In this report, the featured measure of production for KTI industries is value added in current dollars (not adjusted for inflation). Value added is a net measure of output; it is the difference between the value of goods and services produced by an industry (gross output) and the total cost of intermediate inputs that were used in production, including energy, materials, and services purchased from other businesses. For production activities that take place within a country’s geographic borders, industry value added measures the contribution from each industry to overall GDP.

The U.S. data on value added by industry presented in the report are from the Industry and Regional Economic Accounts of the U.S. Bureau of Economic Analysis (BEA). The source for data for KTI employment is the U.S. Census Bureau’s 2019 American Community Survey (ACS). International data on value added of KTI industries are drawn from the Comparative Industry Service, a proprietary database from IHS Markit. A detailed description of these data sources is provided in the Technical Appendix.

KTI Industries in the United States

KTI industries perform and fund more than half of U.S. R&D (see Indicators 2020 report, “Research and Development: U.S. Trends and International Comparisons”). Much of the productivity growth in the United States since the late 1990s is attributable to three of the KTI industries: computer and electronic products, software publishing, and IT services (Nordhaus 2005; Baily and Montalbano 2016). The analysis in this report shows that, compared to other industries, U.S. KTI production has shown resilience to economic downturns (although that varies by disaggregated industries), including the downturn that resulted from the unfolding global COVID-19 pandemic beginning in 2020.

Along with the analysis of overall production trends, this section presents new analysis on the distribution of KTI production across the nation and the composition of KTI employment by STEM workforce categories. Specifically, the regional analysis examines the geographic distribution of U.S. KTI production, the contribution of KTI industries to states’ economies, and the regional specialization of KTI production. Even with globalization, geography remains important because competitive advantages often arise from concentrations of highly specialized skills and knowledge, access to institutions, specialized incentives, and other advantages of productivity and innovation that are difficult to access from a distance (Porter 2000).

The analysis on the composition of the KTI employment by STEM workforce categories focuses on underrepresentation of women, Blacks or African Americans, Hispanics or Latinos, and American Indians or Alaska Natives, and the concentration of foreign-born talent. Underrepresentation signals a lack of diversity in the workplace and can negatively impact productivity, innovation, and entrepreneurship (Hsieh et al. 2019; Bell et al. 2019; Flabbi et al. 2019). Because foreign-born workers are proportionately greater in the STEM occupations compared to the general population, immigration policies can affect the flow of this critical source of science and engineering (S&E) skills and knowledge (Kerr and Kerr 2020).

Employment in KTI Industries

KTI industries employed approximately 12 million workers, accounting for 8% of total U.S. employment in 2019 and 16% of the STEM workforce (Table SKTI-2). Among KTI industries, the IT and other information services industry employed the most workers, accounting for 32% of the total KTI workforce. The next three largest industries in terms of employment (motor vehicles; computer, electronic and optical products; and other machinery and equipment manufacturers) jointly employed another 32% of workers in KTI industries.

Compared to all industries, KTI industries employed disproportionately more workers in STEM occupations. At the low end, workers in STEM occupations comprised 35% of those employed by motor vehicle manufacturers. At the high end, they comprised 60% of those employed by the scientific research and development industry (Figure KTI-3). In comparison, workers in STEM occupations comprised about a quarter of the U.S. workers across all industries (see Indicators 2022 report, “The STEM Labor Force of Today: Scientists, Engineers, and Skilled Technical Workers”).

Workers in each KTI industry, by workforce and education: 2019

(Percent)
Industry STEM without a bachelor's degree (STW) STEM with at least a bachelor's degree Non-STEM
All industries (including KTI industries) 12.8 10.4 76.8
Scientific research and development 10.0 50.2 39.8
Software publishing 8.4 41.5 50.0
IT and other information services 15.8 42.1 42.1
Air and spacecraft and related machinery 23.2 30.4 46.4
Pharmaceuticals 15.8 31.1 53.0
Computer, electronic, and optical products 18.3 30.6 51.1
Chemicals and chemical products 31.2 15.9 52.9
Electrical equipment 20.4 13.9 65.7
Machinery and equipment nec 25.8 13.0 61.2
Motor vehicles, trailers, and semi-trailers 21.9 13.0 65.1
Railroad, military vehicles, and transport nec 18.7 12.6 68.6
Medical and dental instruments 17.3 19.3 63.4

IT = information services; KTI = knowledge and technology intensive; nec = not elsewhere classified; STEM = science, technology, engineering, and mathematics; STW = skilled technical workforce.

Note(s):

KTI industries include high R&D intensive and medium-high R&D intensive industries based on a classification by the Organisation for Economic Co-operation and Development. Data include workers ages 16–75 and exclude those in military occupations or currently enrolled in primary or secondary school. Values may not add up to 100% because of rounding.

Source(s):

U.S. Census Bureau, American Community Survey (ACS), 2019, Public Use Microdata Sample (PUMS), accessed 12 December 2020.

Science and Engineering Indicators

STEM workers without a bachelor’s degree—also called the skilled technical workforce (STW)—were more concentrated in KTI manufacturing industries compared to KTI services industries (Table SKTI-2). The STW made up more than half of STEM workers in five of the nine KTI manufacturing industries. The manufacturing industries that have less than half of their STEM workers without a bachelor’s degree were air and spacecraft, pharmaceuticals, medical and dental instruments, and computer, electronic, and optical products. More than half of STEM workers in the service KTI industries (scientific research and development, software publishing, and IT and other information services) have at least a bachelor’s degree.

There were disproportionately less women in most KTI industries than in the U.S. population in 2019 (Table SKTI-3). However, the proportions of women employed in the pharmaceuticals (47%) and scientific research and development industries (48%) were similar to the resident U.S. population (51%) (NCSES WMPD 2021: Table 1-1). The proportion of women in the pharmaceuticals and scientific research and development industries falls 7–8 percentage points when analyzing those in STEM occupations only (Figure KTI-4). Overrepresentation of women in non-STEM occupations drives the comparatively large proportion of women in these industries.

Women employed in KTI industries, by workforce: 2019

(Percent)
Industry STEM Non-STEM
Scientific research and development 41.0 58.5
Pharmaceuticals 39.3 53.2
Computer, electronic, and optical products 17.4 42.8
Medical and dental instruments 29.9 49.1
IT and other information services 21.2 49.1
Software publishing 22.9 44.3
Chemicals and chemical products 21.8 36.3
Air and spacecraft and related machinery 15.4 34.2
Electrical equipment 15.4 38.4
Machinery and equipment nec 11.3 30.8
Motor vehicles, trailers, and semi-trailers 17.2 33.0
Railroad, military vehicles, and transport nec 10.4 29.3

IT = information technology; KTI = knowledge and technology intensive; STEM = science, technology, engineering, and mathematics; nec = not elsewhere classified.

Note(s):

KTI industries include high R&D intensive and medium-high R&D intensive industries based on a classification by the Organisation for Economic Co-operation and Development. Data include workers ages 16–75 and exclude those in military occupations or currently enrolled in primary or secondary school. Percentages may not add up to 100% because of rounding.

Source(s):

U.S. Census Bureau, American Community Survey (ACS), 2019, Public Use Microdata Sample (PUMS), accessed 12 December 2020.

Science and Engineering Indicators