The aerospace cluster’s economic impact hits the afterburners
Nov 07, 2018 09:29AM
By Chris Haire
By Chris Haire
Add this to the counterintuitive files: Although employment is at a record low and businesses are clamoring for bodies to fill positions, the average wage for American workers is barely moving compared to pre-Great Recession numbers and falling well behind those in the 1970s and ’80s.
Nationally, average hourly earnings increased year-to-year in September by 2.8 percent, while the consumer price index went up by 2.3 percent for the same time period, the U.S. Bureau of Labor Statistics recently noted. To make matters worse, inflation has limited the purchasing power of those wages, keeping them down at levels from 40 years ago, according to an August Pew Research report.
Here in South Carolina, a similar scene is unfolding with low unemployment rates and nominal income increases. In fact, real income in the state continues to lag behind the national average, following four years in which Palmetto State incomes stayed comfortably above national levels.
All of which is why the growth of the aerospace cluster in South Carolina is significant.
In a state where the annual total employee compensation averages $42,512, employees in the South Carolina aerospace cluster hit $78,526, according to a recent study by S.C. Aerospace released on the opening day of the group’s annual S.C. Aerospace Conference and Expo in Columbia last month. Just as impressive: the annual aerospace employee compensation is also $20,000 a year more than what South Carolina workers at other manufacturers receive.
“I think one of the findings that comes out of this study is the continued creation of high-wage, high-skilled employment by the aerospace cluster. That is a very important part of the aerospace cluster in South Carolina,” says Joey Von Nessen, research economist at the University of South Carolina Darla Moore School of Business and the author of the report. Von Nessen says that this factor is important given the fact that one of the “weak spots of the [economic] expansion has been wage growth,” both in South Carolina and across the nation.
So in other words, the aerospace cluster is not only adding jobs — up from 8,704 in 2010 to 20,421 in 2017 — the industry is doing something other sectors aren’t doing: it is creating jobs that are bucking those stagnating trends.
Von Nessen credits the state with being proactive by actively targeting high-wage, high-skilled industries like aerospace. “It’s an alternate way to get wages up,” the Darla Moore researcher adds.
Equally as significant, the creation of new aerospace jobs is outpacing the number of new firms, from big operations employing more than 501 people to those employing a mere five or fewer. The S.C. Aerospace report notes that from 2010-2017, the annual growth rate for firms was 2 percent while the growth rate for employment averaged 13 percent.
“Growth has been a consistent theme for the South Carolina aerospace cluster since 2010, and what we are still seeing,” says Adrianne Beasley, director of Aerospace Initiatives for the Council on Competitiveness. S.C. Aerospace is an industry cluster supported by the Council on Competitiveness, the state Department of Commerce, and industry partners.
“One important aspect of that growth which is most important to me is that we are seeing growth in revenue and employment at a larger pace than just the growth in new firms,” Beasley says. “So the data is showing that once landing in South Carolina, our aerospace firms are growing and thriving. That is essential to the sustainability of the cluster.”
Currently, the aerospace cluster maintains an employment multiplier of 2.7. This means that for every 10 jobs created in the aerospace sector in South Carolina, an additional 17 jobs are created elsewhere in the state, Von Nessen says. “That is evidence that the supply chain in South Carolina is continuing to grow and develop.”
Although the rate has been steadily increasing, it’s less than the multiplier for the automotive industry — a figure that stands at 3.7 and one that Von Nessen himself calls an “outlier.” And with good reason: the average multiplier in the Palmetto State is 1.8.
The aerospace cluster isn’t the only thing growing — so is the S.C. Aerospace Conference and Expo. “This year, we saw 643 attendees and 70 exhibitors, which is an increase on both accounts from previous years. Last year, we had just over 500 attendees and 50 exhibitors,” Beasley says.
“This year, we brought 777 middle and high schoolers to the expo hall to meet with our exhibitors, all of whom were eager to speak with the next generation of workforce,” Beasley adds. “I think that says a great deal about what is important to our industry and where it’s headed.”