Academic journal article
By Hadlock, Paul; Hecker, Daniel; Gannon, Joseph
Monthly Labor Review , Vol. 114, No. 7
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. …