OLMIS

by Jill Cuyler
Published May-26-2010

What is High Tech? Systems Design and Related Services Software Publishing Computer and Electronic Product Manufacturing Semiconductors Dominate the Industry Very High Wages Occupations and Wages Future Trends

The high-tech industry is an important and dynamic part of Oregon's economy.

During the late 1990s, it experienced rapid employment growth while paying wages that were significantly higher than those of many other industries. In 2008, high-tech contributed over $5.1 billion in covered payroll to the state's workers and families. The industry represents over one-quarter of total manufacturing employment, predominately in computer and electronic manufacturing.

High-tech employment peaked at 69,900 in 2001. During the recession from 2001 to 2003, employment declined by 20.5 percent or 14,300 jobs. The industry fared better between 2003 and 2006, growing by 6.7 percent or 3,700 jobs. However, since this period, declines have returned. Between 2006 and 2009, the industry declined by 9.1 percent or 5,400 jobs. During the current recession which began in 2008, employment declined 6.9 percent, or 4,000 jobs. Employment in 2009 fell to 53,900, the lowest since 1996 (Graph 1). Many wonder if the industry will ever return to its 2001 peak, especially given the large losses in semiconductor manufacturing.

The high-tech industry is not an official industry sector with one definitionor official government code. Instead, it is a mix of service and manufacturing businesses from a variety of industries. High-tech means different things todifferent people and organizations.

The Oregon Employment Department (OED) has its own definition, which corresponds to three North American Industry Classification System (NAICS) codes: computer and electronic product manufacturing (NAICS 334), systems design andrelated services (NAICS 5415), and software publishing (NAICS 5112). This definition does not include electronic equipment and appliance manufacturing(NAICS 335), which employs less than 2,500 people statewide.

In 2009, systems design and related services accounted for 18 percent of Oregon's high-tech employment or 9,500 jobs (Graph 2). This sector's employment was down by 16.7 percent in 2009 from 2001. However, since 2003, employment has increased by 17.3 percent, reaching a high of 9,700 jobs in 2008.

This industry comprises establishments primarily engaged in providing information technologies through one or more of the following activities: (1) writing, modifying, testing, and supporting software to meet the needs of a particular customer; (2) planning and designing computer systems that integrate computer hardware, software, and communication technologies; (3) on-site management and operation of client's computer data processing systems; and (4) other professional and technical computer-related advice and services. Common services include computer facilities management, computer hardware or software consulting, computer systems integration design, custom computer programming, and software installation.

In 2009, software publishing accounted for 16 percent of Oregon's high-tech employment or 8,900 jobs. This sector's employment was down by 3.3 percent in 2009 from 2001. However, since 2003, employment has increased by 29 percent, reaching a high of 9,300 jobs in 2008.

Companies in this industry are primarily engaged in the design, development,and publishing of computer software. Important products in this industry include operating, utility, and applications programs. Establishments in this industry may also provide user services such as preparation of software documentation;installation of software; and training in the use of the software.Software publishing is more likely to have a high proportion of self-employedindividuals than other high-tech sectors. However, there are some rather large software companies in the state. These software publishers produce software for many industries including banking, payroll, human resources, computer games, and operating systems.

The computer and electronic product manufacturing industry is clearly Oregon's largest high-tech employment sector. In 2009, computer and electronic product manufacturing accounted for 66 percent of Oregon's high-tech employment, or 35,500 jobs. In 2009, this sector's employment was down 13,800 (-19.7%) jobs compared to 2001. Jobs in this sector were also down by 3,400 (-8.7%) since 2008 (Graph 3).

For businesses in the computer and electronic product manufacturing sector,manufacturing processes are fundamentally different from those of other machinery and equipment companies. The design and use of integrated circuits and the application of highly specialized miniaturization technologies are common elements in the production technologies of the computer and electronic subsector.

The computer and electronic product manufacturing industry consists of several components. The manufacture of computers, communication equipment, audio and visual equipment, magnetic and optical media, technical instruments, and semiconductors are all part of the industry.

In Oregon, the manufacture of semiconductors dominates the computer and electronic product industry. Nearly three-fourths of its employment in 2009 consisted of jobs in semiconductor manufacturing (Graph 4).

Semiconductors - also known as integrated circuits or computer chips - are tiny electronic circuits etched on silicon. Their purpose is to electronically process, store, and move information. From the microprocessors that control our car engines to the chips in our digital watches, semiconductors are the heart ofthe modern technology we take for granted.

Despite considerable job losses over the past few years, this is not an industry to be ignored as it still has a huge economic impact on the state. In 2008, its total covered payroll to Oregon workers was more than $2.7 billion.

One of the most outstanding features of the computer and electronic products industry is its relatively high wages. In 2008, computer and electronic product manufacturing paid more than $3.5 billion to its Oregon workers, for an average of $92,249 per employee (Table 2). This compares with an average wage of $53,130 for all Oregon manufacturing workers in 2008. In 2008, the average wage for all workers in all industries statewide was $40,486. The technical nature of the work accounts for the higher wages. Manufacturing high-tech products requires engineers, designers, computer programmers, and technical sales staff.

The computer and electronic product manufacturing industry is arguably one ofthe most important sectors of manufacturing in Oregon. However, its employment is primarily in the Portland metro area. In 2008, 83 percent of the industry employment was in the Portland metro area. Washington County alone accounts for 67 percent of the industry's employment in Oregon.

As for the service side of high-tech, systems design and related services as well as software publishing also pay higher-than-average wages. In 2008, software publishing had an average wage of $88,811. Systems design and related services workers earned an average annual wage of $78,188. These industries seemed to be spread out in larger areas of the state but were still concentrated around the Interstate 5 corridor. They also had a noticeable presence along Highway 97 in Deschutes and Klamath counties.

Table 3 offers a sampling of occupations most common to semiconductor manufacturing. The high-tech sector overall has similar but slightly differentstaffing patterns. More than one-half of its occupations require a bachelor'sdegree or higher. Engineers and engineering technicians make up the bulk of the workers. Several of the occupations listed require less than a bachelor's degree but still manage to command higher-than-average wages.

Semiconductor processors accounted for over 2,300 of the semiconductor workers in 2008, with an annual mean wage in 2009 of $31,034. However, many of the occupations in the high-tech industry are not high-tech occupations. Thisindustry requires many of the same support staff found in other industries,including managers, accountants, finance managers, sales people, shipping clerks, clerical workers, and maintenance staff.

The Oregon Employment Department forecasts a decline of 3 percent for computer and electronic product manufacturing over the 10 years from 2008 to 2018. This compares to overall employment growth projected at 9 percent.

A more promising future for Oregon's high-tech industry is in its service sectors. Systems design and related services is expected to grow by 21 percent and the software publishing industry is projected to grow at a rate of 10 percent from 2008 to 2018.

No one knows for sure what the future holds for this dynamic industry. Regardless of the blows it has suffered during the last and current recession, high-tech is a key industry for Oregon's economy. Its rapid growth during the 1990s enhanced Oregon's ability to compete globally and it continues to be one of the state's largest exporters.