Letter: State’s high-tech sector reversed course

The Detroit News

The U.S. economy has expanded since June 2009, according to the Cambridge-based National Bureau of Economic Research (NBER), making its duration the third-longest in American history. This expansion includes Michigan nonfarm payroll employment, up 15 percent versus the U.S. average (12 percent), Bureau of Labor Statistics (BLS) records show. Payroll employment is important because it is the broadest economic indicator at the state level.

A subplot is the strong growth of Michigan’s professional and business services sector, which has expanded at a greater rate than the sector’s national average — 27 percent.

This is not your proverbial man in the gray flannel suit sector. Professional and business services has a distinct high-tech flavor, described in BLS’ Monthly Labor Review (November 2009) as pushing “to keep businesses competitive and profitable” with services like “management, scientific and technical consulting” and “computer systems design and related services” needed “to develop and implement new technologies, ensure compliance with government regulations, provide computer security and develop, improve and maintain computer networks.” The sector also includes areas like administrative support and temporary help but is 21st century in its commercial outlook.

The remarkable story is that this Michigan high-tech sector has reversed course from the previous NBER-identified expansion (Nov. 2001 to Dec. 2007) when it shed jobs. Micro-data illustrates the growth of hi-tech employment in the current expansion. In the preceding expansion, Michigan computer systems design and related services contracted, according to quarterly data reported by the Michigan Department of Technology, Management and Budget. Michigan management and technical consulting services also declined.

By contrast, both components have expanded in the current expansion, with computer systems design and related services and management and technical consulting services growing.

Another component — scientific research and development services — reported smaller gains in both expansions.

Technology’s importance to Michigan’s economy continues to grow, creating high-tech jobs and paychecks. Manufacturing is critical to Michigan’s economy but professional and business services has emerged this century as a larger sector. The reversal of professional and business services from a sector that lost jobs a decade ago to one adding high-tech jobs today is a remarkable story.

Greg Kaza

executive director, Arkansas Policy Foundation