Businesses Performed 60% of Their U.S. R&D in 10 Metropolitan Areas in 2018

BRDS estimates that 100 metropolitan and micropolitan statistical areas—collectively referred to as core-based statistical areas (CBSAs)—account for 94% of the distributed total U.S. business R&D (figure 1).^{​CBSAs consist of the county or counties or equivalent entities associated with at least one core (urbanized area or urban cluster) of at least 10,000 population, plus adjacent counties having a high degree of social and economic integration with the core as measured through commuting ties with the counties associated with the core. Metropolitan statistical areas are CBSAs with at least one urbanized area with a population of at least 50,000. Micropolitan statistical areas are CBSAs with at least one urbanized area with a population of at least 10,000 but less than 50,000 (https://www.census.gov/programs-surveys/metro-micro/about.html).} The San Jose-Sunnyvale-Santa Clara, CA is by far the largest CBSA in terms of business R&D, accounting for 15% ($67.4 billion) of the U.S. total. This CBSA, which includes the area commonly known as “Silicon Valley,” has a business R&D-GDP ratio of 0.204, almost 10 times that of the ratio for the entire United States (0.022). The ratio of R&D to GDP is a common indicator of R&D intensity.

The largest centers of business R&D are located on either coast of the United States (figure 1). San Jose-Sunnyvale-Santa Clara, CA together with its neighbor the San Francisco-Oakland-Berkeley, CA CBSA account for almost one-quarter of all business R&D performed in the United States. In comparison, the area commonly known as the Northeast or Acela Corridor, spanning from Boston, MA to Washington, DC, includes CBSAs that together account for 20% of all business R&D performed in the United States. Only 2 of the 10 CBSAs with business R&D estimates over $10 billion, Detroit-Warren-Dearborn, MI and Chicago-Naperville-Elgin, IL-IN-WI, are located within the interior of the United States.

The geographic concentration of business R&D is also evident (figure 2). Ten states accounted for almost three-quarters (73%) of all business R&D in the United States in 2018. Five of these states—California, Massachusetts, Michigan, New Jersey, and Washington—had R&D intensities much higher than the national average, ranging from 0.033 in New Jersey to 0.054 in Washington. The five states with the next largest levels of business R&D performance—Illinois, North Carolina, Pennsylvania, New York, and Texas—had R&D intensities at or below that of the United States as a whole. Of the remaining 40 states and Washington, DC, only 5 had high business R&D intensities compared to the U.S. average: Connecticut, Delaware, Idaho, New Hampshire, and Oregon.

The largest cost component for business R&D in the United States is that associated with the salaries, wages, and benefits of the estimated 1.8 million scientists, engineers, technicians, and support staff who worked on R&D in 2018. The distribution of these R&D personnel across states may not have the same geographic patterns as R&D expenditures, however, because average wages and benefits for these employees vary from industry to industry, between businesses within the same industry, and from city to city. To address this issue, BRDS introduced a question in 2018 that asked R&D-active businesses to report their total employment and R&D employment by state. Estimated business R&D employment in each state and Washington, DC is shown in figure 3.

Although there is a strong relationship between the dollars spent in a state on R&D performed by businesses and the number of R&D personnel employed by businesses in the state, R&D employment is less concentrated than R&D performance in the largest states. The five states with the largest amounts of business R&D account for 47% of U.S. business R&D employment but account for 56% of dollars spent on R&D performance in the United States.^{​A total of 77,000 of the 1,766,000 estimated R&D employees of businesses in the United States could not be assigned to a specific location and is reported as “undistributed” in BRDS data tables. This InfoBrief does not include this undistributed amount in the denominator when calculating location shares of total U.S. R&D employment.}

The R&D employment intensity of a state can be assessed by taking the ratio of R&D employment in the state to total private sector employment (including employment of non-R&D performing businesses) in the state.^{​Total private sector employment in the 50 United States and Washington, DC was 123.9 million in 2018, according to estimates from the Bureau of Labor Statistics (https://www.bls.gov/cew/publications/employment-and-wages-annual-averages/2018/home.htm, table 6).} It is estimated that 14 out of every 1,000 private sector employees in the domestic United States was a business R&D employee in 2018. For the 10 states with the highest rates of business R&D employment, this ratio ranged from a high of 39 per 1,000 in Washington to 9 per 1,000 in New York and Texas.

In this InfoBrief, money amounts are expressed in current U.S. dollars. A company is defined as a business organization located in the United States, either U.S. owned or a U.S. affiliate of a foreign parent company, of one or more establishments under common ownership or control.

The sample for BRDS is selected to represent all for-profit, nonfarm companies that were publicly or privately held and had 10 or more employees in the United States. Because the statistics from the surveys are based on samples, they are subject to both sampling and nonsampling errors (see technical notes in the data tables reports at https://www.nsf.gov/statistics/srvyindustry/). This InfoBrief highlights only a portion of the geographic data available from BRDS. Data for all U.S. states and locations estimated by the survey are available in the BRDS data tables linked above.

Shackelford B and Wolfe R. National Center for Science and Engineering Statistics (NCSES). 2019. Over Half of U.S. Business R&D Performed in 10 Metropolitan Areas in 2015. NSF 19-322. Alexandria, VA: National Science Foundation. Available at https://nsf.gov/statistics/2019/nsf19322/.

Shackelford B and Wolfe R; National Center for Science and Engineering Statistics (NCSES). 2020. Businesses Performed 60% of Their U.S. R&D in 10 Metropolitan Areas in 2018. NSF 21-331. Alexandria, VA: National Science Foundation. Available at https://ncses.nsf.gov/pubs/nsf21331.

Brandon Shackelford
Twin Ravens Consulting, under contract to NCSES

Raymond M. Wolfe
Survey Manager
Research and Development Statistics Program, NCSES
Tel: (703) 292-7789
E-mail: rwolfe@nsf.gov

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