The Buffalo Niagara region still has a ways to go to catch up with the New Economy.
While advanced manufacturing is a hot topic in the Buffalo Niagara region, other types of advanced industries, from computer systems design to semiconductors and web search portals, are vastly underrepresented here.
The result: Our advanced industries are growing much slower than the rest of the country, and they make up a below-average portion of our overall economy, according to a new report from the Brookings Institute.
That’s bad news for the Buffalo Niagara region because advanced industries are where it’s at in the New Economy. They depend on lots of research and development money, and they rely heavily on workers with skills in the STEM fields of science, technology, engineering and mathematics.
Those New Economy jobs are a big deal – and highly coveted – because they pack a big economic punch. Advanced industry jobs pay really well. In the Buffalo Niagara region, they pay an average of $73,529 a year. That’s almost two-thirds more than the $44,965 average for all jobs in the region last year.
There is a glimmer of good news amid the Brookings report: While our advanced industries sector is undersized, its painfully slow growth has been steady.
Among the nation’s biggest metro areas, nearly three of every five experienced a decline in either employment or output within the advanced industries sector from 2013 to 2015. In the Buffalo Niagara region, our output and employment both increased, albeit slowly.
For the most part, though, the Brookings report paints a picture of the Buffalo Niagara region as an afterthought for advanced industries – a group of 50 industry groups spread across the manufacturing, energy and services sectors that rely on heavy R&D spending and get at least 20 percent of their workers from STEM-intensive occupations.
While those advanced industries have been growing faster than the overall economy, the growth hasn’t been spread evenly. Instead, it’s been concentrated in places like Nashville, Tenn., the Silicon Valley, Kansas City and Charlotte, N.C.
“The rich are getting richer as more activity concentrates in the big creative hubs,” said Mark Muro, a senior fellow and director of policy for the Metropolitan Policy Program at Brookings.
Still, in places like the Buffalo Niagara region, even a small presence in advanced industries can have an outsized impact.
“Tech is concentrating but it’s also spreading, as more of the nation’s metros develop genuine tech scenes,” said Muro, the report’s lead author.
In the Buffalo Niagara region, advanced industries are a significant economic force, even if they still have an undersized presence compared with the rest of the country.
• Those 50 advanced industries account for 7.9 percent of all jobs in the region, compared with 8.7 percent nationally. Among the nation’s 100 biggest metro area, that ranks 58th.
• Advanced manufacturing – a key push among the region’s economic development officials – is a local strength. We have 22 percent more advanced manufacturing jobs than the typical U.S. metro area.
• Not surprisingly, energy, another big source of advanced jobs, is just a tiny employer in a region that has comparatively little energy production. Advanced service industries also are underrepresented here, with those service firms providing about 30 percent fewer jobs here than the national average.
• Advanced industries produce $8.3 billion in economic output in the region. That amounts to 12 percent of our total economy. Those same industries account for 17 percent of the U.S. economy.
• The growth among our advanced industries also has been subpar. Output from those 50 industries grew by 1.88 percent annually from 2013 to 2015 – 62nd best out of the 100 biggest metro areas. That was about a third slower than the 2.7 percent growth rate nationally.
• Employment growth is even slower. Our 0.77 percent job growth rate within the advanced industries sector ranked 67th nationally and was two-thirds less than the 2.46 percent average annual growth rate nationally from 2013 to 2015.
• Our automotive sector is one of our strengths within the broader advanced industries category. We’re strong in R&D services, basic chemicals and medical equipment and supplies.
• Our tech sector is a big weakness. Computer systems design is the biggest single advanced industry in the Buffalo Niagara region, with more than 4,500 jobs, according to the Brookings data. But that sector is 37 percent smaller than it is in the typical U.S. metro area.
Employment within the semiconductor industry is 40 percent below the national average. We have about 70 percent fewer web search portals and internet publishing than the national average.