Manufacturing drives American economy, but needs more support.
The majority of America’s advanced industries are manufacturers, said a study by the Brookings Institute.
Read: Report: Silicon Valley Tech Economy Booming
The study measured the impact of the advanced industries sector on American economic renewal, defining “advanced” as industries with research and development spending that exceeds $450 per worker, and in which at least 21 percent of employees have STEM knowledge intensive occupations.
Of the 50 industries named, more than half were manufacturing-related.
And these industries are key to the economy, the study said.
Using nine percent of the United States’ total workforce, advanced industries produce $2.7 trillion in value added annually – 17 percent of the gross domestic product (GDP.) 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 involve a lot of support, purchasing $236,000 in goods and services from other businesses annually, and creating 2.2 jobs domestically for every new advanced industry job (most of them, 1.4, outside of the geographic region.)
Since 1975, average earnings in advanced industries have increased almost five times as fast as those in the overall economy.
That means that manufacturing, and other advanced industries like wireless telecommunications, computer systems design, architecture, engineering and oil and gas extraction are a vital part of the American economy.
The study also tracked the locations of these advanced businesses. Unsurprisingly, most cluster in metropolitan areas. San Jose is the nation’s leading advanced industry hub, with 29.9 percent of its workforce employed in advanced industries.
Despite these numbers, the country as a whole is losing ground compared to other countries, the study said. The U.S. share of global R&D is falling much faster than its share of global GDP and population, and only two regions, San Diego and the San Jose-San Francisco combined area, rank in the global top 20 for filing patent cooperation treaty applications.
Hand-in-hand with the acknowledgment of America’s powerful industrial sector is the need for improvement in that area. Even STEM students in the top 10 percent of U.S. grades score well below their highest-scoring peers in other developed countries, and the availability of STEM graduates varies hugely. In 15 metropolitan areas, the number of STEM graduates as a share of the young adult population (ages 20 to 34) exceeds Finland’s, which holds the highest share internationally. In 33 areas, including Phoenix, Dallas, and Houston, STEM graduation rates trail those of Spain, which ranks 24th internationally.
The Raleigh, N.C. area has the highest percentage of STEM students out of total graduates, with 36 percent, while Madison, Wis. has the most STEM graduates per young adult.
However, “the skills prerequisites of modern advanced industries have been changing faster than the country’s ability to train the needed workers,” the report said. That leaves the country with a decent amount of graduates, a lot of jobs, and few people being hired.
Employees in advanced industries earn an average of $90,000, nearly twice as much as the average worker outside the sector. The jobs are there, and lucrative. But a posting for a STEM-related job in an advanced industry remains online for an average of 43 days, compared to 32 days for non-STEM ads.
Brookings suggests the cultivation of “local advanced industry ecosystems,” advanced companies gathering in one location, to reproduce the type of successes seen in California.
Creation of infrastructure like that, the study says, can keep America’s vital manufacturing, energy, computer, and science industries in the game.
Filed Under: Industrial automation