The high-tech industry, the supposed savior of sagging economies everywhere, is seriously overrated as an answer to unemployment and recession, industry observers report.
A forest of myths obscures some unpleasant realities: high tech creates few jobs, accounting for only about 8 percent of total U.S. employment; the jobs it creates are primarily middle-level ones, rather than either very highly skilled or assembly-line positions; it is not, in many cases, a "clean" industry, and it is dominated by a few giant corporations.
Local jurisdictions, trade groups and federal agencies monitoring the industry have their own, frequently widely varying definitions of a high-tech company. As a result, there is widespread disagreement on how much employment should be credited to these firms.
The National Science Foundation, the U.S. Bureau of Labor statistics and many experts, such as Robert Z. Lawrence, senior fellow in economic studies at the Brookings Institution, use narrower definitions than those of most local jurisdictions and boards of trade, which often count firms with slight connections to high tech.
Montgomery County, for example, includes a contact lens manufacturer in its high-tech biological and medical firms, and a general management consulting company among its high-tech computer firms, according to a Greater Washington Research Center report.
"Using robots to build Frisbees is not high tech," BDM Corp. President Earl Williams told the author of the report, Gail Garfield Schwartz.
Nevertheless, local government and business leaders throughout the country beat the drums frantically in attempts to lure high-tech companies, touting them as the way to a booming economy. The Washington area is no different.
"The Silicon Valley should be taking second fiddle to us in the next five years if we get our act together," Washington Board of Trade President Julia Walsh said at a recent seminar on area employment. Walsh was discussing the board's efforts to attract more private industry, as a way to move the region's economy away from dependence on federal government payrolls and purchases.
In addition, every new commercial real estate development between Frederick and Fredericksburg is being touted as a future home of high-tech industry. Developers often say that it is this industry that will produce the tenants for the vast supply of office buildings being built in the suburbs.
Although Washington's private-sector economy is growing, helped by a large number of high-technology firms, the optimism obscures potential problems, believes Stephen S. Fuller, professor of Urban and Regional Planning at George Washington University.
"It is true that the Washington metropolitan area will be one of the most important high-tech centers in the country, one of four or five," Fuller said. The drawback is that this status is largely the result of Defense Department contracts, on which Washington's high-tech companies depend heavily. "This makes us different from California, Boston and Texas."
Many highly skilled scientists and engineers here are turning out products for uses ranging from "germ warfare, which no one talks about, to sophisticated space equipment. . . . This kind of high tech doesn't translate into jobs producing goods and services we might consume," Fuller said.
For her Greater Washington Research Center report, Schwartz surveyed 21 large high-tech companies in the Washington area. She found that government purchases accounted for about half of their sales revenue, and that four of the firms derived from 90 percent to 100 percent of their revenue from the government.
Although local companies would like to reduce their dependence on federal purchases, "any sharp cuts in government procurements (especially in defense) could still severely affect several firms," she wrote. Schwartz, who is president of Garfield Schwartz Associates, an economic and development consulting firm, completed the study last winter.
Federal contracts, however, are still plentiful for most companies, and local business leaders are optimistic. "It is said" that the sales and employment growth of high-tech companies "promises to make this region a rival of California's Silicon Valley, Route 128 near Boston and Dallas-Forth Worth," the report continued.
But, Schwartz notes, the evidence usually presented does not tell the whole story. Here, as elsewhere in the country, there are many definitions of high-tech industry, with the result that employment and sales statistics can be misleading because they are not gathered consistently from a clearly defined group of companies.
"The numbers referring to private enterprise are not consistent, and they do not explain enough about what occurs in those enterprises to allow accurate estimates of their economic contribution to the region," Schwartz reported. "Without a clear view of what constitutes the technology-oriented segment of the region's economy, it is easy to lapse into counterproductive boosterism."
She cited a Metropolitan Washington Council of Governments report saying the region has " 'the largest per capita concentration of scientific and engineering talent with one-third of the work force engaged in professional and technical work . . . .' " The COG report neglected to point out that "much of the professional and technical expertise in the region has nothing to do with science or technology but is related to the practice of law, lobbying and other activities," Schwartz said.
Counts of high-tech employes by local jurisdictions add up to about 105,000 workers for the region, while the Washington/Baltimore Regional Association estimates the number of employes in its common market area, which is considerably larger than the Washington metropolitan area, at only 44,200. The Washington/Baltimore organization restricts its high-tech classification to companies that engage in research and development, and manufacture products or parts, but most local governments use much broader measures.
Many of the jobs that are available are middle-level positions paying in the $20,000 range, contrary to a popular belief that most high-tech jobs are for highly skilled professionals or unskilled assembly workers, Lawrence said.
The importance of technology-oriented business to the economy "is not its role in directly creating jobs," said Lawrence, of the Brookings Institution. Using a definition of high-tech industries that results in predominantly manufacturers, Lawrence finds that the industry accounts for 7 or 8 percent of all employment.
The major high-technology industries, chemical, electrical machinery, non-electrical machinery, aerospace and instruments, "are forecast to grow rapidly in terms of employment, but nonetheless, those directly engaged in the industries will account for a fairly small proportion of the growth in the economy," according to Lawrence.
High-tech industry's chief value to the economy is its production, accounting for 90 percent of all the equipment used in the United States, Lawrence said. "If you look at the list of industries, you see they make machinery . . . then it's purchased by all the other industries in the economy."
Among the other myths about the industry is the belief that it is made up of many small companies. "In fact, the large companies play a disproportionately large role in spending in research and development, making high tech a big-company game," Lawrence said.
High-tech boosters often list the "cleanliness" of the industry, but there is growing evidence that this is not always true. California's Silicon Valley suffers from chemical pollution of ground water and heavy air pollution from the automobiles of its hundreds of workers.