Industry ClustersJuly 2006
By Nancy Rauch Douzinas
When you think of Silicon Valley, you think “high tech.” Think of Hartford, and you think “insurance.” These are examples of industry clusters, geographic concentrations of firms in related fields. Such clusters are the pillars of a region’s economy.
Long Island’s economy does not rest on any single such industry, but on several. Our largest single segment (not technically an industry cluster) is government and military, which includes public school employees. This segment employs 203,000, about 15% of Long Island workers.
Our largest cluster is Health, with 154,000 workers. Next come Visitors (88,000), Finance and Insurance (77,000) and Business Services (66,000).
Clusters such as Finance and Insurance, and Business Services (which includes lawyers), have special economic value. Not only do they employ many people, but they also pay well. Finance and Insurance, for example, employs 6% of Long Islanders, but accounts for 11% of the Island’s payroll. Overall, clusters provide 42% of our employment, and 47% of payroll.
A region depends on thriving industries, but the dependency is mutual. Industry needs the region to maintain the conditions for business success. In particular, industry requires a pool of suitable workers. That means several things.
First, it means providing housing options for people with modest incomes. Employers need such workers, and if they can’t find them on Long Island, they will re-locate to a place where housing costs are lower. This is why workforce housing has become such a cause célèbre.
Business also needs educated workers. That’s one reason good schools (and plentiful options for higher education) are so important. This has long been one of Long Island’s strengths and a key to our region’s success.
But turning out educated people is one thing. Keeping them in the region is something else. Our educated young people are leaving at five times the national rate. Partly that too is because of high housing costs. But there is another important factor.
This involves something called the “creative class.” This term, coined by social scientist Richard Florida, refers not just to people in the traditional arts, but professionals in design, engineering, technology and business. Throughout today’s economy, success belongs to the innovative, and creative thinkers are prized.
Regions vie to attract such people. The places that have succeeded, such as Boston, San Francisco and Austin, have done so by creating vibrant communities, rich in diversity and offering a contemporary and cosmopolitan lifestyle.
The perception of Long Island—and most “mature suburbs”—is quite different. We are thought of as traditional and family-oriented. That perception is not false, but it’s only half-true.
In fact, our region is more diverse than most of the country. Art and cultural organizations, though widely scattered, are thriving here. And we do have oases of contemporary culture—in the burgeoning town centers of Huntington and Long Beach, for example, and around the Hamptons.
The reality is that the traditional and the hip already co-exist on Long Island. Nurturing that mixture, and enhancing it, may be vital to our economic future.