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An Economy Grows on R&D

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Businesses and nations that spend more on research and development grow at a faster pace, according to many studies.
More than half of all R&D expenses on average are attributable to labor, according to an analysis of countries that belong to the Organization for Economic Co-operation and Development.
Do occupations and industries performing R&D grow faster and continue growing faster than non-research-intensive occupations and industries?
This certainly would be good information for policymakers as they encourage economic growth.
This is not an easy question to answer because R&D is performed by many different occupations, and the Bureau of Labor Statistics does not have one code that classifies R&D as an occupation.
But using job postings data to identify the occupations that most-often referenced R&D in titles serves as a proxy. Computer and information research scientist and mechanical engineers were among the most often identified R&D occupations.
Over the last five years, R&D-related occupations grew at a faster annual average pace – 2.2 percent – than all occupations (at 1.7 percent) in the nation, but rates of growth in engineering and chemical-related occupations were much slower than average.
As a group, employment of R&D occupations (average 2.0 percent per year) are forecast by the BLS to outpace all occupations (average 0.7 percent per year) over the next decade.
To consider the impact of R&D on industries, we calculated the number and percentage of R&D occupations in various industries.
The following top five industries that have the highest percentage of their workforce with R&D skills employ 46 percent of all R&D-related occupations in the nation:

  • Software publishers (27 percent R&D occupations);
  • Management, scientific and technical consulting services (20 percent R&D occupations);
  • Computer systems design and related services (18 percent R&D occupations);
  • Scientific research and development services (12 percent R&D occupations); and
  • Architectural, engineering and related services (8 percent R&D occupations).

By comparison, only 1.5 percent of the workforce in the average industry in the nation are R&D occupations.
Not surprisingly, employment in R&D-intensive industries grew at a faster pace (3.1 percent) than all industries (1.7 percent) over the past year and are forecast to continue growing at a faster pace (1.7 percent) than all industries (0.7 percent).
The two industries employing the smallest percentage of R&D workers (scientific research and development and architectural, engineering and related services) experienced slower employment growth than the national average in the past five years but are forecast to overtake that average over the next 10 years.
These industries and occupations dependent on R&D show an impressive relationship between innovation and growth.
The industries seeking to hire a relatively high concentration of R&D workers are generally industries that have grown faster than average and are expected to continue expanding more quickly.
Likewise, the occupations most associated with research and development show the same pattern of fast job growth.
Given this association, fostering a climate conducive to innovation is a strategy worth considering by economic developers and policymakers to promote a growing, healthy economy.
(This column first ran in Richmond Times Dispatch on February 5,  2018)
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