Professional and Business Services: A Varied Sector
May 20, 2024Professional and business services employ over a quarter of a million Oregonians. This large, multifaceted super sector is composed of three main parts: (1) professional, scientific, and technical services; (2) management of companies and enterprises; and (3) administrative and support and waste management. This super sector is composed of establishments that specialize in performing activities for clients that require a high degree of training and expertise. Some services that can be found in the super sector include architectural and accounting services, establishments that administer and oversee other companies or enterprises, and establishments performing routine support activities for the day-to-day operation of other organizations. It can be hard to capture the entirety of the super sector in this short piece, but more information on the employment and wages of the industries in professional and business services can be found at our website QualityInfo.org.
A Large Sector with Significant Employment
Professional and business services had 37,632 firms in 2023 which employed 265,121 workers. This makes up nearly 16% of the state’s private employment for the year.
The largest sector in 2023 was professional, scientific, and technical services with 26,075 firms that employed 110,899 workers. Within this sector, jobs are distributed among 34 different industries, including law offices, architectural services, laboratory testing, computer systems design, environmental consulting agencies, photography services, and veterinary services. These industries account for 42% of the super sector’s employment. The largest industries were computer systems design and related services with 17,359 workers, management consulting services with 12,869 workers, engineering services with 12,583 workers, and accounting and bookkeeping services with 12,484 workers.
The second largest sector was administrative and waste management services with 10,001 firms that employed 103,065 workers. This sector includes more than 25 industries. Some industries include call centers, temporary help services, credit bureau agencies, travel agencies, landscaping services, and waste treatment/disposal. These industries account for 39% of the super sector’s employment. The largest industries were temporary help services with 33,327 workers, landscaping services with 12,397 workers, and janitorial services with 11,637 workers.
Lastly, management of companies and enterprises accounts for the smallest share of professional and business services employment with 1,556 firms that employed 51,157 workers. This sector holds a broad array of occupations that all share responsibilities like oversight and managing of establishments. These account for the remaining 19% of employment in the super sector.
There were 213 government entities in 2023 employing 6,790 workers, a relatively small piece of the employment pie for professional and business services. The public sector jobs are also very diverse. Some prominent jobs are engineering, landscape services, computer systems design, and janitorial services.
Employment Growing Over Time
Professional and business services in Oregon has seen continuous growth since the early 1990s, declining only for short periods during economic recessions.
The decade from 1990 to 2000 was one of the longest periods of employment growth in Oregon history with Oregon’s private sector growing 31%. This was also true for professional and business services, which added 83,300 jobs (+80%). During this decade, professional and business services accounted for 26% of the state’s employment growth.
A series of subsequent shocks to the economy brought a mild economic downturn at the start of the 2000s. The decline in economic activity felt within this sector was most likely due to the Dotcom crash, a correction in the high-tech industry. From 2000 to 2003, professional and business services employment lost about 12,000 jobs (-6.4%) while private sector employment decreased only 3%. Computer systems design and related services lost 3,500 jobs (-30%). However, business support services, such as telephone call centers, experienced growth and added 3,100 jobs (+29%) from 2001 to 2003.
From 2004 to 2007, professional and business services added 21,900 jobs (+12%). All major sectors within the super sector gained jobs during this time and notably, management of firms added 4,800 jobs (+17%). Administrative and support services added the most jobs over this period, increasing employment by 8,000 (+10%).
The Great Recession introduced turmoil to the general economy and from 2007 to 2009, professional and business services dropped 16,000 jobs (-8.2%). The professional and technical sector dipped relatively less during the recession because industries such as computer systems and design gained 600 jobs over the period. Management of companies also added about 1,700 jobs (+5%) from 2007 to 2010. The largest loss came from the volatile temporary help industry, which lost 14,800 jobs (-35%) between 2006 and 2009. The temporary help industry also helped the overall super sector start to recover earlier from the recession, making it a leading indicator. It wasn’t until 2013 that professional and business services was at pre-Great Recession employment levels.
Following the Great Recession, there was a period of strong economic expansion from 2010 to 2019. Professional and business services employment added 65,600 jobs, growing at an average rate of 3.2% for nine years. This compares with Oregon’s private payroll that increased by an average of 2.3% annually during that period.
Professional and technical services added 28,700 jobs (+40%). Within that sector, job growth was fueled by computer systems design and related services, which added 7,200 jobs (+73%). Next was administrative and support services which added 21,500 jobs (+26%). Temporary help services contributed 7,824 of those 21,500 jobs. Management of companies and enterprises increased payroll by 15,400 (+44%) during those nine years, although some of that growth is from redefining companies into the industry.
Pandemic Uncertainty
The last year of major employment growth before the COVID-19 pandemic was 2019. The uncertainty in the early stages of the pandemic brought unprecedented layoffs and plummeting employment levels. With most non-essential business coming to a halt, Oregon’s private payroll shed 238,400 jobs (-17%) from March to April of 2020 and professional and business services lost 18,700 jobs (-8%) in that month.
Certain sectors fared somewhat better than others during COVID-19. The five years selected in the graph above speak for major periods throughout the pandemic. 2019 represents pre-pandemic times, 2020 represents the major lockdown period and overall freeze the economy felt, 2021 and 2022 largely represent a recovery phase for employment, and 2023 represents the most recent data there is coming out of the pandemic.
Professional and technical services was able to regain employment the fastest out of the three sectors. By 2021, it had surpassed pre-pandemic employment levels. The sector lost 700 jobs (-1%) on an annual basis from 2019 to 2020 but bounced back the year after to gain 4,900 jobs (+5%) from 2020 to 2021. One reason for the swift recovery may be because these industries had the capability to work remotely. Despite that, there was still employment movement at the industry level. Services related to advertising took the biggest hit, losing 568 jobs (-42%) from 2019 to 2020. Business operation services like accounting, bookkeeping, and payroll services lost 225 jobs (-2%) from 2019 to 2021 but rebounded the following year adding 1,018 jobs (+9%). Research and development in physical engineering added 917 jobs (+20%) from 2019 to 2021.
The administrative and waste services sector took the biggest hit. Many frontline jobs in this sector cannot be done remotely and most of those industries were negatively affected by COVID-19 restrictions. Consequently, this sector lost 8,500 jobs (-8%) on an annual basis from 2019 to 2020. Employment services lost 6,000 jobs (-17%) from 2019 to 2020. Travel agencies, tour operators, and convention and trade show organizers all took big losses as well. Professional employer organizations added 348 jobs (+9%). Services to buildings and dwellings added 800 jobs (+3%) from 2020 to 2021, which may be because home improvement activity increased during COVID-19. It wasn’t until early 2022 that administrative and waste services surpassed its second quarter 2019 employment level. In 2023, employment in the sector decreased to below pre-pandemic levels due to widespread job losses in the sector.
Management of companies and enterprises lost 1,600 jobs (-3%). Although it was not the hardest hit sector, it did take the longest to recover. It was not until the fourth quarter of 2022 that this sector surpassed pre-pandemic employment levels.
The labor market took 80 months to recover from job losses during the Great Recession in 2007 to 2009, compared with the 28 months it took to recover from the COVID-19 pandemic. The employment recovery that played out after spring 2020 has been rapid considering job losses were greater in March 2020 than the Great Recession job losses.
Differences in the Sector’s Industry Mix Determine Wages
The professional and business services super sector is so varied that different geographies have different industry mixes within it. Areas with a high proportion of employment in the professional and technical services and management of companies industries will have relatively higher average wages, while those that have a high proportion in industries such as call centers, temporary help firms, and laborious services such as waste disposal or landscaping services will have relatively lower wages.
More urban counties like Washington and Multnomah have large shares of employment in professional and technical industries and company headquarters with high annual average wages. However, some nonurban counties have high wages within the super sector. Hood River has a relatively large share of employment in engineering and Gilliam has employment in management of companies and waste remediation. Other rural counties that have employment in a company headquarters can have high wages within professional and business services.
Outlook
Professional and business services is expected to continue adding jobs into the future. The Oregon Employment Department projects the super sector will add 34,100 jobs (+13%) from 2022 to 2032. At the industry level, computer systems design and related services is expected to add the most jobs at 3,600 and have the fastest growth rate of 20%. Architectural and engineering services is expected to add the second most jobs and grow at the second fastest rate of 3,500 jobs and 19%, respectively.