Most research in Alaska in performed at the University of Alaska and by Federal agencies.

20. Source: National Science Foundation R&D expenditures at the University of Alaska Fairbanks, Alaska’s only doctoral institution, have been on an upward trend. The 1998 total of $76 million was comprised of: R&D Type $MM Engineering 4 Physical Sciences 14 Environmental Sciences 34 Life Sciences 20 Social Sciences 4 Total 76

21. Sources of FY98 Federal R&D ($Millions) Spent in Alaska Source: Rand, Discovery and Innovation: Federal Research and Development Activities in the Fifty States, District of Columbia, and Puerto Rico, 2000 In FY98, approximately $135 million of federal R&D funds were spent in Alaska. In FY98, Alaska ranked 41st among the 50 states, District of Columbia, and Puerto Rico in terms of the amount of Federal R&D dollars received. Per capita Federal R&D spending was: California ($441/person), Washington (220), Alaska (220), Hawaii (187), Montana (90), Wyoming (85), and Maine (63). Approximately 4% of all federal funds spent in Alaska on matters other than the direct support of individuals (i.e., such entitlements as retirement, disability, and housing assistance) is spent on R&D. This compares with 14% of all federal funds spent nationally on matters other than the direct support of individuals is spent on R&D.

22. Source: Battelle Memorial Institute and State Science and Technology Institute State government research and development expenditures per capita measure a state’s commitment to support basic research and commercialization efforts within that State. State support of research is particularly important for states that do not have any federal research laboratories and that do not have many large company corporate headquarters with accompanying R&D activities. In FY 1995, ranked 20th out of 50 states in State government R&D expenditures per capita and was on par with the national average.

23. Initial Public Offerings (1998 - October 2000) Source: Hale & Dorr LLP, www.haleanddorr.com An initial public offering or IPO occurs when a privately owned company initially offers shares of its stock to the public. It is a method regulated by the Securities and Exchange Commission to allow companies to raise funds for expansion, product development, or acquisition and to allow trading in the stock. Typically companies going IPO have developed sufficient track record to attract outside investors. The number of IPO’s in a state is a measure of the number of companies reaching this threshold. During this time period, Alaska had only one new company use this financing tool. Alaska Communications Systems Group raised $140 million.

24. According to the national PWC survey, venture capital in Alaska in 1995-1999 was nil. Sources: PriceWaterhouseCoopers, 1999 Venture Capital Report, MoneyTree and National Governor’s Association, Growing New Businesses with Seed and Venture Capital: State Experiences and Options According to PWC, venture capital is critical to growing new businesses that will drive the new economy. Entrepreneurs dominate the most rapidly growing segments of the U.S. economy. Young, high-growth firms require large amounts of outside capital long before they can tap traditional sources of debt from banks or equity from the public stock markets. Private equity from individuals or high specialized venture capital companies fills this gap. Venture capital is largely focused in a few key regions – Boston, Silicon Valley, and more recently, Austin, New York, Denver, and Seattle. Creating an entrepreneurial environment in other parts of the nation depends, in part, on the availability of venture capital.

25. Sources: Alaska Technology Transfer Center and U.S. Small Business Administration The Small Business Innovation Research (SBIR) and Small Business Technology Transfer Research (STTR) programs are competitive federal programs that fund cutting edge research by small businesses throughout the nation. SBIR projects are exclusively innovative, applied research projects that have significant commercial potential. Alaska has been traditionally underrepresented in SBIR/STTR awards, but has made significant progress over the past six years, rising from no awards in 1993 or 1994 to a total of $3.4 million SBIR awards as of May 2000. Alaska has not yet won an STTR award.

26. Source: U.S. Small Business Administration Alaska ranked poorly in the number of 1997-1998 SBIR Awards per million persons in comparison with both small and large population states. Alaska ranked 49th out of 50 states in fiscal 1998 and 50th in 1997 in terms of total number of awards. In terms of dollars awarded, for the 1997-1998 period, Alaska received $0.4 million out of $2.2 billion nationally or 0.02%.

27. Online Population Source: U.S. Department of Commerce, National Telecommunications & Information Administration, Falling Through the Net: Defining the Digital Divide, November 1999. The number of people online in probably the most basic indication of a state’s progress toward the digital economy. Alaska ranks first in the nation in terms of percent of households with internet access and computers and 13th in terms of percent of households with telephones.

28. Digital State Government Sources: The Center for Digital Government, 2000 Digital State Survey, Parts I and II, 2000 and The Progress and Freedom Foundation, The Digital State 1998, September 1998 In the most recent survey (2000), Alaska continued to rank highly in the use of digital technology in State Government. In the 1998 survey, Alaska ranked 9th overall in the use of digital technology in State Government. Washington State was ranked 1st overall.

29. Sources: National Science Foundation and Bureau of Labor Statistics The highest educated members of the workforce represent a driving force for technology breakthroughs and innovations. According to National Science Foundation estimates, Alaska had 1151 Ph.D. scientists and 165 Ph.D. engineers in its workforce in 1997. On a per worker basis, Alaska highly educated workforce lags California and Washington and is the same as the national average.

30. Source: The College Board SAT scores are a measure of a student’s readiness for higher education. Alaska’s SAT scores have exceeded the national mean score in both the math and verbal tests in the 1995-2000 period; however Alaska’s lead in math has shrunken. In 1998, 52% of Alaska’s high school graduates took the SAT test versus 43% for the national average.

31. Educational Attainment of Persons 25 Years Old and Over, March 1998 Source: U.S. Bureau of the Census As of March 1998, Alaska ranked 2nd of the 50 States in terms of percentage of high school graduates with 90.6% trailing only Washington State which had 92%. Alaska’s population with bachelors degrees or more was on peer with the U.S. average, compared well with the other small population states, but lagged California and Washington. The corresponding Alaska percentages for 1990 were 86.6% high school graduates and 23% college graduates.

32. University of Alaska System Headcount, Degrees Awarded, and Faculty Source: UA in Review, 2000, www.alaska.edu/oir/uair00/ Total headcount has declined 7% from fall 1995 to fall 1999. Master’s headcount fell by 13%. Doctorate headcount increased 9%. Overall baccalaureate degrees awarded fell by 11%, math & science baccalaureate degrees awarded increased by 31%, and engineering baccalaureate degrees awarded fell by 10%. Overall master’s and doctorate degrees awarded increased by 9 and 42% respectively. Total faculty declined by 5%. According to the National Center for Education Statistics, Alaska ranked 36th in the nation in the percentage (63.8%) of students who graduate from high school. However, only 44% of those students go on to higher education according to UAF admissions director Mike Mills. Furthermore, Mills said that Alaska sends more than half of its college-bound students out of state (in 1996 Alaska’s figure was 58% versus the national average of 17%). [Taken from Anchorage Daily News (6/25/2000)]

33. Alaska U.S. (000) Sources: National Science Foundation and U.S. Bureau of the Census Science and engineering graduate students are the pipeline for tomorrow’s practicing scientists and engineers. Science and engineering graduate students at the University of Alaska peaked in 1994 and have been declining faster than the national average decline trend. In 1998, Alaska lagged several other small population states and the U.S. average in science and engineering graduate enrollment per 1000 population.

34. Source: National Science Foundation Science and engineering doctorate awards in Alaska showed an upward trend over the 1994-98 period. The University of Alaska Fairbanks is the only institution in Alaska offering doctoral degrees. In 1998 Alaska ranked 48th out of 50 states. Sources: NSF and U.S. Census Bureau Alaska’s 1998 rate of science and engineering doctoral awards per capita is half the national average.

36. Appendix B – Advisory Committee and Acknowledgements This first edition of the Alaska Science & Technology Innovation Index was compiled by Mark Bendersky, ASTF Group Project Administrator. Any comments or suggestions for future improvements should be forwarded to Mark at mbendersky@astf.org or 907-272-4333. Advisory Committee The Alaska Science and Technology Foundation would like to thank the following individuals for contributing to this index: Patrick Burden, Northern Economics Neal Fried, Alaska Department of Labor and Workforce Development Scott Goldsmith, University of Alaska Anchorage, Institute for Social & Economic Research Sally Suddock, Alaska High Tech Business Council Jeff Pokorny, Anchorage Economic Development Corporation Dan Berglund and Marianne Clark, State Science & Technology Institute Marsha Schachtel, Johns Hopkins Institute For Policy Studies [ASTF and not the Advisory Committee is responsible for this Index.] Acknowledgements ASTF would like to thank the following state organizations for paving the way in the art of Innovation Indexes: Illinois Coalition and KPMG Peat Marwick, Illinois High Tech Yearbook, 1997 Kansas Technology Enterprise Corporation, Innovation Index 1999, www.ktec.com/documents/innov_index.pdf Maine Science & Technology Foundation, 1998 Maine Science & Technology Report Card, www.mstf.org/initiatives&partners/reportcard98/ Maryland Technology Alliance, The Maryland Innovation and Technology Index 1999, www.mdbusiness.state.md.us/reports/innovation.pdf Massachusetts Technology Collaborative, Index of the Massachusetts Innovation Economy 1999, www.mtpc.org/theindex/theindex.html North Carolina Board of Science and Technology, Tracking Innovation, North Carolina Innovation Index, 2000, www.governor.state.nc.us/govoffice/science/projects/nc2030.html Washington Technology Center, Index of Innovation and Technology – Washington State 2000, www.watechcenter.org/techindex/index.html

37. Appendix C - References Workforce Bureau of Labor Statistics, Local Area Unemployment Statistics, www.bls.gov Alaska Department of Labor and Workforce Development, Employment and Earnings Summary Reports, 1994-1999. Per Capita Personal Income U.S. Department of Commerce, Bureau of Economic Analysis, BEA 00-11, May 17, 2000, www.bea.doc.gov Patents U.S. Patent and Trademark Office, www.uspto.gov Patent Counts by Country/State and Year, All Patents, All Types, January 1, 1977-June 30, 1999, August 1999 Patenting Trends, Calendar Year 1999 Patenting by Geographic Region (State and Country), Breakout by Technology Class, 1994-1998 Utility Patent Grants, Alaska Patenting by Geographic Region (State and Country), Breakout by Organization, 1994-1998 Utility Patent Grants, Alaska SBIR/STTR Awards U.S. Small Business Administration, www.sba.gov/sbir/library.html Alaska Technology Transfer Center, attac@arctic.net, (907) 274-7232 Population U.S. Census Bureau, www.census.gov ST-99-3, State Population Estimates: Annual Time Series, July 1, 1990 to July 1, 1999 Educational Attainment of Persons 25 Years Old and Over, for States: March 1998 Resident Population Estimates of the United States by Age and Sex: April 1, 1990 to July 1, 1999, with Short-Term Projection to July 1, 2000 Alaska Population Overview: 1999 Estimates, Alaska Department of Labor and Workforce Development, May 2000 An Economic Profile of Alaska, Alaska Department of Labor and Workforce Development, Research and Analysis Section, June 2000 Gross State Product Goldsmith, Scott, Alaska Gross State Product 1961-1998, Institute of Social and Economic Research, University of Alaska Anchorage, June 1999

38. National Science Foundation, www.nsf.gov Science and Engineering Doctorate Awards, Annual Series, Table 6, 1994-1998 State Science and Engineering Profiles and R&D Patterns: 1997-98, September 2000, NSF 00-329 Survey of Graduate Students and Post doctorates in Science and Engineering (1991-1998) Survey of Research and Development Expenditures at Universities and Colleges, Fiscal Year 1998 National Patterns of R&D Resources: 1999 Data Update and 1998 Initial Public Offerings and Venture Capital Hale and Door, LLC, www.haleanddorr.com PriceWaterhouseCoopers, 1999 Venture Capital Report, Moneytree, www.pwcmoneytree.com National Governors’ Association, Growing New Businesses with Seed and Venture Capital: State Experiences and Options, 2000, www.nga.gov/center/ SAT Scores The College Board, SAT Scores, www.collegeboard.org Online Population U.S. Department of Commerce, National Telecommunications & Information Administration, Falling Through the Net: Defining the Digital Divide, November 1999, www.ntia.doc.gov. Digital State Government The Progress & Freedom Foundation, The Digital State 1998, How State Governments are Using Digital Technology, September 1998, www.pff.org. The Center for Digital Government, 2000 Digital State Survey, www.centerdigitalgov.com.

39. General Progressive Policy Institute, The State New Economy Index, July 1999, www.dlcppi.org Battelle Memorial Institute and State Science and Technology Institute, Survey of State Research and Development Expenditures: Fiscal Year 1995, September 1998 Corporation for Enterprise Development, 2000 Development Report Card for the States, www.drc.cfed.org Rand, Discovery and Innovation: Federal Research and Development Activities in the Fifty States, District of Columbia, and Puerto Rico, 2000, www.rand.org/publications/MR/MR1194/ U.S. Department of Commerce, The Dynamics of Technology-Based Economic Development, State Science and Technology Indicators, June 2000, www.ta.doc.gov/Reports.htm American Electronics Association, Cyberstates 4.0, A State-by-State Overview of the High-Technology Industry, 2000 American Electronics Association, Cyberstates 3.0, A State-by-State Overview of the High-Technology Industry, 1997 DeVol, Ross C., America’s High-Tech Economy, Growth, Development and Risks for Metropolitan Areas, Milken Institute, July 13, 1999, www.milkeninstitute.org. DeVol, Ross C., Blueprint for a High-Tech Cluster, The Case of the Microsystems Industry in the Southwest, Milken Institute, August 8, 2000, www.milkeninstitute.org. University of Alaska in Review, 2000, www.alaska.edu/oir/uair00/