Oregon's High-Technology Sector

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Oregon’s High-Technology Sector

April 2016

Oregon Office of Economic Analysis

2Oregon Office of Economic Analysis

Overview

• Big Picture Trends• Historical look at the high-tech industry in Oregon

• Hardware vs Software• Oregon’s legacy in hardware manufacturing vs the

strong software growth in recent years

• The Great Recession• Comparing industry trends over the business cycle

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Big Picture Trends

4Oregon Office of Economic Analysis

Firms are technically business units. One firm may have more than one business unit in the state.Corporate taxes are for C Corporations only. S Corps, partnerships and the like are not included in this calculation.

5Oregon Office of Economic Analysis

High-Tech jobsstatewide nowat highest levelsince thedotcom bust

Accounts for~5% of all jobsin Oregon

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In 1970s, High-Tech wages paid10% more thanthe statewideaverage wage

In 2015, High-Tech wages aremore than twicethe statewideaverage (215%)

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Oregon’s stateGDP growthdriven in largepart to high-techproductivity.

In 2013, techcontributed $44.7 billion tostate GDP - 22% of total

Very hard for BEA to measure well given Moore’s Law &improvedperformance ineach generationof chips.

8Oregon Office of Economic Analysis

9Oregon Office of Economic Analysis

Oregon’s high-tech sector today is equivalent in size to the forest sector (timber)in the 1970s in terms of employment, impact of wages and the like. However onebig difference is the geographic concentration of the employment.

10Oregon Office of Economic Analysis

Share of Employment in High Technology, 2012

U.S. 4.6%

Significantly Above Average (>6%)

Above Average (4.6% - 6%)

Below Average (3.5% - 4.6%)

Significantly Below Average (<3.5%)

Based on industry employment data

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Based on occupational employment data

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Hardware vs Software

13Oregon Office of Economic Analysis

Defining Hardware and SoftwareNAICS Industry Hardware/Software

3254 Pharmaceutical & medicine manufacturing Hardware

3341 Computer & peripheral equipment manufacturing Hardware

3342 Communications equipment manufacturing Hardware

3344 Semiconductor & electronic component manufacturing Hardware

3345 Electronic instrument manufacturing Hardware

3364 Aerospace product & parts manufacturing Hardware

5112 Software publishers Software

5161 Internet publishing & broadcasting Software

5179 Other telecommunications Software

5181 Internet service providers & Web search portals Software

5182 Data processing, hosting & related services Hardware

5413 Architectural, engineering & related services Software

5415 Computer systems design & related services Software

5417 Scientific research-and-development services Software

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Hardware hasnot been anemployment growth sectorsince thetechnology bustin the early2000s.

All of the growthin the pastdecade is insoftware.

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Hardware and Intel

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19Oregon Office of Economic Analysis

The rest of theindustry sawlarge job lossesin recentdecades – both locally andnationally.

The fact Oregonremained thehub of R&D andproduction hasserved the economy verywell.

To reiterate, the Intel employment figures come from The Oregonian not from any official tax or employment records.

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Expectationsfor the industrywere no jobgrowth in thecoming decade.

However, stableemployment was expected. That Oregon would maintainthe number ofhigh-wage,very productivejobs.

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Software and Outposts

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Vast majorityof high-tech jobgrowth in recentyears is insoftware.

The largest gains are inMultnomahCounty.

Many of thesenew businessesare outposts forfirms withheadquarterselsewhere.

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24Oregon Office of Economic Analysis

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The Great Recession

26Oregon Office of Economic Analysis

High-tech in Oregon sawlarger job lossesthan the typicalindustry.

Recovery has been slightlystronger, effectively matching trendsin the state’seconomy.

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With a largerhardware sectorOregon’s techlosses werelarger than thenation‘s.

Growth sincethe GreatRecession haseffectively matched national trends.

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Oregon’s hardwarehasoutperformed the nation.

Software hasseen slightly few net jobgains.

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Summary

• High-Tech is a very productive, high-wage sector

• Integral part of the Oregon economy

• Oregon’s legacy and strength is in hardware manufacturing• Oregon still outperforms here, but hardware is not an

employment growth sector

• Growth is all software• Increasingly located in the Portland MSA, particularly

Multnomah County and the City of Portland

31Oregon Office of Economic Analysis

Contact

www.OregonEconomicAnalysis.com

@OR_EconAnalysis

joshua.lehner@oregon.gov

(503) 378-4052