The Economic Impact of Technology-Based Industries in Washington State, 1995
Executive Summary
Technology-based industries are now responsible for one third of total employment in Washington State, making them the largest industry in the state’s economy. Natural resource-based industries, such as agriculture and food products, and forest products, continue to be very important, particularly in more rural parts of Washington State.
Technology-based industries were defined in this study as those Standard Industrial Classification Codes with at least 10% of their employment in occupations defined by the National Science Foundation as research and development related. Using this definition, this study finds that 778,000 jobs, some 33% percent of Washington’s aggregate employment, are supported by technology-based business activity. Similar percentages of overall Washington State sales are generated and labor income is earned by those working in the industries included in this study.
The industries included in this study have higher than average impacts on the state economy, creating 3.37 jobs for each technology-based job. This high impact stems from the higher than average wage payments in these industries; their average labor income per job was $52,328, which compares to a statewide average of $27,445. Technology-based industries also are strong contributors to the economic base of the state, as over 76% of their sales are made out-of-state. This compares with an economy-wide average of 40% out-of-state sales.
Technology-based industries have grown rapidly over the past twenty years, increasing from 93,000 private sector jobs in 1974 to 220,000 private sector jobs in 1995, an increase of 137%. This compares with a statewide increase in employment of 88%. In 1995, there were another 11,000 public sector university and Federal research related jobs in Washington State, bringing total technology-based employment to 231,000. The share of state employment accounted for directly by private sector technology-based industries has expanded from 6.7% in 1974 to 9.3% in 1995, which means that these industries have gradually expanded their importance in the economic base of Washington State.
Washington State has a larger share of employment in technology-based industries than the nation as a whole. In 1995, this state had 35% more employment in these industries than the national average. This relatively high level of employment is associated with our very strong aerospace sector, and Washington also has relatively high indices for software and other computer services (36% above the national average), and also for engineering, research, and management consulting services (14% above the national average). Most Washington State technology-based industries have increased their concentration in the state over the past decade, as growth in these industries within the state has outpaced their growth nationally.
Research and development effort at federal laboratories, at the University of Washington and Washington State University, in industry, and in non-profit research organizations is more important in Washington State than in the US as a whole. The state has an especially strong concentration in funding to Non-Profit research organizations. The University of Washington was the largest recipient of Federal research funds of any public university in the United States in 1995.