1. The Changing Nature of Technology- Based Industry in Washington State: Perspectives from 8 Technology Alliance Sponsored Studies William B. Beyers Department of Geography University of Washington Seattle, WA 98195 beyers@uw.edu Seattle Economists Club June 13, 2012 Updated February 18, 2015

2. Outline Defining Technology-Based Industry The Changing Nature of R&D – WA vs. Other States Current Employment Trends in Employment The Changing Geography of Tech-Based Industry Changes in Economic Impacts

3. The Technology Alliance Technology- Based Industry Economic Impact Studies Studies have been benchmarked against the years 1995, 1997, 2000, 2003, 2007, 2009, 2011, and 2013 They have tried to use a consistent methodology Changes in underlying data sources have made this difficult We are unaware of any similar legacy of studies of this type

4. Defining Technology-Based Industry Many definitions of “high tech” Some are based on % of sales related to R&D, some based on arbitrary definitions of industries included, some based on % of R&D related occupations Early Technology Alliance economic impact studies defined technology-based industries as those with at least 10% of their workforce in R&D related occupations Starting in 2008, we defined tech-based industry as those with double the state average in R&D employment for all industries. In the current study, that threshold is 16.6% (up from 15.6 in 2010). This definition leads to some changes in industries included in the study, but other factors also lead to changes to industry inclusion (shift to NAICS, occupational structural change) After careful inspection of occupational structure, we included two industries with less than 16.6% R&D related occupations (electronic shopping & waste treatment/disposal)

5. R&D Related Jobs are very important in technology-based industry Source: Calculated From Washington State Employment Security Department 2012 industry-x-occupation matrix

6. Technology-Based Industries in 2013 Study

7. Examples of R&D Intensive Occupations in SOC 15, 17, and 19

8. Washington R&D by Users of Funds Source: NSF 2014 D – data not disclosed NA – data not available for this year Indexed ranks are against Gross State Product, which controls size of state economies

9. 1995 Study Employment Mix

10. 1997 Study Employment Mix

11. 2000 Study Employment Mix

12. Employment Mix 2003 – After the shift from SIC to NAICS

13. Employment Mix 2007

14. Employment Mix 2009

15. Employment Mix - 2011 Manufacturing 28% Services 72% Total 434,343 Data for 2011 Includes Self-Employed for the first time

16. Employment Mix 2013

17. Changing Mix of Technology-Based Industry Employment The share in 2013 was the same as in 2011

18. History of Technology-Based Employment in Washington State

19. Concentration of Technology-Based Employment in Washington State Nonemployer = 9.8% of County Business Patterns Employment

20. Location Quotients - 1993

21. Location Quotients 2011

22. 1993 Location Quotients – Less Aerospace

23. Location Quotients – Less Aerospace

24. 1993 Location Quotients- Tech Intensive

25. Location Quotients – Tech Intensive Industries with greater than 30% R&D related employment

26. Location Quotient Trend – Washington State

27. Washington County Employment 1997

28. Direct County Tech-Based Employment 2013

29. Economic Impact Analysis

30. Employment Impacts 1997

31. Total Direct and Indirect Employment Impacts 2013

32. Direct & Total Impacts B&O tax only B&O and Sales Tax

33. Direct & Total Impacts

34. Multiplier History

35. Historic Trend in Technology-Based Industry Employment and Impacts * 2013 *

36. Concluding Comments Washington has strong technology-based industry, but it has changed over time The occupational foundation for defining technology-based industry continues to rise Our R&D position relative to other states has also risen Service industry components of technology-based industry have continued to expand While these industries are strongly concentrated in the Puget Sound region, there has been geographical spread to other parts of the state Growth of technology-based industry has been faster than the state average, leading to growth in economic impacts that have also gradually risen. Thanks to the Technology Alliance for supporting this unique set of portraits of technology-based industry in Washington State

37. Old Slides Follow These slides were left in the file for reference purposes

39. Boeing Employment Fluctuations

40. Boeing’s Long-Run Trend towards Outsourcing Regional Purchases are about 7% of total, mostly services Source: Washington State Input-Output Tables

41. 1.465 1.10 1.06 1.12 Washington Ranks 2 nd. - Peer States Black/White Numbers Other High Location Quotients - Red 1.17 1.20 1.16 0.90 1.27 1.12 1.41 1.19 1.468 Location Quotients – All Hi Tech 2009

42. Washington Ranks 3 rd - Peer States Black/White Numbers Other High Location Quotients - Red 1.31 1.10 1.05 1.14 1.24 1.19 1.31 1.00 0.93 1.46 1.17 1.22 1.52 Location Quotients – Less Aerospace

43. 1.93 1.17 1.22 1.24 0.92 1.37 1.11 1.44 1.97 1.55 2.20 Washington Ranks 3 rd - Peer States Black/White Numbers Other High Location Quotients – Red 1.27 Location Quotients – Tech-Intensive

44. 233,475 52,918 15,048 18,739 11,929 Direct County Tech-Based Employment 2011 52,918 233,475 15,048 18,739 11,929

45. 434,343 1,007,378 1,441,721 Hi Tech Trade Services Direct Mfg. Other Industries Indirect Total Direct and Indirect Employment Impacts 2011 2010 Report: 381,546 826,644 1,208,189