SMALL BUSINESS -- Where Diversity Thrives, So Does High-Tech

By Theresa Forsman in New York

It makes sense for companies to locate near a good source of their chief raw material, and in the knowledge economy, the raw material is the worker. To find the largest high-tech labor pool, look for areas that have a high population of gays, artists, and foreign-born residents, says a survey done for the Brookings Institution and released this month. It shows a high correlation between a city's diversity of population and the success of its high-tech industry.

``People in technology businesses are drawn to places known for diversity of thought and open-mindedness,'' say the authors of the survey, Richard Florida of Carnegie Mellon University and Gary Gates of The Urban Institute. ``These places possess what we refer to as low barriers to entry for human capital...Leading high-tech centers are places where people from virtually any background can settle and thrive,'' they said.

When the study ranked the most diverse cities overall, according to percentage of gays, artists and foreign-born, Los Angeles, San Francisco and Washington, D.C., claimed the first three spots. Below are the most diverse metropolitan areas, using the above criteria. The number in parentheses is the area's ranking on the Milken Institute's ``Tech Pole'' Index, which measures the output of its high-tech industries.

1 Los Angeles (6)

2 San Francisco (1)

3 Washington, D.C. (4)

4 New York (10)

5 Seattle (3)

6 Boston (2)

7 San Diego (12)

8 Austin (14)

The study's authors quote Carly Fiorina, CEO of Silicon Valley-based Hewlett-Packard, who recently told a conference of governors: ``Keep your tax incentives and highway interchanges. We will go where the highly skilled people are.''