The Changing Nature of TechnologyBased Industry in Washington State:
Perspectives from 7 Technology
Alliance Sponsored Studies
William B. Beyers
Department of Geography
University of Washington
Seattle, WA 98195
beyers@uw.edu
Seattle Economists Club June 13, 2012
Outline
• Defining Technology-Based Industry
• The Changing Nature of R&D – WA vs. Other
States
• Current Employment
• Trends in Employment
• The Changing Geography of Tech-Based Industry
• Changes in Economic Impacts
The Technology Alliance TechnologyBased Industry Economic Impact Studies
• Studies have been benchmarked against the
years 2005, 2007, 2000, 2003, 2007, 2009, and
2011
• They have tried to use a consistent
methodology
• Changes in underlying data sources have
made this difficult
• We are unaware of any similar legacy of
studies of this type
Defining Technology-Based Industry
• Many definitions of “high tech”
• Some are based on % of sales related to R&D, some based
on arbitrary definitions of industries included, some based
on % of R&D related occupations
• Early Technology Alliance economic impact studies defined
technology-based industries as those with at least 10% of
their workforce in R&D related occupations
• Starting in 2008, we defined tech-based industry as those
with double the state average in R&D employment for all
industries. In the current study, that threshold is 16.2% (up
from 15.6 in 2010).
• This definition leads to some changes in industries included
in the study, but other factors also lead to changes to
industry inclusion (shift to NAICS, occupational structural
change)
• After careful inspection of occupational structure, we
included two industries with less than 16.2% R&D related
occupations (electronic shopping & waste
treatment/disposal)
R&D Related Jobs are very important in
technology-based industry
35%
Non High Tech
Employment
3%
% of Total S&E Jobs
% Industry in S&E
Occupations
65%
High Tech
Employment
42%
0%
10%
20%
30%
40%
50%
60%
70%
Source: Calculated From Washington State Employment Security
Department 2010 industry-x-occupation matrix
Technology-Based Industries in 2011 Study
NAICS
Industrial Description
5413
5415
5112
5417
3364
5191
5416
518
Technology Intensive: R&D Occupations Over 30%
Architectural and engineering services
Computer systems design and related services
Software Publishers
Scientific research and development services
Aerospace
Other information services
Management and technical consulting services
ISP and Data Processing
University and Federal Research
334
3241
3361
517
335
3336
4234
5511
5629
3335
3332
325
5622
4541
% R&D
70.1%
66.3%
64.8%
60.5%
35.7%
35.5%
34.8%
33.0%
(Not covered in ESD
data base: see text)
Other Technology Industries: R&D Occupations 11.8% - 30%
Computer and Electronic Mfg.
Petroleum & Coal Prod.
Motor vehicle manufacturing
Telecommunications
Electrical Equipment
Turbine and power transmission equipment mfg.
Commercial equip. merchant wholesalers
Management of Companies & Enterprises, millions
Remediation and other waste services
Metalworking machinery manufacturing
Industrial machinery manufacturing
Chemicals
Waste treatment and disposal
Electronic shopping and mail-order houses
29.4%
27.9%
26.7%
24.2%
23.4%
23.3%
22.0%
19.5%
17.9%
17.8%
16.6%
16.2%
13.9%
11.8%
All Technology-Based Industries
41.9%
Examples of R&D Intensive Occupations
in SOC 15, 17, and 19
Standard
Occupational
Category (SOC)
15-1031
15-1032
15-2031
15-2041
17-1011
17-2011
17-2051
17-2141
17-3023
17-3029
19-1023
19-1042
19-2031
19-2041
19-3021
19-3051
19-4021
Occupational Description
Computer Software Engineers, Applications
Computer Software Engineers, Systems Software
Operations Research Analysts
Statisticians
Architects, Except Landscape and Naval
Aerospace Engineers
Civil Engineers
Mechanical Engineers
Electrical and Electronic Engineering Technicians
Engineering Technicians, Except Drafters, All Other
Zoologists and Wildlife Biologists
Medical Scientists, Except Epidemiologists
Chemists
Environmental Scientists and Specialists, Including
Health
Market Research Analysts
Urban and Regional Planners
Biological Technicians
Other R&D Intensive Occupations
% of
Total
11.7%
6.6%
0.5%
0.2%
1.3%
2.7%
5.2%
2.5%
1.1%
1.5%
0.8%
2.0%
0.8%
1.7%
3.7%
1.2%
1.6%
54.7%
Washington R&D by Users of Funds
2008 Rank $ 2008 Rank
Performer and Sources of Funds
$ Millions
Used Indexed
United States Sources: Total Used
$16,696
5
6
A. Federal Government: Total Used (1)
$258
18
24
B. Business: Total Used (2)
$13,876
5
3
Federal Sources
$717
14
13
Business Sources (3)
$13,159
5
2
C. Universities and Colleges: Total Used(4)
$1,058
14
34
Federal Sources
$721
14
25
Non-federal Government Sources
$61
17
32
University & College Sources
$156
22
40
Business Sources
$81
13
11
Non-Profit Sources
$39
25
38
D. Non-Profits: Total Used (5)
$1,504
4
4
Nonprofit FFRDC
$1,137
4
4
Other Nonprofits
$367
4
6
E. State Internal (6)
NA
NA
2000
Rank $
Used
8
14
7
D
D
14
11
35
22
11
27
4
4
7
NA
1993
Rank $
Used
11
21
9
8
10
14
10
32
NA
14
NA
5
NA
NA
NA
Source: NSF 2012 D – data not disclosed NA – data not available for this year
Indexed ranks are against Gross State Product, which controls size of state economies
1995 Study Employment Mix
1997 Study Employment Mix
2000 Study Employment Mix
Total Employment:
285,835
Chemical Production
and Petroleum Refining
2.0%
Specialized Instruments
and Devices
2.9%
Motor Vehicles
and Machinery
5.5%
Computers and
Electronics
8.3%
Bio-Technology/
Bio-Medical
Manufacturing Services
2.8%
2.7%
Federal and University
Research
3.8%
Software and Other
Computer Services
21.0%
Services
45.9%
Manufacturing
54.1%
Aerospace
32.6%
Engineering,
Commercial Research,
and Consulting Services
18.4%
Employment Mix 2003 – After the shift
from SIC to NAICS
Employment Mix 2007
Employment Mix 2009
Employment Mix - 2011
Data for 2011
University & Federal
Research
Petroleum &
3%
Waste Treatment &
Chemicals Mfg.
Remediation
2%
3%
Scientific Research
5%
Aerospace & Motor
Vehicle Mfg.
19%
Management
Consulting
7%
Commercial
Equipment Merchant
Wholesalers
3%
Computer Systems
Design
10%
Electronic Shopping &
Mail Order Retail
3%
Architecture &
Engineering
9%
Services 72%
Machinery Mfg.
1%
Computer & Electrical
Eq. Mfg.
6%
Management of
Companies
8%
Telecommunications
6%
Manufacturing 28%
Software Publishing,
Data Processing &
Other Information
Services
15%
Includes Self-Employed for the first time
Total 434,343
Changing Mix of Technology-Based
Industry Employment
History of Technology-Based
Employment in Washington State
1954
1952
1950
1948
1946
1944
1942
1940
1938
1936
1934
1932
1930
1928
1926
1924
1922
1920
1918
1916
Boeing Employment
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
1967
1965
1963
1961
1959
1957
1955
Boeing Employment Fluctuations
Boeing Employment
120000
100000
80000
60000
40000
20000
0
Boeing’s Long-Run Trend towards
Outsourcing
100%
90%
80%
70%
Intermediate Goods and
Services
60%
50%
Value Created
40%
30%
20%
10%
0%
1963
1967
1972
1982
1989
1997
2002
Regional Purchases are about 7% of total, mostly services
Source: Washington State Input-Output Tables
Concentration of Technology-Based
Employment in Washington State
Petroleum Refining
Chemicals
Machinery
Computers
Electrical Equipment
Aerospace & Motor Vehicles
Commercial Equipment Merchant Wholesalers
Electronic Shopping & Mail Order
Software Publishers & Computer systems design
Telecommunications
Data Processing & Other Information Services
Business Services
Scientific R&D
Waste Management
All Technology Based Industry
County
Business
Patterns
0.693
0.346
0.712
0.938
0.338
5.409
1.079
0.903
2.801
1.230
1.353
1.241
1.263
1.898
Self-Employed
0.432
1.020
1.020
1.457
0.967
1.074
1.110
1.565
2.550
0.802
1.175
2.383
1.314
0.622
Combined
0.676
0.360
0.727
0.958
0.353
5.483
1.097
1.018
2.25
1.238
1.328
1.343
1.280
1.860
1.410
2.059
1.465
Nonemployer = 9.4% of County Business Patterns Employment
Location Quotients - 1993
Location Quotients – All Hi Tech 2009
1.465
1.16
1.20
1.27
0.90
1.12
1.41
1.10
1.06
1.12
1.17
1.468
1.19
Washington Ranks 2nd. - Peer States Black/White Numbers
Other High Location Quotients - Red
1993 Location Quotients – Less Aerospace
Location Quotients – Less Aerospace
1.31
1.19
1.24
1.31
0.93
1.10
1.05
1.14
1.00
1.46
1.17
1.52
Washington Ranks 3rd - Peer States Black/White Numbers
Other High Location Quotients - Red
1.22
1993 Location Quotients- Tech Intensive
Location Quotients – Tech-Intensive
1.93
1.37
0.92
1.11
1.22
1.17
1.24
1.44
1.97
2.20
1.27
Washington Ranks 3rd - Peer States Black/White Numbers
Other High Location Quotients – Red
1.55
Location Quotient Trend –
Washington State
2.1
1.9
1.7
All Industries
1.5
Less Aerospace
1.3
Very High Tech
1.1
0.9
0.7
1995
1997
2000
2004
2007
2009
2011
Washington County Employment 1997
EMPLOYMENT
0-1
2-100
101-1000
1001-15000
49555
144378
Direct County Tech-Based Employment 2011
52,918
52,918
233,475
11,929
233,475
15,048
11,929
15,048
18,739
18,739
Economic Impact Analysis
Purchases Outside
State
Results:
Direct
High Tech
Activity
In-State Purchases
• Output
• Jobs
Indirect
Activity
• Labor
Income
• Tax
Revenues
Out-of-State Sales Revenues
Employment Impacts 1997
895,368
Other Industries
266,451
+
=
Indirect
Jobs
High
Tech
Total Jobs
Impact
Direct
Direct
Jobs
Services
Indirect
Trade
628,917
Mfg.
Total Direct and Indirect Employment
Impacts 2011
1,007,378
Services
Other
Industries
Trade
Hi
Tech
Direct Jobs
Indirect Jobs
Total Jobs Impact
381,546
826,644
1,208,189
Mfg.
Direct
434,343
2010 Report:
Indirect
1,441,721
Direct & Total Impacts
% Change from 2010 Study (Nominal $)
$ in Millions
Direct Impacts
Sales
Employment
Labor Income
Taxes
$230,960
434,343
$41,059
$770 B&O tax only
Total Cumulative Impacts
Sales
$369,543
Employment
1,441,721
Labor Income
$85,775
Taxes
$6,132 B&O and Sales Tax
Multipliers
Sales
Employment
Labor Income
1.60
3.32
2.09
73.7%
13.8%
-2.3%
-8.1%
55.0%
19.3%
11.8%
15.1%
Multiplier History
Historic Trend in Technology-Based
Industry Employment and Impacts
Concluding Comments
• Washington has strong technology-based industry, but it has
changed over time
• The occupational foundation for defining technology-based
industry continues to rise
• Our R&D position relative to other states has also risen
• Service industry components of technology-based industry
have continued to expand
• While these industries are strongly concentrated in the Puget
Sound region, there has been geographical spread to other
parts of the state
• Growth of technology-based industry has been faster than the
state average, leading to growth in economic impacts that
have also gradually risen.
• Thanks to the Technology Alliance for supporting this unique
set of portraits of technology-based industry in Washington
State