​These Graphics Show Why the US Needs to Boost Tech Beyond Silicon Valley
Participants in a Energy Department workshop aimed at boosting participation in high-tech jobs. Image: DoE/BNL

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​These Graphics Show Why the US Needs to Boost Tech Beyond Silicon Valley

Investments in research and education can help drive a US “advanced industries supersector.”

Silicon Valley is the epicenter and symbolic home of US technology innovation, spawning world-famous companies like Apple, Google, and Facebook that employ tens of thousands of highly-skilled workers, generating billions of dollars in economic activity.

But across the country, thousands of lesser-known high-tech firms are also doing their part to lay the foundation for America's advanced economic future, according to a new report from The Brookings Institution, a leading DC-based think tank.

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As the US continues to emerge from the Great Recession, there is an urgent need to look beyond Silicon Valley and support high-tech—or "advanced"—industries across the country in order to boost sluggish economic growth and reduce economic inequality, according to Mark Muro, a senior fellow at Brookings who directs the Metropolitan Policy Program, which conducted the study.

The report, which was released on Thursday, analysed how the US "advanced industries supersector"—a group of 50 industries that rely heavily on research and development (R&D) and science-technology-engineering-math (STEM) skills—performed across the nation's 100 largest metropolitan areas from 2013 to 2015.

"These industries punch above their weight," Muro told Motherboard. "They're the most critical industries that we have, and if we're going to move toward more inclusive prosperity, they need to do well."

Image: The Brookings Institution

The report is part of a broader effort by Brookings researchers to develop policy recommendations designed to reenergize the American economy following the worst recession in decades.

The nation's advanced industry supersector can play a crucial role in this effort, according to Muro, especially at a time when US GDP growth is plodding along at a disappointing 1.2 percent rate, according to the most recently released data from the Commerce Department.

One of the inescapable takeaways from the report is that if the US doesn't make significant investments in its advanced tech economy, the nation could be doomed to decades of stagnant growth.

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One reason that these advanced industries are so important is that they are highly productive, accounting for 8.7 percent of the total US workforce, but 17.2 percent of overall US GDP and a whopping 60 percent of US exports, according to the report. (See chart below.)

Image: The Brookings Institution

"The problem is the rest of the economy, which is drifting along at very low productivity growth, and nowhere is worse than education and healthcare," Muro said. "What we need to do is transfer some of these technologies and business practices from the advanced economy to the rest of the economy."

One of the key findings of the report is that while advanced industries are certainly concentrated in what Muro calls "coastal creative hubs" like San Francisco, Los Angeles, New York, Boston and Seattle, they're also present in a places like Denver, Atlanta, Kansas City, and Madison, Wisconsin.

"The advanced economy is more widely distributed than we typically think," said Muro. "These places aren't just flyover country." (See map below.)

Image: The Brookings Institution

While there has been plenty of discussion about the collapse of America's traditional commodity manufacturing base, less attention has been focused on what Muro calls the "renewed vitality" of advanced manufacturing firms building things like auto parts, jet engines, turbines and sophisticated medical devices.

"This isn't your parent's manufacturing anymore," said Muro. "These are essentially high-tech companies, but they're doing it on the factory floor."

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Advanced industries in some areas of the country haven't fared nearly as well as others, especially in places heavily dependent on the energy sector.

The proliferation of advanced fossil fuel technologies like hydraulic fracturing, or "fracking," has led to a glut of domestic oil and natural gas, driving down their price, and severely affecting local economies that rely on those industries from 2013 to 2015. (See map below.)

Image: The Brookings Institution

The nation's advanced industries have shown remarkable productivity growth since 1980, thanks in part to technology-driven automation.

But there's a flipside to that good news: increasing automation means machines can replace workers, which is why employment growth in the advanced industries has remained relatively flat since 1980, while output has soared. (See chart below.)

That's why it's so important to aggressively expand these advanced industries and employ more workers as productivity continues to improve, Muro said. "This sector inordinately supports the good quality jobs in the economy, and if it were twice as big, the nation would be much more prosperous and many more people would have good jobs," he said.

This is especially crucial at a time when so many young people are graduating high-school or college and finding it difficult to land a good-paying job. Although the youth unemployment rate (ages 16-24) has declined since its post-recession high of nearly 20 percent, it's still hovering above 10 percent, with more than two million young people out of work.

Image: The Brookings Institution

Is the US doing everything it can to help these industries grow, both in terms of public and private investment? Muro says the answer is no. R&D investment, as well as education, including job training and retraining, particularly in STEM fields, will be crucial over the next decade, he said.

"This sector is defined by its innovation capacity and its skills, so those are the first two areas for policy support," Muro said. "We need a technical skills approach that is just as serious about community college degrees as it is about PhD production. There's a huge band of what we call blue-collar STEM workers who run the equipment, maintain the equipment and are a big part, certainly on the advanced manufacturing side, of the success of these industries."

"On the innovation side we need to pile on practically-oriented basic and applied research," Muro said. "The federal research budgets have been going sideways when other nations have been ramping up. We simply have to make those investments."