The corporate research lab -- where science is harnessed to pursue profit -- has produced one of the strongest technology job markets over the past five years. U.S. lab employment has steadily grown, despite the tech bust earlier this decade, and despite a growing trend of U.S. companies conducting research overseas.
But while high-end corporate research and development employment rose 16 percent from 2001 through 2006 nationally, it fell almost 28 percent in Illinois, according to a Tribune analysis of federal employment data. The state, which five years ago ranked second only to California in corporate R&D jobs, had dropped to seventh in 2006.
The culprit appears partly to be a downturn in traditional telecommunications research, particularly at Lucent Technologies' suburban Chicago labs, which shed about 7,000 jobs earlier in the decade. The shuttering of drugmaker G.D. Searle & Co.'s Skokie labs in 2003 hit hard, too, erasing over 1,000 more R&D jobs.
Still, there's evidence that the R&D job market in Illinois has picked up since 2005 and is continuing to improve this year.
In Illinois, employees in physical, engineering and biological research labs made $112,000 a year on average last year, federal data show. More important, research is vital to the nation's economy.
"It's the lifeblood of our future competitive position," said Ross DeVol, director of regional economics at the Milken Institute, a Southern California-based think tank. "If you fall behind, you're starting to eat your seed capital."
Corporate-funded research in the United States dipped after the 2001 recession, but it remains at historically high levels. In fact, it grew at a 7 to 8 percent clip annually in 2006 and 2005, up from 3 percent growth in the two preceding years, according to Battelle, a non-profit science and technology group that tracks research trends.
"Industrial R&D has gone up rather substantially over the past few years," said Jules Duga, senior analyst at Columbus, Ohio-based Battelle.
Trends in R&D jobs tend to follow trends in spending: R&D is labor intensive.
Nationally, corporate R&D jobs grew slowly in the first part of the decade, then jumped handily in the past two years. Overall, private-sector employment in "physical, engineering and biological research" rose 16 percent nationally from 2001 to 2006, according to the Bureau of Labor Statistics.
That job category, as defined by the BLS, covers corporate labs in myriad industries: pharmaceutical, computer, telecommunications, automotive and so on. It has been one of the country's best-performing technology job sectors in recent years, according to a Tribune analysis of BLS data.
Employment in software publishing in 2006 was still 10 percent less than it was five years earlier. Computer systems design has recovered the jobs it lost after the tech bubble burst -- but it has shown no net employment gain. And while employment in engineering services has risen at a decent clip, its growth has trailed that of the R&D sector.
The health of the corporate R&D job market is heartening, given worries research would migrate overseas.
Actually, U.S. companies have been setting up foreign R&D operations for years. China and India are the world's fastest-growing major R&D markets. But those international efforts have coexisted with R&D operations here, and some experts don't expect that to change significantly any time soon. That's because offshoring R&D isn't simply driven by cost, as is often the case in manufacturing and lower-skilled services.
"The movement offshore -- everyone thinks it's all about labor arbitrage, you send work to India and China because labor there is cheaper," said Barry Jaruzelski, vice president of the innovation practice at Booz Allen Hamilton, a consulting firm. "But there is a lot more subtlety to what's going. There are very pragmatic reasons beyond cost."
A key reason: To better tailor products aimed at foreign markets. "The way you design good products is to be close to customers and understand their needs," Jaruzelski said. "The kind of car you sell to the middle-class Chinese will be different than the one for the middle class here."
Take Schaumburg-based Motorola Inc., which Booz Allen says has the biggest global R&D budget of any publicly traded Illinois company.
The cell phone-maker's ranks of R&D employees increased by 25 percent between 2004 and 2006, according to regulatory filings. But much of that growth was driven by pursuing sales in global markets: China and India are the world's hottest mobile phone markets.
Globalization has also lead to "in-sourcing," where foreign companies establish R&D centers in this country. "They are coming here for the same reason we are going there," said Battelle's Duga.
Analysts say it's been significant in the drug and auto industries. Michigan can attest to the latter.