Manufacturing and technology drive much of the Washington state economy, as documented in a new report sponsored by the Association of Washington Business and produced by High Peak Strategy LLC.
Below we’ll highlight some of the major findings of the 73-page report, which is a must-read for anyone looking for a deep understanding of ICT and manufacturing in Washington.
But because we’re in the middle of the legislative session, we’ll lead with the conclusion:
Because manufacturing is a key driver of economic growth, states across the U.S. compete for these activities through incentives and recruitment policies. States across the U.S. compete for manufacturing investments through a range of tax incentives and discretionary grants and loans. Manufacturing continues to be a key source of innovation and high paying, high skill jobs and an engine of economic growth. However, equal or more important are the fundamentals of access to (and cost of) key business inputs, such as qualified workers, land, and energy, and the predictability of permitting processes.
Most of these competitive factors – tax policy, worker training, energy costs and availability, and regulatory permitting – are directly affected by state and local public policies. Other states want what Washington has; Washington must compete to retain and win investment and jobs.
Now, to the economic impact of the sectors.
In announcing the release of the report, AWB writes,
Manufacturing is a major employer and source of job creation in Washington state. In 2019, the manufacturing sector employed 305,300 workers in Washington state, equal to 9% of Washington’s entire nonfarm employment base. Manufacturing punches above its weight — the sector was responsible for more than 11% of gross state product.
The manufacturing sector is increasingly overlapping with another key pillar of the state’s economy: Information & Communication Technology. ICT is among Washington’s largest sectors. It is fast growing, pays strong wages, and an increasingly important driver of other industries in Washington state. The ICT sector in 2019 employed more than a quarter of a million workers (276,700) and paid average annual wages, including benefits, of $225,000 per worker. Even more importantly, every ICT job creates several more jobs, with a jobs multiplier of 3.7.
Recent advances in technology and manufacturing have blurred the distinctions between the sectors. AWB points out,
There’s an increasing overlap between ICT and manufacturing. For example, an estimated 15% of employees in the space sector work in ICT occupations, such as software engineering. Within biotech, nearly 9% of the workforce are ICT workers, and 6% in energy systems. The distinction between tech and manufacturing as separate sectors is becoming less defined. Various manufacturing firms develop their own software solutions, whilst the ICT sector also designs and builds hardware products.
From the full report:
Manufacturing is alive and robust across the state. There were twenty-three (23) counties with at least 1,000 manufacturing workers in 2019. Seven counties were home to at least 10,000 workers, led by King and Snohomish (105,400 and 60,500) but with large concentrations in Kitsap (17,500), Spokane (16,300), Pierce (17,400), Clark (14,100), and Whatcom (10,500).
Manufacturing creates jobs across the economy in every county. Manufacturing supports additional employment elsewhere in the economy. Manufacturing involves an extensive supply chain, supporting jobs and wages among these businesses. Manufacturing workers, along with workers among suppliers, spend a large share of their income on household goods and services in the economy, such as on groceries and restaurants, spurring additional employment in the economy. For example, each job in aerospace supports a total of three jobs across the state economy, both among suppliers and various services businesses whose revenues come from aerospace worker household spending.
Manufacturing is diverse, supporting jobs and prosperity across a range of activities in Washington state. Among subsectors analyzed in this study, activities ranged from aerospace to biotechnology to food and beverage processing. The aerospace and space sectors combined employed 88,900 workers and paid an average wage of $151,300 (including benefits). Other transportation equipment—including shipyards, truck manufacturing, and transportation parts and equipment—employed 24,400 workers in 2019. Agri-tech activities, including food and beverage processing, directly employed 51,600 workers and supported nearly $4.0 billion in foreign exports.
ICT is among Washington’s largest sectors, fast growing, pays strong wages, and an increasingly important driver of other industries in Washington state. The ICT sector in 2019 employed more than a quarter of a million workers (276,700) and paid average annual wages, including benefits, of $225,000 per worker. The sector is highly concentrated in King County but there are twelve counties in Washington state with at least 1,000 ICT workers, including Clark (8,940), Snohomish (8,370), and Spokane (5,310). Washington is also home to centers of ICT government work, such as the Department of Energy’s Pacific Northwest National Laboratory in Richland.
The economic impact of the ICT sector, including upstream business-to- business transactions (indirect) and household consumption (induced), summed to more than 1.0 million jobs in 2019. The sectoral jobs multiplier of 3.7 is among the highest of any industry in Washington state.
It’s a comprehensive, timely, and important analysis of the strength of the state’s manufacturing and ICT sectors. And a reminder not to take them for granted.