INDUSTRY CLUSTERS
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Why is this important?
Long Island’s industry clusters make up approximately 70% of Long Island’s employment base. An industry cluster is a geographic concentration of interdependent firms in related industries and includes a significant number of companies that sell their products and services outside the region.
The first bubble chart illustrates three key dimensions of Long Island’s industry cluster:
- The cluster’s employment concentration relative to the nation (vertical axis).
Employment concentration measures the percentage of employment on Long Island compared to the same cluster, nationally.
- A concentration greater than one indicates that Long Island has relatively more employment in that sector as compared to the national economy as a whole. Change in employment from 2002 to 2007 (horizontal axis).
- Concentration in 2007 (size of circle). Concentration shows the size of the cluster relative to the Long Island economy as a whole.
The second bubble chart illustrates key dimensions of Long Island’s industry clusters in relationship to wages and employment growth from 2002 to 2007.
On each chart, the upper right hand quadrant represents those clusters with the most positive indicators in concentration and employment (first chart) or employment and wages (second chart).
How are we doing?
Reading the two charts in relationship to each other, a critically important trend becomes apparent. Employment opportunities tend to be increasing in sectors of the economy that pay wages close to or somewhat below the median, and declining in those sectors that generally offer higher wages and salaries.
- The first chart shows that the most concentrated cluster relative to the U.S. economy is Biomedical. The least concentrated is Transportation and Freight Services. The second chart indicates that these two clusters are close to the median wage divide.
- The clusters experiencing the greatest employment growth have been Education (17% in the past five years) and Health Services (25%). Both are among the three most concentrated clusters (each representing about 11% of employment). The second Chart indicates that both pay close to median level wages.
- For Long Island, those clusters yielding the highest average pay tend to be both the smaller sectors and those that have experienced employment declines between 2002 and 2007 (Information and Communication Services fell 7%, Manufacturing fell 4%, Finance and Insurance only grew .6%).
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Another way to view this data is to compare the average growth in wages with the average change in employment. Again we see that growth is occurring in those industries where salaries are near the average rather than in the higher paying clusters.