Hidden tech in rural Massachusetts

I’ve blogged before about how rural areas can sustain economic growth in the wake of factory shutdowns. Now, Virginia Postrel links to a fascinating Red Herring article about “hidden tech” — self-employed techies migrating away from urban areas to places like the Pioneer Valley and the Berkshires in Western Massachusetts:

With the rapid adoption of inexpensive broadband technology, and the cost of urban living still high despite the downturn, tech communities are popping up in unlikely places. Migratory entrepreneurs have set up shop in places as diverse as Grand Forks, North Dakota, Wenatchee, Washington, Bozeman, Montana, and Amherst, Massachusetts – scrapping the rat race and cutting back on their business costs, to boot. Many of these businesses are home-based and unincorporated, literally hidden from view and flying under the radar of government statisticians. Still, these “hidden tech” communites are getting VC [venture capital] attention…. Going solo certainly has its upside, according to the study: hidden tech entrepreneurs often pull six figures, and claim clients as powerful, and diverse, as the Vatican, the Thomas Register, and Boeing…. Why does the hidden tech trend matter? In a “jobless recovery,” with the government reporting growth in self-employment nationwide, economic development experts believe that the hidden tech population may be a badly needed shot in the arm for the American economy. In some cases, with manufacturing increasingly moving offshore, these entrepreneurs may be the only growing economies in some regions, especially in rural areas…. These new communities are also fresh, fertile ground for venture capitalists, as Village Ventures of Williamstown, Massachusetts has discovered. Analysts there have identified 101 emerging tech communities nationwide – from Lexington, Kentucky to Charleston, West Virginia – and have located new funds in areas such as Tucson, Arizona, and Lexington and Worcester, Massachusetts.

For another story about this phenomenon, click here. Other reports can be found at the Hidden Tec website. Postrel points out, “[T]his is yet another suggestion–admittedly anecdotal–that the economy may be shifting toward work that doesn’t get counted in the jobs data.” Is this true? Elise Gould makes a powerful argument that the payroll survey is more reliable than the household survey on job creation (link via Brad DeLong). But on the self-employment question, she says:

A… critique of the payroll survey is that it leaves out self-employment. However, because the household survey employment reports do not distinguish between the self-employed who are gainfully employed and those who are searching for work—and because the numbers of self-employed nonearners would be expected to increase during tough economic times—the omission of self-employment numbers from the payroll survey may more accurately reflect overall employment trends.

Here’s my question: what happens when economic times are improving, but payroll data about job creation remains sluggish? This could be an explanation. A question to readers — is hidden tech an important trend that captures job creation, or is it more of a “boutique” phenomenon?