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Thursday, Sep 28, 2023

Divvying Up the Pie of Advanced Workers

The Chapman-UCI Innovation Index has allowed our team the opportunity to track and measure the progress of Orange County and 49 other metropolitan statistical areas (MSAs) in creating jobs, wage growth, and establishments in “Advanced Industries.”

Our databank, perhaps the largest in the nation, encompasses a broad range of advanced industries, including high-tech, software development, aerospace, scientific research, medical products, and pharmaceutical research.

The high-value-added nature of these jobs is shown in Chart 1.

In 2005, average wages in advanced industries were 63% higher at $75,000 versus $46,000 for all workers (including advanced).

By 2022, advanced industry wages were $140,000 versus $78,000 for all workers or 80% higher. Not only were advanced industries paying more in wages than all jobs, but the spread widened over time.

Given the globalization of knowledge and technology, it should not be surprising that the number of advanced jobs in the 50 MSAs we track is growing faster than total jobs. Chart 2 shows that total advanced jobs increased from around 6 million jobs in 2005 to 8.5 million in 2022, a 42% increase during the 17-year period between 2005-2022.

To gauge how Orange County is doing in creating and retaining advanced jobs, we calculated advanced jobs in the county as a percent of all advanced jobs in the 50 MSAs we track.

If Orange County is growing faster in creating advanced jobs than the average for all 50 MSAs, the County’s percentage will increase over time. If it decreases, the county’s percentage will decline.

As a frame of reference, we compared Orange County’s advanced jobs as a share of all advanced jobs in the 50 MSAs to San Diego, an area similar in population and geography.

Chart 3 shows that the long-run trend for Orange County from 2005 to 2022 is not encouraging. Advanced jobs in San Diego, as a percentage of the total number of advanced jobs in the 50 MSAs we track, held its own.

Orange County, however, experienced a secular decline from about 2.9% in 2005 to 2.3% by 2022. Instead of being ahead of San Diego as it was in 2005, by 2022, Orange County was behind.

In raw numbers of advanced workers, the lead Orange County had in the percentage of advanced workers over San Diego in 2005 (2.9% in Orange County versus 2.5% in San Diego) translated to 22,000 more advanced workers in Orange County than San Diego.

By 2022, however, Orange County’s lead turned to a deficit (2.3% in Orange County and 2.6% in San Diego). That difference translates to 16,000 fewer advanced workers in Orange County than in San Diego in 2022.

To see how all 50 MSAs have fared in divvying up the pie of advanced workers, we decided to focus on the 2017 to 2022 period to provide a clearer picture of what’s happening in the shorter run.

Chart 4 shows the top 10 MSAs in rank order of how each area’s share of advanced jobs increased over the last five years. Notice that San Diego just made it on that list. The 0.113% increase for San Diego occurred because its percentage of advanced workers increased from 2.43% in 2017 to 2.54% in 2022 (2.547 less 2.434 = 0.113).

Unfortunately, Chart 5 shows that Orange County was in the bottom 10 at No. 41. Its percentage of advanced workers decreased from 2.48% in 2017 to 2.37% in 2022 (2.479 less 2.366 = -0.113).

On the brighter side, at least the County’s piece of the pie didn’t shrink as much as Chicago, Detroit, Los Angeles, or New York. Sadly, that’s hardly the kind of company we’d like to keep.

These empirical findings should not be taken as just more statistical fodder. On the contrary, they should be taken as a call to action.

We propose that the leadership of OC’s engineering, science, and business colleges, in consort with the leading public-private partnerships, meet as a Task Force to prepare a plan of action.

Such a report should include a vision for how Orange County can become a leader in the creation of advanced industries. Aspiring to that vision means articulating clear strategies for meeting the tough challenges posed by an ever-increasing knowledge universe.

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Sonia Chung
Sonia Chung
Sonia Chung joined the Orange County Business Journal in 2021 as their Marketing Creative Director. In her role she creates all visual content as it relates to the marketing needs for the sales and events teams. Her responsibilities include the creation of marketing materials for six annual corporate events, weekly print advertisements, sales flyers in correspondence to the editorial calendar, social media graphics, PowerPoint presentation decks, e-blasts, and maintains the online presence for Orange County Business Journal’s corporate events.

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