Economic growth has always been at the forefront of political discourse, but likely even more so since the Great Recession. How to achieve widespread prosperity has been a matter of heated debate. With the breakneck pace of technological development that has affected every aspect of our lives, many argue that advanced industries are essential to economic prosperity.
In a recent update to its 2015 report America’s Advanced Industries: What They Are, Where They Are, and Why They Matter, the Brookings Institution’s Metropolitan Policy Program argues that the key to rebuilding the nation’s economy is in promoting the development of advanced industries. Advanced industries are characterized by heavy investment in research and development (R&D) and high employment in science, technology, engineering, and mathematics (STEM) fields. Advanced industries include manufacturing industries such as automobile and aircraft manufacturing, energy industries such as oil and gas extraction, and high-tech service industries such as computer systems design and software, and more.
> Advanced industries, share of employment: 13.3%
> Advanced industries, share of output: 23.8%
> Annual avg. wage: $72,120
> Largest advanced industry: Computer systems design
The Boston area is home to some of the nation’s top universities and research institutions, many of which spend enormous sums on R&D investments. MIT-sponsored research alone totalled $1.48 billion in fiscal 2016, 44% of the university’s total annual spending and one of the largest R&D investments of any institution nationwide. Advanced industries in the Boston metropolitan area generate approximately $80 billion annually, nearly a quarter of the region’s total GDP. The share and output are each among the largest compared with other major metro areas.
Like other cities with high advanced industry employment, Boston area residents are highly educated. Of adult area residents, 46% have at least a bachelor’s degree, the fifth largest percentage in the country.
To identify cities with the largest share of advanced industry jobs, 24/7 Wall St. used data from the most recent update to the Brookings report. With 31.2%, the San Jose-Sunnyvale-Santa Clara metro area has the largest share of employees working in advanced industries.
There are 50 industries in total that meet the criteria for being considered advanced: industries that spend at least $450 per employee on R&D, and have at least 20% of workers employed in STEM roles. According to Mark Muro, senior fellow at the Metropolitan Policy Program at Brookings, these attributes reflect “inputs that lead to particularly high quality, high impact growth.” These industries “are highly productive, highly innovative, and they determine our global competitiveness and our balance of trade,” he said.
One way advanced industries can contribute to economic growth is through high wages. In 2015, the average wage for all U.S. employees was $53,060. Workers employed in advanced industries were paid much more. The average employee of an advanced industry was paid $95,500, over $40,000 more than the average American worker.
Advanced industries also tend to attract a high level of venture capital investment. In cities such as San Francisco, Boston, and San Jose, the average venture capital deal made in the latest fiscal quarter was worth more than $9 million, among the most of any metro. According to Muro, companies in advanced industries also “generate innovations that flow through the economy.” Of the 15 cities with the largest shares of advanced industry employees, 11 were awarded more patents per capita in 2015 than the national average of 49 per 100,000 Americans.
To identify cities with the most advanced jobs, 24/7 Wall St. used data from the most recent update to the 2015 Brookings report on advanced industries, America’s advanced industries: New trends. Brookings identified 50 four-digit NAICS industries that meet its criteria of advanced industries: industries that spend at least $450 per worker on R&D annually and that employ at least 20% of their workforce in STEM-related roles.
The share of workers in advanced industries, advanced industries’ contribution to output, average annual wage, and employment and output figures by industry came from the Brookings report. Data on patents by metropolitan area are for 2015 and from the U.S. Patent and Trademark Office. The number of venture capital deals and their value came from the National Venture Capital Association and are as of the fourth quarter of the 2016 fiscal year. Seasonally adjusted December 2016 unemployment rates came from the Bureau of Labor Statistics. Data on population and educational attainment came from the U.S. Census Bureau’s American Community Survey and are for 2015.
Click here to see the 15 cities with the most high tech jobs.