Professional and Business Services: “What’s in that Industry?”March 7, 2018 When economists report on employment figures we refer to industries that are growing or declining. But, the general public may not always know what these industry titles describe. At presentations, doing media interviews, or just talking to noneconomists, I’m often asked “what’s in that industry?” Professional and business services is one of those industries I’m often asked to describe.
Professional and business services has been highlighted in recent years because it has added a lot of jobs. It is a large and varied industry super sector that includes everything from law offices, engineering services, and computer systems design to company headquarters to temporary help firms, call centers, and janitor services. It is separated into three sectors: professional and technical services, management of companies, and administrative and waste management. A more comprehensive look at the industries in professional and business services can be found at our QualityInfo.org website. This article will be a general overview of the sector with more detailed analysis of its industries to come in the future.
The super sector employed 237,942 in 2016, roughly 13 percent of total employment in the state. The first table shows that the largest sector is administrative and waste services, which included 7,024 firms with 100,875 workers. The largest industries in administrative and waste services are temporary help services with 34,493 workers, telephone call centers with 11,442 workers, and janitorial services with 10,226. Wages are relatively low in this subsector, at an average of $34,632.
The next largest sector is professional and technical services with 15,710 firms and 91,761 workers in 2016. The largest industries are computer systems design and related services with 15,672 workers, accounting and bookkeeping services with 10,817 workers, and offices of lawyers with 10,797 workers. Wages in this subsector are high, averaging $74,436 in 2016.
Finally, the management of companies and enterprises had 1,258 firms and 45,306 workers. This subsector is largely made up of bank holding companies and company headquarters. Wages are highest of the three subsectors, averaging $114,681.
A small amount of professional and business services jobs are in government. Like the private sector, the industries are varied but jobs in engineering, computer systems design, and administrative services are the most prevalent.
The professional and business services industry in Oregon has grown almost continuously since the early 1990s, declining for only short periods of time during recessions.
Between 1990 and 2000 the sector grew rapidly, adding 83,600 jobs and growing by 81.0 percent compared with 28.8 percent for total employment. Professional and business services accounted for 23.1 percent of total growth during the decade.
Much of the growth in the 1990s can be attributed to the increased use of employment services, especially temporary help firms that take care of hiring for companies in a wide range of industries. Employment services added 28,800 jobs for a growth rate of 182.3 percent over the decade. The fastest growing industry in the sector was computer systems design, which grew by 262.5 percent while adding 8,400 jobs. Call centers also grew rapidly at 147.0 percent, adding 5,000 jobs.
The relatively mild economic downturn that lasted from 2000 to 2003 was particularly hard on the professional and business services sector. While the overall economy declined by only 2.7 percent, professional and business services dropped 6.4 percent. This period included the recession known as the dotcom bust which was a correction in the high-tech industry. The computer systems design industry lost roughly 3,500 jobs or 30.2 percent of its employment. In addition, employment services lost 10,100 jobs, or 22.6 percent. Telephone call centers actually grew during this period, adding roughly 2,700 jobs.
After a short recovery period between 2004 and 2007, the economy fell into the Great Recession. This time, the professional and business services sector suffered less than the overall economy, losing 13,400 jobs, or 6.6 percent compared with 7.5 percent for all industries. The professional and technical subsector actually grew slightly during the recession due to computer systems and design, which gained 500 jobs over the period. Management of companies also added about 1,700 jobs. The largest loss came from the volatile temporary help industry, which lost 14,300 jobs or 37.3 percent between 2006 and 2009.
Since the Great Recession, the professional and business service sector in Oregon has outgrown the overall economy, adding more than 52,000 jobs between 2011 and 2017 for a 28.1 percent growth rate. This compares with a growth rate of 14.5 percent for total employment. The professional and technical subsector has been the best performing of the three subsectors, especially the computer systems design industry, which added 6,000 jobs (+61%) and management consulting services which added 4,100 jobs (+96%).
Management of companies continues its steady growth, adding 10,400 jobs for a 29 percent increase, although some of that growth is from redefining companies into the industry.
In the administrative and waste management subsector, which added 18,000 jobs between 2010 and 2016, temporary help services grew by 10,500 (+44.8%) to reach 34,500 although the industry has not regained its prerecession peak of 38,300 reached in 2006. Telephone call centers added 1,600 (+16.4%) jobs between 2010 and 2016 to reach 11,442, but dropped jobs since reaching a peak of 12,300 in 2013.
Differences in the Sector’s Industry Mix Determine Wages
The professional and business services sector is so varied that different geographies have different industry mixes within the sector. Areas with a high proportion of employment in higher paying professional and technical and management of companies industries will have relatively higher average wages while those that have a high proportion in industries such as call centers and temporary help firms will have relatively lower wages.
Some metropolitan counties like Washington and Multnomah that have large shares of employment in professional and technical industries and company headquarters have high annual average wages. But, some nonmetropolitan counties have high wages within the sector. For instance, Hood River has a relatively large share of employment in engineering and Gilliam County has employment in management of companies and waste remediation. Other rural counties that have employment in a company headquarters can have high wages within the professional and business services sector.
The professional and business services sector is expected to continue adding jobs into the future. Oregon Employment Department projections for 2014 through 2024 show the sector is expected to add 45,700 jobs for a 21 percent growth rate. At the industry level, computer systems and design is expected to grow the fastest at 40 percent, adding 5,700 jobs, while employment services is expected to add the most at 6,700 and 18 percent growth.