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

                              Number of   Percentage
        Industry of            workers    of overall
     prior employment         in group    new hires

High-Tech Manufacturing          596          13
Non-High-Tech Manufacturing      978          22
Services                        1,155         25
Retail Trade                     922          20
Other Industries                 887          20
Missing Industry Code            938          --

The industry of prior employment is determined by first calculating the total wages earned by each worker at each employer in the 2 years prior to the hire period. Following this, the industry that paid the largest amount of wages was chosen as the prior employer. (8)

For those workers whom an industry code could be assigned, the largest percentage (25 percent) had been previously employed in Services. Relatively large proportions had been employed in non-high-tech manufacturing (22 percent) and retail trade (20 percent) as well.

Unfortunately, the occupations in which these workers were employed cannot be determined. It is impossible to determine from the data if the high-tech companies prefer to hire textile workers, say, for production occupations or if these workers are getting jobs in some other semi-related occupations, such as material handling. There is evidence from the BLS Occupational Employment Statistics program that high-tech companies tend to employ a smaller percentage of production workers than traditional manufacturing companies. For example, in 2001, approximately 35 percent of employees in drug manufacturing companies (SIC 283) were production workers, compared with 64 percent of workers in textile mills (SIC 22).

Do replacement ratios differ by industry of prior employment? Chart 3 compares median post-hire wages to median pre-hire wages by industry groups. There is a large difference in the median pre-hire wage across industries. The median pre-hire wages were highest in high-tech manufacturing and other industries (which includes wholesale trade; finance, insurance and real estate; construction; government; and trade, communications and utilities) and lowest in retail trade and services.

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Chart 3 shows a comparison of pre-hire wages and post-hire wages for workers, based on the industry of prior employment. Post-hire wages tend to equalize wages for workers who were previously employed in different industries. That implies higher wage gains for workers who were previously employed in low-wage industries such as services and retail trade. The percentages shown in chart 3 are the ratio of median post-hire wages to median pre-hire wages. Note that these percentages are just the ratio of median wages and do not give a person-by-person evaluation of wage gains.

Chart 4 shows the different replacement ratios for new hires by industry of previous employment. Consistent with chart 3, workers from services had the highest replacement ratios (earning on average 46 percent more than previously), while workers from other high-tech manufacturing companies had the lowest replacement ratios (3 percent more, on average). As noted previously, the median replacement ratio for all workers was 1.19.