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High technology employment: another view: a novel definition of high technology yields some interesting statistics on employment, pay, and projected growth in this vital component of American industry.

A novel definition of high technology yields some interesting statistics on employment, pay, and projected growth in this vital component of American industry

Employment opportunities in high technology industries have been a source of interest among economists for many years. However, notions of what makes an industry high technology vary widely, making analyses of industry and occupational changes difficult. This article presents one method by which high technology industries can be identified and discusses employment in these industries.

One often-used definition of high technology limits the term to the aerospace, computer, and telecommunications industries. This is perhaps the most popular use of the locution. Another definition describes high technology industries as those "that are engaged in the design, development, and introduction of new products and/ or innovative manufacturing processes through the systematic application of scientific and technical knowledge."' Still another uses research and development (R&D) expenditures as a percentage of industry value added and industry employment of scientists, engineers, and technicians as a porportion of the industry work force. 2 In 1983, BLS analysts introduced three measures of high tech employment-utilization of technology-oriented workers, expenditures for R&D, and utilization of technology-oriented workers and R&D expenditures combined.1 The following analysis, by contrast, presents a definition of "high technology" based on an industry's percentage of R&D employment, which is defined as the number of workers who spend the majority of their time in R&D, as determined by their employer. Hence, we define a high technology industry as one with a significant concentration of R&D employment.

Data on R&D employment are derived from the Bureau of Labor Statistics Occupational Employment Statistics (OES) program, which provides current occupational employment data on wage and salary workers by industry.' This program follows a 3-year survey cycle: manufacturing industries and hospitals are surveyed in the first year; mining, construction, finance, and service industries in the second; and trade, transportation, communications, public utilities, education, and government services industries in the third. However, only manufacturing industries and selected nonmanufacturing industries are surveyed for R&D employment. The data used in this study were collected in 1987, 1988, and 1989 and are based on industries classified at the three-digit level in the 1987 edition of the Standard Industrial Classification (SIC) Manual.

Using the OES data, we identify industries as high technology if their proportion Of R&D employment is at least equal to the average proportion for all industries. The industries that meet this criterion are then divided into two groups: If an industry's proportion of R&D employment is at least 50 percent higher than the average proportion for all industries surveyed, it is a Level I, or R&D-intensive, industry; all other such industries are from the Level II, or R&D moderate, group. Classifications based on these criteria resulted in 30 Level I industries and 10 Level II industries.

While defining industries on the basis of the proportion of their employment in R&D is a proxy measurement of high technology, the use of occupational employment data at specific industry levels is a unique refinement that yields results that are in line with popularly held expectations. The industries classified as high technology in this analysis are ranked according to their percentage of R&D employment. (See table 1.) Of the top five industries with the highest percentage of R&D employment, four are part of chemical manufacturing (sic 28). Other top-ranked high tech manufacturing industries include guided missiles, space vehicles, and parts manufacturing; petroleum refining; and computer-and office equipment manufacturing. Level I high technology manufacturing industries also include many of the instruments and related products industries (sic 38), including search and navigation equipment, measuring and control devices, medical instruments and supplies, and photographic equipment and supplies.

Research and testing services and computer and data-processing services are the highest ranked service-related high tech industries. Engineering and architectural services, miscellaneous services, and management and public relations services are also classified as high technology service industries.

Employment and pay

The OES program collected data on R&D for specific managerial, professional, paraprofessional, and technical occupations. Engineering, mathematical, and natural sciences managers account for most of the R&D employment in managerial and administrative occupations. Among professional occupations, engineers, physical and life scientists, and computer scientists and related occupations, as well as various health professional specialties, have the heaviest concentrations of R&D employment. Engineering and science technicians also are employed in R&D in significant numbers in high tech industries.

Although 24 of the 30 Level I high tech industries are manufacturing industries, the six nonmanufacturing industries in the Level I group (20 percent of the total) represent 32.8 percent of total employment. Computer-related industries accounted for a significant portion of that figure. Fully 21 percent of all Level I industry employment is attributed to computer and office equipment manufacturing, computer and data-processing services, and electronic components and accessories (semiconductors) manufacturing industries. Motor vehicles and equipment manufacturing and aircraft and parts manufacturing together accounted for 18 percent of Level I high tech industry employment.

Annual pay. Total employment in high tech industries is not that large in relation to the entire economy, but these industries show an above-average annual pay level. Examining average annual pay for 1989, derived from wage data for workers covered by unemployment insurance programs, one can discern a strong relationship between higher pay and the degree of technological development activity of an industry.' In 1989, the average annual pay per employee for all industries, excluding government and education, was $22,302; employees in Level I averaged $35,597, while Level II employees averaged $28,373.

Those high tech industries with the highest average annual pay were cigarette manufacturing, crude petroleum and natural gas operations, industrial organic chemicals manufacturing, and petroleum refining. In the petroleum and chemicals industries, concentrations of highly paid engineering staff, together with specialized technical support personnel, are factors in the high average pay in these industries. The high average pay in the relatively small cigarette manufacturing industry can be attributed in part to an increased percentage of professional and technical workers in the industry. This increase stems in part from the introduction of more automation in the industry, resulting in a decreasing number of lower paying jobs.

Area distributions

Level I and Level II high tech industries comprised only 11.3 percent of total nongovernment and noneducation employment in 1989. The concentration of employment in these industries varies little regionally, ranging from 12.2 percent in the West to 9.8 percent in the South. (See table 2.) The Northeast and Midwest regions both have 12.0 percent of their employment in these industries.

Although the South has the lowest percentage of all regions of high tech industry employment (as defined here) relative to the total work force, it has the largest proportion of national high tech employment; that is, 28.2 percent of all workers employed in high tech industries are in the South. The Midwest region employs 26.1 percent of all high tech industry workers. The Northeast, popularly viewed as a bastion of high technology, ranks third with 23.0 percent, and the West accounts for 22.7 percent of total high tech industry employment. Employment data show little dispersion among the regions, with 2.3 million high technology workers in the West being the low figure and 2.8 million in the South the high figure.

Among the States, Delaware, with significant chemical industry employment, has the highest percentage of its work force employed in high tech industries-19.7 percent. Michigan ranks second with 16.7 percent, due to a concentration in automobile manufacturing and other major manufacturing industries. The next three States in order are located in New England: Massachusetts, Connecticut, and New Hampshire. The States with the lowest percentages of their work force employed in high tech industry are located in the West North Central, Mountain, and Pacific regions. They are, in order, from the lowest percentage up: Hawaii, Montana, North Dakota, Nevada, and South Dakota.

California employs 14.8 percent of the Nation's high tech industry workers, more than twice the proportion of any other State. Following California are New York, Texas, Michigan, and Ohio. Unlike the other States, Texas is not known as an industrial manufacturing giant; however, its overall size and its concentration of petroleum-refining and crude petroleum and natural gas exploration industries, along with aircraft, electronics, and chemicals manufacturing, give it its place among the leading States in high technology employment.

Trends,1988-2000

High tech industries constituted a relatively small proportion of wage and salary employment in the economy in 1988-7.1 percent for Level I and 8.4 percent for Levels I and II combined. In comparison, the earlier BLS analysis reported that employment in high technology industries in 1982 ranged from 2.8 percent to 13.4 percent.'

Every other year, the Bureau of Labor Statistics develops projections of employment growth. The latest projections present low-, medium-, and high-growth scenarios from 1988 to the year 2000.1 Perhaps surprisingly, as a group, high technology industries are projected to grow more slowly than the average for all industries in the low- and medium-growth scenarios. In the high-growth scenario, Level I industries are projected to grow more rapidly than the average for all industries, and Levels I and II combined are projected to increase at the same rate as the average. (See table 4.)

A projection of relatively slow growth for the high technology industries in, for example, the medium-growth scenario is not surprising upon closer examination. High tech industries are primarily manufacturing industries (24 of 30 in Level I, and all in Level II), and total manufacturing employment in the economy is projected to decline slightly in the medium-growth scenario. Output in manufacturing is expected to grow 31 percent in this scenario, as fast as output in the economy as a whole, but large increases in productivity will keep total employment from growing.

Even among Level I industries, the manufacturing industries' employment as a whole is projected to decline slightly in the medium-growth scenario, just as is total manufacturing. All growth in Level I (and in Levels I and 11 combined) is attributed to the service industries, which are projected to grow 50 percent.

ACKNOWLEDGMENT: The authors thank Ken Lavish of the Division of Industrial Prices and Price Indexes and Richard Riche of the Division of Industry Productivity and Technology Studies, Bureau of Labor Statistics, for their assistance in the preparation and editing of this article.

1 From Technology, Innovation, and Regional Economic-Development (Washington, U.S. Congress, Office of Technology Assessment, Sept. 9, 1982), a 14-page report that assesses the implications of high technology in order to promote the development of high tech industries in States and other areas.

2 Michael Boretsky, "Concerns About the Present American Position in International Trade," Technology and International Trade (Washington, National Academy of Sciences, 1971).

3 Richard W. Riche, Daniel E. Hecker, and John U. Burgan, "High technology today and tomorrow: a small slice of the employment pie," Monthly Labor Review, November 1983, pp. 50-58.

4 For more information about the Occupational Employment Statistics program, see BLS Handbook of methods, Bulletin 2285 (Bureau of Labor Statistics, 1988), pp. 28-30.

5 Annual pay data are compiled from reports submitted by employers under unemployment insurance programs covering 107 million full- and part-time workers. Average annual pay is computed by dividing the total annual payrolls of employees covered by unemployment insurance programs by the average monthly employment of these employees. See Employment-and Wages, Annual-Averages, 1989, Bulletin 2373 (Bureau of Labor Statistics, 1990), pp. 531-32, and BLS Handbook of methods, pp. 35-40.

6 State data were compiled from the Covered Employment and Wages Program, which collects information on the employment and wages of workers covered by unemployment insurance programs. Each quarter, covered employers submit mandatory reports of employment and wages to the appropriate State Employment Security Agency. These reports, supplemented by multiple work-site reports for employers engaged in a variety of activities, are edited and summarized by county, State, and detailed industry and forwarded to the Bureau of Labor Statistics. Self-employed persons are not included.

7 Riche, Hecker, and Burgan, "High technology today and tomorrow," p. 53.

8 For more details on industry employment projections in particular, see Valerie A. Personick, "Industry output and employment: a slower trend for the nineties," Monthly Labor Review, November 1989, pp. 25-41.
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Author:Hadlock, Paul; Hecker, Daniel; Gannon, Joseph
Publication:Monthly Labor Review
Date:Jul 1, 1991
Words:2067
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