The Low Down on High Tech

Forget family farms. Ignore traditional industries like textiles and furniture. Have no fear. High tech is here, with good jobs for workers, clean industry for communities, and profits for all. 

Texas is the latest big winner in the competition for this highly touted savior of sagging economies. Fifty-seven cities in 27 states bid to be the home of the Microelectronics and Computer Technology Corporation (MCC), a consortium of 13 major companies seeking to develop cutting-edge technologies to compete with the Japanese. MCC promised a projected employment of 400 people, an estimated annual budget of $150 million, and the magnet that would attract other firms to the nation's next major high-technology center. 

Former Arizona governor Bruce Babbitt said MCC chair Admiral Bobby Inman, ex-deputy head of the CIA, toured the country "like an imperial court," seeking the sweetest deal possible from slack-jawed public officials. Writing in Issues in Science and Technology, Babbitt detailed the pieces of Austin, Texas' winning offer: "a multimillion dollar package, including thirty million dollars in faculty endowments at the University of Texas in Austin, thirty-seven million dollars in equipment and operating expenses, twenty acres of land at nominal rent in the Balcomes Research Park, twenty million dollars of office space, subsidized home mortgages for MCC employees, a petty cash fund of a half-million dollars for country club initiation fees and other services, and a Lear jet with two pilots available at all times." 

Texas may have paid the biggest price for high tech, but it doesn't have the field to itself. According to High Technology magazine, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Texas, and Virginia now have high-tech "development programs" — state-owned technology corporations that direct research and development activities. Georgia's Advanced Technology Development Corporation, for example, is an incubator for high-tech companies. Located at Georgia Tech, it draws on the school's annual crop of 1,700 graduating engineers and $50 million research and engineering budget that is exceeded only by MIT's and Johns Hopkins'. 

Louisiana, North Carolina, Tennessee, and Texas offer matching grants to industries that will work with universities to develop new products. Florida, Georgia, South Carolina, and Texas also have non-funded advisory councils to make policy recommendations on how to attract high-tech industry. And as of 1983, 10 Southern states had spent $691.2 million of public money on venture capital projects, led by Texas's $473.4 million. 

Each of these states wants to duplicate the perceived success stories of California's Silicon Valley and Massachusetts's "Technology Highway," Route 128. In Texas, they talk of Silicon Gulch; in Georgia, it's the Technology Crescent; in Alabama, it's Silicate Valley. Is it possible to doubt the worth of all these efforts? Congress says, "Yes." Its Office of Technology Assessment looked at high-tech development programs and, says study director Paul Phelps, "A lot of this stuff is good old-fashioned boosterism with high-tech colors." States have been engaging in these activities for years, he says, only now they apply "a little more money and a lot more publicity." 

The Southern success stories are, in fact, few and far between. North Carolina's Research Triangle Park (RTP) boasts 47 companies on land now selling for over $45,000 per acre, an unemployment rate consistently below four percent, and the highest concentration of Ph.D.'s in the nation. The Tennessee Technology Corridor Foundation, headquartered in Knoxville, says it has lured 97 companies to the area (although local residents say its claims are exaggerated). And Huntsville, Alabama's Cummins Research Park hosts over 40 companies and federal agencies, a total employment of over 12,000, and a direct line into NASA's Marshall Flight Center that stretches back more than two decades. 

But the research park model is not infallible. The Wall Street Journal calls Virginia's Center for Innovative Technology (CIT) the state's "trump card in the high-technology sweepstakes," but says its start-up "has been shaky." A pet project of then-governor Charles Robb, CIT is located on a 35-acre site given free by two developers in exchange for favorable zoning on two adjacent parcels they owned; according to the Journal, it still suffers from a "fuzzy image." Meanwhile, the Engineering Research Center at the University of Arkansas in Fayetteville has zero tenants on its 23 acres four years after its opening, and the Northern Kentucky University Foundation, established in 1980, has one tenant on 75 acres. 

Despite the hoopla, the South is still not recruiting its share of high-tech start-ups. According to University of Florida geographer Edward Malecki, between 1978 and 1983 only two Southern states, Texas and Virginia, exceeded the national average of new firms locating per capita (Chart 1). 

Chart 1 

New High-Tech Firms Per One Million Residents, 1978-1983 

TX               36.8 

VA               29.7 

U.S.              27.5 

GA               26.4 

FL                25.3 

AL                14.7 

NC               13.1 

TN               11.8 

LA                11.7 

SC                 8.7 

KY                6.8 

AR                4.8 

MS                4.0 

WV               1.5 

Source: Edward Malecki; compiled from Dun and Bradstreet Corporation, Dun's Market Identifiers Files, 1983. 

 

The region also has far fewer than its share of bona fide high-tech workers (Chart 2), and contrary to industry hype, these jobs are not recession proof. The Bureau of Labor Statistics study of declining high-tech employment during the 1981-83 recession indicated that this industry of the future is far from immune to recessionary cycles. Indeed, according to the BLS, only the most skilled high-tech jobs categories outperformed the rest of the manufacturing sector. 

Chart 2 

Employment in High Tech, 1983 

       Number of workers % of non-agri workforce 

U.S.          2,578,700                             2.9 

TX             155,600                               2.5 

FL             107,700                               2.8 

NC             47,800                                2.0 

GA             29,500                                1.3 

VA              25,500                                1.2 

AL              25,000                                1.9 

TN             16,300                                 .9 

SC               13,900                                1.2 

KY              9,600                                 .8 

LA               9,500                                 .6 

MS              6,200                                 .8 

WV             1,100                                 .2 

AR               N.A.                                  .9 

South         447,700 

Source: Bureau of Labor Statistics data for employment in office computers, drugs, communications equipment, aircraft, guide missiles, and space vehicles. 

 

Two-Tier High Tech 

Despite the image of highly-skilled, highly-educated employees, high technology actually promotes a two-tiered work force: the elite professionals and the production workers. Two out of three (65 percent) employees in high-tech firms work in low-paying production, clerical, and technical jobs. Instead of advancing up the income scale, the average semiconductor production worker receives an hourly wage that is only 57 percent of the rate paid his or her counterpart in the typical unionized steel or auto production plant. 

In high tech and low, Southern development boards advertise their states' low wages as an attraction to production facilities — and they reap what they sow. Overall, the wages for high-tech work in every Southern state reflect this low standard. 

A perfect example of how high tech furthers the development of a two-tier economy of the privileged and put-upon can be found in Huntsville, Alabama's largest employer, SCI Systems Inc. Begun by a group of engineers dissatisfied with NASA's retreat from satellite research, SCI (originally Space Craft Inc.) now does everything from design missile guidance systems to produce automated bank teller machines. It has 1,100 engineers and scientists and 3,300 production workers, and according to its former corporate counsel Harvey Harkness, the two have "no interaction, they're even in different buildings." 

Harkness told Institute for Southern Studies researchers that engineers are recruited nationally, paid very well, and treated like "prima donnas." In sharp contrast, the production part of SCI is "just like a poultry plant," Harkness said. "You pay them as little as you can, give them a benefit package that's competitive in the community, and you hope" — hope they don't vote in a union. 

SCI's split personality intensified in the late 1970s when it landed a contract to produce circuit boards for IBM's Personal Computer. For the past three years, IBM has furnished over half of SCI's $400 million-plus revenues, compared to 11 percent from government contracts. The workers who assemble the guts of the IBM Personal Computer in SCI's several factories differ little from those who made towels in the textile mills that were once Huntsville's industrial backbone. 

"Virtually all the workers are women,'' wrote a reporter for the Los Angeles Times. "Rita Sellers, who has a high school education, no special training and used to pick peaches for a living, now works as a technician testing completed computer circuit boards. So does Ronnie Johnson, who earns $3.75 an hour and used to load boxes in a chicken plant. Barbara Whittington, who earns $3.65 an hour as a quality control inspector, came from a sewing plant." 

According to plant manager J.R. Bell, "Most of our workers are off farms, chicken houses, processing plants, sewing factories, places like that. . . . You can train a worker in one hour. . . . They're doing real well within one week." 

SCI's low wages depend on the fact that the company is non-union. In fact, if anything differentiates high technology from older industry, it is its lack of labor organizations. According to union activists Rand Wilson and Steve Early, "Only 90 of American Electronics Association's 1,900-member companies have union contracts." Writing in Technology Review, the two organizers said the AEA reported fewer than 100 union elections between 1971 and 1982 — of which unions won just 21. 

If SCI is any guide, high-tech firms can be just as fiercely anti-union as a J.P. Stevens. The International Brotherhood of Electrical Workers (IBEW) tried organizing SCI in 1984-85 but had to stop because dozens of workers were losing their jobs. Even the conservative National Labor Relations Board (NLRB) was so outraged at SCI's behavior that it issued a complaint against the company. In September 1986, the NLRB sought a federal injunction to stop SCI from firing and discriminating against, pro-union workers. There are also charges the company hired detectives to spy on union organizers and workers; and one IBEW organizer was successfully set up to accept a bribe from SCI's attorneys in front of a FBI agent and photographer. 

What would happen if SCI workers eventually voted in a union? According to former SCI counsel Harkness, IBM — itself a notoriously anti-union employer — would take its contracts away from the company. And even if IBM didn't pull out, SCI would probably shift production outside Alabama to its new factory in Graham, North Carolina, or to others recently opened in Scotland and Singapore. SCI chief Olin King told Forbes, "While I expect to remain union-free in the U.S., should there be a problem, I'd be very comfortable having outside plants. You might say they are insurance." 

SCI's dependence on IBM's goodwill is far from unique. It suggests the real lack of control workers and communities exert over this international industry. Within the United States, the problem is especially acute for the South. Says geographer Malecki, "Branch establishments overwhelmingly dominate the high-tech sectors of the South, and the small numbers of local firms are unable to alter the branch economy there." 

 

Health Hazards 

Even if high-tech jobs were secure and well-paid, the occupational health risks of this supposedly clean industry are well documented. Summing up years of studies, Wilson and Early conclude, "High-tech production procedures are chemically intensive and often quite dangerous." They note that "company health-and-safety records for 1980 through 1982 show that compared with other production workers, California semiconductor workers had three times the rate of occupational illness serious enough to cause lost time. Workers-compensation statistics for the same period show that semiconductor workers had twice the incidence of illness from exposure to toxic chemicals." 

The health risks may be getting worse. Georgia Tech spokesperson Raymond Moore admitted to Business Week that "we may never be another Silicon Valley." But he went on to claim that Georgia may be home to a future "Gallium Arsenide Hill." He is referring to new production processes for computer chips in which gallium is replacing silicon. Both use arsenic. The difference, says occupational health specialist Dr. Joseph LaDou, is that "Three pounds of arsenic are used in a typical gallium-arsenide ingot, compared with the milligram quantities of arsenic in a silicon ingot." LaDou says firms are seeking safer ways to use gallium arsenide, but few are looking for alternatives. 

According to LaDou, "Recent findings also show that the industry is contaminating the groundwater of nearby communities and polluting the air with photochemical smog." Susan Sherry, author of High Tech and Toxics: A Guide for Local Communities, cites examples in Austin, Texas and Manassas, Virginia, where toxic leaks threatened, although they did not contaminate, water supplies. The threat is highlighted by a discovery in 1982 that toxic materials leaking from underground chemical storage tanks had contaminated private drinking wells in Silicon Valley. 

In other ways Silicon Valley has proven a harbinger of trouble as much as a model to emulate. The San Jose Unified School District, in the heart of Silicon Valley and home to many high-tech production workers, went bankrupt in 1984. Now comes super mimic, Texas: "Austin's boom has quickly stretched the region's facilities to their limits," reports High Technology magazine. "It has caused overcrowding at the small airport, raised housing prices, and strained city services." In the words of Josh Farley and Norman Glickman, two Austin economic analysts, ''high-tech growth can create rapid increases in housing costs, traffic congestion, and urban sprawl. In turn, these events can threaten the quality of life — a key locational factor for additional R&D facilities." 

Hewlett-Packard recently decided not to locate a plant in Austin, despite the presence of the MCC. "Because of the infrastructure problems, we have so far chosen not to go there. The roads, sewer systems, and airport all need to be upgraded. . . . The utilities still have to be brought in line with the growth rate," says James Law, manager of the company's corporate land development and planning. 

Finally, there are the military ties. Regardless of the moral questions of linking employment to war-making, such links are notoriously unreliable. Aerospace firms are now riding high on Star Wars; Alabama enjoys second place behind California in Strategic Defense Initiative dollars. But those dollars might not last. California's current high-tech malaise is nothing compared to its mid-1970s depression when military spending declined. Employment in Huntsville plummeted by 11,000 between 1965 and 1973 following shifts in NASA's funding. 

The military ties are prevalent in almost every high-tech center. "Florida's biggest industry," wrote Horance Davis in the Gainesville Sun, "is war-making." The Texas Observer documented the ties of the MCC and other Texas high-tech firms to the Defense Department. "Texas Instruments," wrote Nina Butts, "the premier high-tech firm in the state, also is the second largest defense contractor." As of 1984, 11 of 18 MCC cooperating companies were major weapons contractors. 

Returning to MCC, we might ask, "How many eggs is the golden goose laying?" The answer is precious few so far. Austin Chamber of Commerce president Lee Cooke says what he thinks MCC has produced: "Hype, hype, hype. If we learn anything from Silicon Valley, we ought to learn how not to do what they did. It created tremendous toxic problems, tremendous traffic problems, tremendous cost-of-living problems. I don't think high tech will ever be our savior." One chamber of commerce economist told Texas Monthly that high-tech employment as a percentage of the region's jobs had actually dropped since MCC had come to town. 

And how about Admiral Bobby Inman, "Mr. MCC"? Well, he resigned in 1986. He now plans to chair Westmark Systems, a new holding company for defense-related electronics firms.