#519. America’s Advanced Industries – What They Are, Where They Are, and Why They MatterFeb 10, 2015
The Brookings Institution recently released a new study that looked at the advanced industry sector, which includes those industries with a deep involvement with technology research and development (R & D), and STEM (science, technology, engineering, and math) workers. This week we will share some key points from the study, and next week we will look at our own portfolio of projects to see where they fall in regards to the advanced industry sector.
America’s Advanced Industries – What They Are, Where They Are, and Why They Matter
The need for economic renewal in the United States remains urgent. Years of disappointing job growth and stagnant incomes for the majority of workers have left the nation shaken and frustrated. At the same time, astonishing new technologies—ranging from advanced robotics and “3-D printing” to the “digitization of everything”—are provoking genuine excitement even as they make it hard to see where things are going.
At a critical moment, this report asserts the special importance to America’s future of what the paper calls America’s “advanced industries” sector. The sector encompasses 50 industries ranging from manufacturing industries such as auto-making and aerospace to energy industries such as oil and gas extraction to high-tech services such as computer software and computer system design.
These industries encompass the nation’s “tech” sector at its broadest and most consequential. Their dynamism is going to be a central component of any future revitalized U.S. economy. As such, these industries encompass the country’s best shot at supporting innovative, inclusive, and sustainable growth. For that reason, this report provides a wide-angle overview of the advanced industry sector that reviews its role in American prosperity, assesses key trends, and maps its metropolitan and global competitive standing before outlining high-level strategies to enhance that.
The overview finds that:
Advanced industries represent a sizable economic anchor for the U.S. economy and have led the post-recession employment recovery
Modest in size, the sector packs a massive economic punch:
* As an employer and source of economic activity the advanced industry sector plays a major role in the U.S. economy. As of 2013, the nation’s 50 advanced industries employed 12.3 million U.S. workers, or about 9 percent of total U.S. employment. And yet, U.S. advanced industries produce $2.7 trillion in value added annually—17 percent of all U.S. gross domestic product (GDP). That is more than any other sector, including healthcare, finance, or real estate.
At the same time, the sector employs 80 percent of the nation’s engineers; performs 90 percent of private-sector R&D; generates approximately 85 percent of all U.S. patents; and accounts for 60 percent of U.S. exports. Advanced industries also support unusually extensive supply chains and other forms of ancillary economic activity. On a per worker basis, advanced industries purchase $236,000 in goods and services from other businesses annually, compared with $67,000 in purchasing by other industries. This spending sustains and creates more jobs. In fact, 2.2 jobs are created domestically for every new advanced industry job—0.8 locally and 1.4 outside of the region. This means that in addition to the 12.3 million workers employed by advanced industries, another 14.3 million U.S. workers owe their jobs to economic activity supported by advanced industries. Directly and indirectly, then, the sector supports almost 39 million jobs—nearly one-fourth of all U.S. employment
* In terms of the sector’s growth and change, the total number of jobs in the sector has remained mostly flat since 1980, but its output has soared. From 1980 to 2013 advanced industry output expanded at a rate of 5.4 percent annually—30 percent faster than the economy as a whole.
* Advanced industries also provide high-quality economic opportunities for workers. Workers in advanced industries are extraordinarily productive and generate some $210,000 in annual value added per worker compared with $101,000, on average, outside advanced industries. Because of this, advanced industries compensate their workers handsomely and, in contrast to the rest of the economy, wages are rising sharply. In 2013, the average advanced industries worker earned $90,000 in total compensation, nearly twice as much as the average worker outside of the sector. Even workers with lower levels of education can earn salaries in advanced industries that far exceed their peers in other industries. In this regard, the sector is in fact accessible: More than half of the sector’s workers possess less than a bachelor’s degree.
For the full report, visit here.
Next week we will see how many of our Agracel projects are in the advanced industry sector.