Employment and wage outcomes for North Carolina's high-tech workers: North Carolina's employment surge in "high-tech" industries has captured many economic planners' focus; these industries may provide high-paying employment to workers in declining industries, such as textiles, furniture, and apparel

Monthly Labor Review, May, 2004 by Robert Bowles

During the 1990s, North Carolina experienced a large employment increase in certain industries classified as high-tech. As a result, many economic planners have focused on these industries as a means of providing high-paying employment to workers displaced from declining industries, such as textiles, furniture, and apparel.

From what industries are new high-tech employees drawn? How large are the replacement wages of these workers? (1) The answers to these questions provide valuable insights to State planners who decide which industries receive subsidies and to those who evaluate the success of such programs. In addition, results could be used as a comparison to the results obtained from economic simulation software, which are used in many economic impact studies. (2)

How data were obtained

The methodology involved choosing growing companies in key high-tech industries that had considerable employment in North Carolina in 2000. What are "high-tech" companies? There is no official definition. In general, these are companies that utilize the latest technology in their production or are involved in creating new technology. They have variously been chosen based on the percentage of research and development spending, the proportion of scientists and researchers employed, number of new patents, and so forth. This article uses the three-digit Standard Industrial Classification (SIC) industries highlighted by Paul Hadlock and others in 1991. (3)

The employer data are from the North Carolina Quarterly Census of Employment and Wages (QCEW) program. Also known as the ES-202, this program is a cooperative effort between the Bureau of Labor Statistics and each State. The QCEW data also are linked longitudinally from 1990 through the most recently available quarter, providing a comprehensive and accurate source of business employment and wage data. The employer-reported wage records, which also come from the ES-202, list each employee and total wages paid during the quarter. Combining these existing administrative files with the longitudinal QCEW allows accurate and comprehensive analyses by industry and county for most employers.

From the list of 30 high-tech three-digit sic industries noted in Hadlock and others, 11 manufacturing industries with a presence in North Carolina were chosen. (4) From the State's longitudinal QCEW, individual companies that had employment increases from the first quarter of 1999 to the third quarter of 2000 were chosen. (The third quarter of 2000 was chosen as a reference period because the current economic downturn hit many of these industries beginning in the latter half of 2000. It also provides an opportunity to see which of the workers hired in this period were laid off in subsequent periods.) Choosing only companies with large net increases in employment produces the most relevant sample for the purposes of this analysis.

For each company chosen, the unemployment insurance (UI) account number was matched to the State's wage records database to obtain the identification numbers of workers employed at that company. Then, each worker's wage record history (back to the fourth quarter of 1992 and forward to the fourth quarter of 2002) could be retrieved. Those workers who obtained employment in the high-tech companies during the second quarter of 1999 were selected, and their wage and employment histories were analyzed for this report. Data were initially retrieved for all four quarters of 1999. However, for ease of exposition only, one quarter was chosen for this report. Henceforth, the second quarter of 1999 is referred to as the hire quarter.

Company characteristics

As stated previously, North Carolina has significant employment in 11 high-technology manufacturing industries. Table 1 shows the total employment in North Carolina and average annual wages for each of these industries in the second quarter of 1999.

Among all manufacturing employment in the second quarter of 1999, these industries represented 19 percent of total manufacturing employment in North Carolina. The quarterly average wage of the high-tech companies was 142 percent of the average wage for all manufacturing workers in the State.

From the 11 industries, 169 individual companies were chosen based on an increase in the number of jobs between the first quarter of 1999 and the first quarter of 2000. (Originally, there were 170 companies selected, but one of these companies has been deleted because of its relatively large share of employment, which may have led to violations of confidentiality.) These companies are henceforth referred to as the high-tech sample. This section shows some of the characteristics of these companies, based on data from the longitudinal QCEW for the second quarter of 1999. In order to protect confidentiality, the companies were aggregated to the two-digit SIC-defined industries. In addition, it is important to distinguish between worksites and companies, as a given company may have several worksites, some of them in different industries.