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© Copyright 1998 by the Wyoming Department of Employment, Research & Planning

The Standard Industrial Classification (SIC) system is a way of assigning a code to each employer so that employment data can be summed to common categories of business activity known as industries. Under the 1987 SIC system, there is no classification specific to High-Tech industry. Instead, High-Tech firms are found throughout the traditional classification system. Some are in Manufacturing and some, like Computer Services, are in the Services industry. There are many definitions of High-Tech industries, but for this analysis, the Oregon Department of Employment’s definition based on firms that produce advanced technology was used. It includes firms in:

• SIC 357 Computer and Office Equipment Manufacturing
• SIC 36 Electronic and Other Electrical Equipment and Components, Except Computer Equipment Manufacturing
• SIC 38 Measuring, Analyzing, and Controlling Instruments; Photographic, Medical and Optical Goods; Watches and Clocks Manufacturing
• SIC 737 Computer Programming, Data Processing, and Other Computer Related Services.

Using this definition, a time series (a sequence of observations representing measurements taken at regular intervals) of employment for High-Tech was created from existing employer Unemployment Insurance (UI) records in Wyoming. This "new" industry is compared with traditional industries and shown to be small, but growing quickly. Its wages are above average for all industries and rising faster than average. As a result, High-Tech produces "real" or inflation-adjusted growth for Wyoming’s economy.

Definition of High-Tech Industries

It should be emphasized that there are many alternative definitions of "High-Tech" industries. Charney and Leones (1995) ⁽¹⁾ summarize much of the academic literature on the subject and categorize definitions of High-Tech industry into six basic groupings:

1. Product Sophistication--Using this method, industries which produce "high-tech" products or services are classified as High-Tech.
2. Growth in Employment--This method classifies all industries that grow faster than average as High-Tech.
3. Research and Development Intensity--Industries with higher than average R&D expenditures per dollar of sales can be classified as High-Tech.
4. Occupational Mix--Based on the occupational mix, industries that employ a high percentage of engineers, scientists, etc. can be classified as High-Tech.
5. Technology Intensity--Industries which use High-Tech inputs are classified as High-Tech under this definition.
6. Arbitrary Groupings--A large number of arbitrary groupings exist which are based on combinations of the above definitions.

The Oregon definition falls under the first category (product sophistication) because it is based on industries that produce computers or electronic goods or services. Readers should note that this is a rather narrow definition of High-Tech. Other definitions have included Petroleum Refining, Engineering Services, Telephone and Cable Services and Chemical Manufacturing, all of which are well-established industries in Wyoming. However, the Oregon definition was chosen because it focuses on core high-tech industries that produce high-tech equipment and services rather than just using high-tech equipment or services.

Wyoming’s High-Tech Industry 1990 and 1996

How large is this High-Tech industry in Wyoming? In 1996, there was an average of 1,097 jobs in the High-Tech industry. This represents about one-half of one percent of UI covered jobs in the state. By comparison, the smallest traditionally defined UI covered industry was Agriculture. In 1996 it had 3,051 jobs, or 1.4 percent of all UI covered employment.

As Figure 1 shows, the High-Tech industry has grown considerably faster than overall employment in Wyoming. In 1990, only 666 people were employed in High-Tech industries, but by 1996 this had grown 65 percent to 1,097. By comparison, 1990 total employment was 190,705, which grew 12 percent to 213,699 in 1996. Table 1 shows High-Tech along with the traditional industries ranked by the percent change in number of jobs between 1990 and 1996.

What about wages? In order to adjust for inflation, real wages are used in this study. To produce the real wage figures, nominal wages were "deflated" to 1982-1984 dollars based on the Consumer Price Index (CPI). In 1996, the real average weekly wage (AWW) for a job in the high-tech sector was $302. This is above the average for all jobs ($280), and above the Agriculture ($193), Retail ($152), Services ($221) and Local Government ($270) industries. In 1990, the real average weekly wage in high-tech industry stood at $298. This was barely above the average for all industries ($295). However, the real average weekly wages in the High-Tech industry grew 1.2 percent since 1990 while the real average wage for all UI covered jobs fell 5 percent. Table 2 shows how High-Tech compares with the rest of the industries in real wage growth between 1990 and 1996.

As can be seen from Tables 1 and 2 , Manufacturing and Federal Government had greater increases in real average weekly wage (AWW) than High-Tech. It should be noted while the real AWW in Federal Government increased, this occurred partly because employment at the low end of the pay scale decreased (see Table 1).

Manufacturing increased in both real AWW and employment. Part of this was due to a "non-economic code change," made as a result of an annual review of employers’ primary business activity⁽²⁾, where an establishment, previously coded in the Mining industry, was moved to Manufacturing. Taking this code change and the reduction in federal employment into account, High-Tech’s position of dominance becomes even more pronounced. It ranked first in employment growth and second in real wage growth between 1990 and 1996.

Where is this high-wage, fast growth industry located? In 1996, 93 percent of all High-Tech employment was located in only seven counties. These seven counties in order are: Fremont, Laramie, Albany, Teton, Campbell, Sheridan and Uinta. Interestingly, these seven counties only account for one-half of total UI covered employment. If High-Tech industries stay geographically concentrated, Wyoming’s 16 other counties might be left behind. The good news is that the number of UI covered High-Tech firms increased from 71 to 126 during the six-year period from 1990 and 1996.

Comparison to U.S. High-Tech Industry

Just as in Wyoming, wages in the national High-Tech industry have increased faster than average for all industries. However, national High-Tech employment hasn’t grown as fast as the U.S. average. Part of this is due to a decline in U.S. Manufacturing employment.

Nationally, employment in the three Manufacturing SIC’s (357, 36 and 38) included in High-Tech decreased in absolute numbers from 1990 to 1996. A 58 percent increase in Computer-Related Services (SIC 737) caused a small increase (5.0%) in the U.S. High-Tech industry. Thus, while Wyoming’s High-Tech sector as a percentage of total employment is smaller than the national one, it is growing faster, and we are catching up. A simple straight-line projection based on 1990 to 1996 trends suggests that Wyoming and the U.S. will have the same proportion of employment in High-Tech industry in about 25 years.

Occupational Employment

If individuals were to train to work in Wyoming’s High-Tech firms, what kind of occupations are found there? Presently, occupational staffing patterns by three-digit SIC are not available, so an occupationally detailed picture of the industry’s staffing pattern isn’t possible. However, occupational information is available at the two-digit level, so SIC 36 (Electronic and Other Electrical Equipment and Components Manufacturing) is analyzed as an example of the occupational composition of a high-tech industry.

Figure 2 and Table 3 show the occupations found within SIC 36 in 1994 and 2005. The largest group of occupations is in the category of Operators, Fabricators and Laborers. In 1994, this group included 102 workers and by 2005, it is projected to employ 406. Examples of occupations within this group include Electrical and Electronic Assemblers and Coil Winders, Tapers and Finishers. Executive, Administrative and Managerial Occupations accounted for 32 workers in 1994 and have a 2005 projected employment of 130. This includes General Managers as well as Line Managers and Production Managers. In 1994, Precision Production, Craft and Repair Occupations employed 12 people within this industry. By 2005 this occupational group is expected to grow to 43. In terms of percent increase (see Table 3) the fastest growing occupational group is Professional, Paraprofessional and Technicians. From 1994 to 2005 it is expected to grow 450 percent, from four employees to 22. This category is made primarily of Industrial Engineers.

Conclusion

The High-Tech industry is clearly an exception to this period of wage and employment stagnation in Wyoming. While it is still geographically concentrated and small in size, it is growing quickly, and its wages are increasing faster than average. The 1990 to 1996 time series suggest that the High-Tech industry will continue to produce good job opportunities for Wyoming residents.

1 Charney, Alberta and Julie Leones. Impact of High Technology Industry on the Arizona Economy. University of Arizona, 1995.

2 Each year, during the refiling survey, approximately one-third of employers covered by Unemployment Insurance (UI) in Wyoming are contacted to confirm that they have been assigned the correct Standard Industrial Classification (SIC) code. If it is found that an employer has changed primary business activity, a new SIC code is assigned to reflect that change.

David Bullard is a Senior Statistician and specializes in Local Area Unemployment Statistics (LAUS) with Research & Planning. He is also an Associate Editor of Wyoming Labor Force Trends.

The staff of Research & Planning congratulates David and his wife Karen on their January 31, 1998 marriage!