Useful Stats: Defining High Tech

For years, defining "high technology" and identifying industries that fit within that classification has been a difficult task loaded with political implications. AeA, for example, has used a definition of high tech in its publication Cyberstates that places heavy emphasis on information technology.

In presentations around the country, SSTI has advocated using a definition based on work prepared by the Bureau of Labor Statistics (BLS) that defines high tech by data rather than ideology. Unfortunately, the BLS definition was developed under the Standard Industrial Classification (SIC) system. Attempts to translate those industry sectors into the North American Industry Classification System (NAICS) through correspondence tables and crosswalks results in a list lacking in precision because the individual user must make certain judgments as to whether or not an industry should be included.

A new issue brief, Technology Industries and Occupations for NAICS Industry Data, prepared by the Center for Economic Development (CED) at Carnegie Mellon University and SSTI offers a new approach to identifying technology industries using NAICS.  Industries are identified either as technology employers or technology generators. Technology employers have employment of technology occupations exceeding the national average by at least three times. Technology generators are industries where R&D expenditures per employee and/or the proportion of full-time equivalent R&D scientists and engineers in the workforce exceed the national average.

The issue brief identifying the industries that fall within the technology employers and technology generators definitions can be found at http://www.ssti.org/Publications/online.htm or through CED at http://www.smartpolicy.org/. One of the difficulties discussed in the issue brief is the shortcomings of available data.

One shortcoming is that to protect company confidentiality, employment data is masked for several industries, particularly in smaller population states. SSTI, with CED's assistance, has prepared a table <http://www.ssti.org/Digest/Tables/032904t.htm> showing by state the minimum level of employment in each of the Technology Employer and Technology Generator industries. Because not all employment data is publicly available, the employment levels and percentage of technology employment should be viewed as the minimum occurring in the state. As a result of the data-masking, users are strongly discouraged from ranking the states. State and local policymakers might want to use the list of industries identified to get more precise data from their employment services departments that are responsible for ES202 data.