Professional and Business Services: “What’s in that Industry?”

by Brian Rooney

August 27, 2019

When economists report on employment figures, we refer to industries that are growing or declining. However, the general public may not always know what these industry titles describe. At presentations, doing media interviews, or just talking to non-economists, 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 248,626 in 2018, roughly 13 percent of total employment in the state. The largest sector is administrative and waste services, which included 7,462 firms with 102,979 workers. The largest industries in administrative and waste services are temporary help services with 37,121 workers, landscape services with 10,626, janitorial services with 10,519, and telephone call centers with 10,148 workers. Wages are relatively low in this subsector, at an annual average of $37,410.

The next largest sector is professional and technical services with 16,660 firms and 97,108 workers in 2018. The largest industries are computer systems design and related services with 16,238 workers, accounting and bookkeeping services with 10,993 workers, and offices of lawyers with 10,885 workers. Wages in this subsector are high, averaging $74,760 in 2018.

Finally, the management of companies and enterprises industry included 1,338 firms and 48,539 workers. This subsector is largely made up of bank holding companies and company headquarters. Wages are highest of the three subsectors, averaging $118,622 annually.

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.

Employment Trends

The professional and business services industry in Oregon has grown almost continuously since the early 1990s, declining for only short periods during recessions.

Between 1990 and 2000 the sector grew rapidly, adding 83,300 jobs and growing by 80.0 percent compared with 28.8 percent for total employment. Professional and business services accounted for 23.0 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 181.1 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 10,200 jobs, or 22.8 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 dropped more than the overall economy, losing 16,000 jobs or 8.2 percent compared with 7.5 percent for all industries, although the industry started to recover earlier. The professional and technical subsector dipped slightly during the recession due to computer systems and design, which gained 600 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 14,800 jobs or 35.1 percent between 2006 and 2009.

Since the Great Recession, the professional and business service sector in Oregon has outpaced growth in the overall economy, adding more than 53,700 jobs between 2011 and 2018 for a 27.4 percent growth rate. This compares with a growth rate of 18.0 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 5,500 jobs (+50%) and management consulting services which added 4,100 jobs (+86%).

Management of companies continues its steady growth, adding 13,500 jobs for a 38 percent increase, although some of that growth is from redefining companies into the industry.

In the administrative and waste management subsector, which added 20,900 jobs between 2010 and 2018, temporary help services grew by 9,300 (+33.4%) to reach 37,121 although the industry has not regained its prerecession peak of 38,825 reached in 2006. Telephone call centers added 2,500 (+25.6%) jobs between 2010 and 2013 to reach 12,300, but dropped jobs since to reach 10,148 in 2018.

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 and therefore have high annual average wages. However, some nonmetropolitan counties have high wages within the sector. For instance, Morrow County has a large share in data services, 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.
Outlook

The professional and business services sector is expected to continue adding jobs into the future. Oregon Employment Department projections for 2017 through 2027 show the sector is expected to add 41,200 jobs for a 17 percent growth rate. At the industry level, computer systems and design is expected to add the most jobs at 4,700 and grow the fastest at 29 percent.


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