The United States’ GDP of $16.3 trillion in 2014 was the highest in the world, due in large part to the strength of U.S. industries. However, all industries are not equal in terms of their contribution to economic output.
While the U.S. economy is among the world’s strongest, however, other countries continue to invest in education, technology, innovation, and other industries that invigorate economies, and the U.S. is falling behind. The percentage of U.S. workers employed in what the Brookings Institution calls “advanced industries” has fallen from 11.6% in 1980, to 8.7% in 2013. While this was a slight improvement from 8.4% in 2010, the need for a resurgence in the nation’s most important industries is more pressing than ever.
The Brookings Institution identified 50 advanced industries. To be considered advanced, an industry’s research and development spending must exceed $450 per employee, and the proportion of STEM (science, technology, engineering, mathematics) workers must be above the national average, or more than 21% of all employees. Mark Muro, senior fellow and policy director of the Metropolitan Policy Program at the Brookings Institution, explained that companies within these advanced industries “patent a lot, generate innovations that flow through the economy, export heavily,” and partly as a result, “pay well and tend to have long supply chains.”
24/7 Wall St. reviewed the metropolitan areas with the highest percentages of workers employed in advanced industries. The San Jose-Sunnyvale-Santa Clara metro area leads the nation with 30% of its workforce employed in such jobs. These are the cities with the most high-tech jobs.
> Advanced industries, share of employment:13.3%
> Advanced industries, share of output: 22.8%
> Annual avg. wage: $67,370
> Largest advanced industry: Computer Systems Design and Related Services
As in other cities with prominent advanced industries, Boston metro area residents are relatively well educated. Nearly 45% of adults had at least a bachelor’s degree in 2013, the fifth highest share among large metro areas. Perhaps as a result, residents were also well paid. The average wage among all workers was $67,370 in 2013, the sixth highest average wage reviewed. Higher earnings among advanced industry workers helped raise the average wage as well as the percentage of households with especially high incomes. Ten percent of area households had incomes of at least $200,000 in 2013, the sixth highest share among large metro areas and twice the national proportion. Like Massachusetts as a whole, Boston area residents also had exceptionally high health insurance coverage. Just 4.2% of residents did not have health insurance in 2013, nearly the lowest among large metro areas.
Advanced industries contribute considerably more to economic output than other industries, and these industries accounted for even larger shares of economic output in the 15 areas with the highest concentrations of advanced jobs. While advanced industries accounted for 17.7% of all U.S. economic output in 2013, they contributed more than the national share in all but one of the 15 metros on our list. In the San Jose metro area, advanced industries accounted for 47.5% of economic output, the highest such contribution among large U.S. cities.
Average wages among workers in these industries also tend to be far higher than in other types of jobs. Nationwide, the average wage for an advanced industry worker was $89,300 in 2013 versus the average for all workers of $50,130. Earnings among both cohorts were far higher in the 15 metro areas with dense concentrations of advanced industries. Average wages among advanced industry workers in eight of the 15 areas were well above $100,000 in 2013.
Advanced industry jobs’ wages also grow faster than all wages. In fact, average wages in advanced industries have risen nearly five times as fast as those in the overall economy since 1975.
According to Muro, the strength of advanced industries also lies in the range of educational requirements for workers. While wages tend to be far higher across the board in these industries, many of these jobs do not require especially high levels of education. Muro said, “as a whole, these 50 industries are surprisingly accessible.” Brookings estimates that fully half of jobs available in the advanced industry do not require a bachelor’s degree.
The diversity of both workers and the types of advanced industries is essential for the prosperity of these areas. As Muro explained, such diversity creates “regional ecosystems,” in which “firms are surrounded by a web of relationships that allow them to compete efficiently.” Companies seek out these areas. “If regions didn’t matter, these industries would be distributed equally across the country,” Muro said.
In fact, advanced industries are clustered in specific locations. The West Coast, for example, where four of the most densely concentrated advanced industries are located, is a major hub for innovation and technology. According to Muro, the West Coast has developed both its advanced manufacturing and high-end services, computer system design software, and research and development activities. In addition, many of these cities have very high qualities of life and have become “centers for migration among millennials.”
To identify the 15 metro areas with the most high-tech jobs, 24/7 Wall St. reviewed the share of workers in each of the country’s 100 largest metro areas employed in advanced industries from the Brookings Institution’s February 2015 report, “America’s Advanced Industries: What They Are, Where They Are, and Why They Matter.” The contribution to gross metropolitan output (GMP), an area’s most dominant industry within the advanced industry classification, average wages for advanced workers, and total workforce also came from the Brookings report. We also looked at educational attainment rates, poverty rates, and the percentage of area residents with health insurance from the U.S. Census Bureau’s 2013 American Community Survey (ACS). Unemployment rates are from the U.S. Bureau of Labor Statistics (BLS) and are as of November 2014, the latest period for which non-preliminary data are available.