In an era in which many businesses that pay high wages have been shedding jobs, the wide-ranging employment category of professional, scientific and technical services has been a relatively stellar performer, expanding some 15% since 2001. In contrast, employment dropped over 20% in such lucrative fields as manufacturing and information-related businesses (media, telecom providers, software publishing) over the same period, and finance and wholesale trade experienced small declines.
With an average annual wage nearing $90,000, this category — which includes computer consulting and technical services, accounting, engineering and scientific research, as well as legal, management and marketing services — increasingly shapes the ability of regions to generate higher-wage jobs. In order to determine which metropolitan areas are doing best, Mark Schill of Praxis Strategy Group compiled rankings based on both long and short-term growth, as well as the extent and growth of each region’s business service economy compared to the national average.
Notably absent from the top 10 are Chicago and the big metropolitan areas of the Northeast and California that have traditionally dominated high-end business services. The only exception is the third-ranked San Francisco-Oakland-Fremont metropolitan statistical area, which has logged 21% growth in this sector since 2001, while expanding the proportion of such jobs in the local economy to nearly twice the national average. Over the past year alone the region added 22,000 professional and business services jobs, which was more than a quarter of all new positions during that period.
The continuing vitality of nearby Silicon Valley, and the region’s attraction to educated workers, have made the Bay Area easily the best performer of the nation’s mega-regions. Yet the other leaders on our list are generally smaller, growing metro areas whose expansions have been propelled by a rapid increase in employment in technology and professional management services. These include our top-ranked metro area, Austin-Round Rock-San Marcos, Texas, which enjoyed over 46% growth in employment in professional services since 2001; fourth-place Raleigh-Durham, N.C.; and No. 5 Salt Lake City, Utah. These areas have enjoyed strong net-in migration of educated workers, and have poached companies from more expensive regions.
More surprising still has been the rapid ascent of such unheralded regions as second-place Jacksonville, Fla., and Oklahoma City (sixth place). In Oklahoma City, where business and professional services employment has grown over 30% since 2001, progress can be traced to the city’s burgeoning energy sector.
But some other areas on our list are benefiting from a hitherto unnoted shift of high-end services to lower-cost and often lower-density regions. Jacksonville may be the poster child for this. Over the past decade, the northern Florida metro area’s population has grown 20% to over 1.3 million, but business services employment has expanded nearly 50%, the biggest jump of any of the country’s 51 largest metropolitan areas. Once a business services backwater, the share of jobs in that sector in the local economy has rapidly climbed towards the national average. This growth has been driven by management consulting as well as computer and data center services, an area in which Jacksonville has enjoyed among the highest growth rates in the country. One major player is web.com, which employs 500 people at its headquarters in south Jacksonville.
Other industries that rely on professional and business service providers have recently added jobs in the market, including BI-LO and Winn Dixie, which moved their combined headquarters there, as did environmental services company Advanced Disposal. Financial giant Deutsche Bank has also expanded in the area.
Jerry Mallot, president of the local business development group Jaxusa Partnership, suggests that low costs, a high rate of housing affordability and Florida’s lack of income tax make Jacksonville attractive to companies seeking to expand or relocate. The state, according to a recent report from New Jersey-based www.BizCosts.com, is now home to five of the country’s least expensive and most pro-business cities. Jacksonville, Orlando, and Tampa also are all among the U.S. metro areas adding college-educated residents the fastest.
Of course up-and-comers like Jacksonville, Charlotte, and Oklahoma City, and even Portland (10th place), still lack the critical mass of high-end business services of many of the larger, more established metropolitan areas. Some have continued to see strong growth in their professional services sectors. Not surprisingly, this includes greater Washington, D.C. (11th), with 26% growth since 2001, keyed by the expansion of government and the regulatory apparat in recent years. The share of professional services jobs in the local economy is two and a half times the national average, the highest concentration in the country.
Yet many of America’s largest metro areas, including longtime business service bastions, have lagged well behind. New York, home to Wall Street and many leading consulting, legal and professional firms, ranks a mediocre 32nd out of the 51 largest metro areas, with relatively meager growth of 8.5%. The share of professional services jobs in the New York economy fell, as it did in Los Angeles-Long Beach-Santa Ana (36th) and Chicago-Joliet-Naperville (43rd). This suggest trouble ahead for the future.
Chicago was among the few areas that actually lost employment in this generally fast-growing field. The other big losers include Detroit-Warren-Livonia, Mich. (39th) , despite a decent pickup in the last two years as the auto industry has rebounded; the Cleveland metro area (47th); Milwaukee-Waukesha-West Allis, Wisc. (49th); Birmingham-Hoover, Ala. (50th); and last-place Memphis.
What do these trends tell us about the future of high-wage employment? Certainly size is not enough, nor even the possession of strong legacy in business service industries. The relative declines of our three largest metro areas — New York, Los Angeles and especially Chicago — alone tells us that. Chicago, which has touted itself as a capital of business expertise, now seems to be falling into the nether reaches long inhabited by older Rust Belt cities and Southern backwaters.Chicago leaders such as Mayor Rahm Emmanuel needs to spent less time being possessed by what Time Out Chicago called a “world class city complex” and look into why, as urban analyst Aaron Renn suggests, the city’s vaunted global economy is not enough to produce enough high-wage jobs to sustain its vast surrounding region.
At the same time, being small and affordable, while helpful, is also not sufficient for business services success, as the presence of a number of smaller metro areas at the bottom of the list suggests. But the strong performance of many mid-sized cities – ranging from Austin, Raleigh and Salt Lake to less-heralded Jacksonville, Kansas City, Oklahoma City and Richmond — suggest that these jobs will likely continue to migrate to smaller, less costly and generally less dense urban regions.
Once considered the natural domain of megacities and dense urban cores, high-wage business service jobs, largely due to technology, can increasingly be done anywhere. This suggests that the playing field for such positions, rather than concentrating, will become ever wider. As the struggle for good jobs intensifies in the years ahead, expect the competition between regions to get even greater.
|Professional, Technical, and Scientific Services in the Nation’s Largest Metropolitan Areas|
|Rank||Index Score||2001 – 2012 Growth||2005 – 2012 Growth||2010 – 2012 Growth||2012 LQ||2001 – 2012 LQ Change||2012 Avg. Annual Wage|
|1||Austin-Round Rock-San Marcos, TX||79.6||46.9%||38.8%||13.8%||1.43||5.9%||$90,649|
|3||San Francisco-Oakland-Fremont, CA||67.2||21.4%||23.6%||12.9%||1.97||11.3%||$120,442|
|5||Salt Lake City, UT||63.3||33.4%||26.2%||9.8%||1.10||6.8%||$76,341|
|6||Oklahoma City, OK||59.9||31.1%||16.6%||11.0%||0.89||8.5%||$62,374|
|7||Kansas City, MO-KS||59.5||24.2%||17.6%||10.4%||1.24||10.7%||$82,060|
|9||Charlotte-Gastonia-Rock Hill, NC-SC||56.1||29.9%||24.4%||6.3%||0.97||5.4%||$81,171|
|12||Riverside-San Bernardino-Ontario, CA||54.6||45.5%||3.1%||2.1%||0.58||11.5%||$52,617|
|14||Buffalo-Niagara Falls, NY||52.4||22.7%||19.4%||5.2%||0.93||10.7%||$64,449|
|15||Atlanta-Sandy Springs-Marietta, GA||52.2||18.6%||14.4%||10.7%||1.30||3.2%||$87,575|
|17||San Diego-Carlsbad-San Marcos, CA||50.9||24.7%||13.4%||3.4%||1.51||5.6%||$98,390|
|19||San Antonio-New Braunfels, TX||48.1||30.5%||13.2%||5.3%||0.80||0.0%||$69,979|
|22||Tampa-St. Petersburg-Clearwater, FL||46.7||18.7%||7.6%||5.0%||1.17||8.3%||$72,087|
|24||Dallas-Fort Worth-Arlington, TX||44.6||20.1%||17.1%||5.4%||1.12||-2.6%||$89,392|
|26||Las Vegas-Paradise, NV||43.6||33.4%||-1.1%||1.6%||0.74||4.2%||$74,939|
|27||Louisville/Jefferson County, KY-IN||41.8||16.4%||13.8%||4.7%||0.82||2.5%||$65,664|
|30||Houston-Sugar Land-Baytown, TX||39.0||20.4%||15.0%||4.1%||1.15||-10.2%||$101,352|
|31||New Orleans-Metairie-Kenner, LA||38.8||6.0%||11.8%||2.5%||0.97||10.2%||$78,866|
|32||New York-Northern New Jersey-Long Island, NY-NJ-PA||37.5||8.5%||9.8%||7.1%||1.36||-6.2%||$110,211|
|34||San Jose-Sunnyvale-Santa Clara, CA||35.4||-5.5%||13.7%||7.9%||2.10||-9.1%||$143,640|
|36||Los Angeles-Long Beach-Santa Ana, CA||34.8||7.8%||4.3%||5.6%||1.22||-3.2%||$89,157|
|37||Minneapolis-St. Paul-Bloomington, MN-WI||32.2||4.5%||7.1%||7.8%||1.04||-8.0%||$89,476|
|38||Miami-Fort Lauderdale-Pompano Beach, FL||31.9||10.5%||0.4%||3.5%||1.13||-4.2%||$76,567|
|44||St. Louis, MO-IL||25.5||1.0%||0.9%||4.2%||0.93||-6.1%||$77,086|
|45||Hartford-West Hartford-East Hartford, CT||25.1||2.9%||3.9%||2.5%||0.91||-7.1%||$84,846|
|46||Virginia Beach-Norfolk-Newport News, VA-NC||24.5||7.4%||1.1%||-1.3%||0.89||-4.3%||$71,609|
|48||Providence-New Bedford-Fall River, RI-MA||19.8||4.4%||-3.3%||-2.2%||0.72||-4.0%||$68,834|
|49||Milwaukee-Waukesha-West Allis, WI||15.8||-5.0%||-5.1%||2.3%||0.81||-10.0%||$76,264|
|Analysis by Mark Schill, Praxis Strategy Group|
|Data Source: EMSI 2012.4 Class of Worker – QCEW Employees, Non-QCEW Employees & Self-Employed|
The LQ (location quotient) figure in the table above is the local share of jobs that are professional, technical, and scientific services (PSVS) divided by the national share of jobs that are PSVS. A concentration of 1.0 indicates that a region has the same concentration of PSVS as the nation.