The professional and business services sector: employment changes across Indiana metros.As the number one manufacturing state in the country, Indiana s Indiana, state, United StatesIndiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). economy continues to evolve as manufacturing jobs continue to dwindle dwin·dle v. dwin·dled, dwin·dling, dwin·dles v.intr. To become gradually less until little remains. v.tr. To cause to dwindle. See Synonyms at decrease. . In 1990, manufacturing jobs made up 24 percent of the state's workforce. In 2006, that number was down to 19 percent; meanwhile service-providing jobs increased from 71 percent to 76 percent of the state's workforce. Education and health care remain two of the largest service sectors in Indiana, but another important service sector, professional and business services, has experienced growth surpassing both the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Midwestern Mid·west or Middle West A region of the north-central United States around the Great Lakes and the upper Mississippi Valley. It is generally considered to include Ohio, Indiana, Illinois, Michigan, Wisconsin, Minnesota, Iowa, Missouri, Kansas, and neighbors. Harpel Harpel () is a town in the Dutch province of Groningen. It is a part of the municipality of Vlagtwedde, and lies about 28 km north of Emmen. (2006) suggests that the professional and business services (PBS PBS in full Public Broadcasting Service Private, nonprofit U.S. corporation of public television stations. PBS provides its member stations, which are supported by public funds and private contributions rather than by commercials, with educational, cultural, ) sector supports economic growth, and sector growth has been largely positive) This article tracks the PBS sector for Indiana metro areas This article is about the music production team. For the article about population centers, see metropolitan area. Metro Area are a Brooklyn-based dance music production team composed of Morgan Geist and Darshan Jesrani. and provides comparative information on Indiana and neighboring neigh·bor n. 1. One who lives near or next to another. 2. A person, place, or thing adjacent to or located near another. 3. A fellow human. 4. Used as a form of familiar address. v. states. Structural Changes in the U.S. Economy Economies of the world practicing free enterprise almost always evolve along very similar paths but at different time periods in history. As an economy makes the transition from one phase to another, a radical restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of its labor force is typically observed. This process can be especially painful for workers in sectors that are slow to adapt to changing conditions. Economies start out as being almost exclusively agricultural in nature. The United States began this evolutionary process during colonial times when over 90 percent of all workers made their living in farming. As late as the Civil War, more than two-thirds of workers were still employed in agriculture. By the 1920s, more than one-fourth of U.S. workers were still in agriculture, but the percentage of agricultural workers has dropped to about 2 percent since then--with a corresponding massive reduction in the number of farms. States that held on to agriculture as their economic mainstay became economically depressed, particularly when compared to states that embraced the transition to manufacturing economies. By 1925, employment in the manufacturing segment of the economy surpassed employment in agriculture. Manufacturing employment peaked at 19.4 million in 1979 but has subsequently continued to decline to 14.2 million workers as of December December: see month. 2006. New manufacturing jobs in the United States seem unlikely, with typical projections calling for another half-million or more manufacturing job losses in the coming decade. Such losses can be attributed to increasing automation, improved efficiency, foreign competition, and outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. . Meanwhile the service sector of the economy continued to make significant advances. In 1979, there were 64.9 million U.S. service workers; by December 2006, the number had surged to 113.9 million. The ratio of service workers to manufacturing workers increased from 3.35 in 1979 to 8.05 as of December 2006. Replacing manufacturing jobs with service jobs often translates into painful wage losses; manufacturing jobs pay 23 percent more than service sector jobs on average. Service jobs are typically thought of as including retail salespeople sales·peo·ple pl.n. Persons who are employed to sell merchandise in a store or in a designated territory. , food service workers, customer service representatives, janitors, hairdressers, and groundskeepers. U.S. Department of Labor statistics for 2005 verify (1) To prove the correctness of data. (2) In data entry operations, to compare the keystrokes of a second operator with the data entered by the first operator to ensure that the data were typed in accurately. See validate. a significant difference in average mean earnings for these service sector jobs when compared to production jobs. Whereas production jobs paid a mean average annual wage of $29,890 in 2005, food preparation and service jobs paid a mean average annual wage of $17,840 and personal service jobs paid a mean average wage of $22,180. Fortunately, not all service-related jobs produce lower wages. The service industry also encompasses new job opportunities driven by the transition to a knowledge-based economy. This type of economy is often called an information society where an increasing number of employees work in information jobs that are based on services, education, and creative activities. This transformation is the byproduct by·prod·uct or by-prod·uct n. 1. Something produced in the making of something else. 2. A secondary result; a side effect. Noun 1. of technological progress and the increasing importance of computer technology. An information society generates a large number of high paying jobs that involve working with knowledge and a declining number of jobs that demand low cognitive skills cognitive skill Psychology Any of a number of acquired skills that reflect an individual's ability to think; CSs include verbal and spatial abilities, and have a significant hereditary component . The professional, scientific, and technical services subsector is one of the fastest growing sectors in advanced economies and reflects the growing importance of specialists and specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. knowledge (applied knowledge) vs. generalists. Ultimately, the investment in knowledge determines the productivity of the employee, more than the tools, machines, and capital available. The good news for technology specialists is that these jobs pay relatively high salaries. The Dice salary survey found that technology professionals had average 2006 salary increases of 5.2 percent to $73,308 in 2006--up from $69,700 in 2005. (2) Strong demand for technology professionals is documented by starting salary increases of 13.1 percent to $42,414 in 2006. Those with one to two years of technology experience saw 13.8 percent increases. The strong performance of the technological sector of the economy suggests that we take a closer look at jobs that are coded by the government as professional and business services. The Professional and Business Services Sector The professional and business services (PBS) sector includes three subsectors: * Professional, scientific, and technical * Management of companies * Administrative, support and waste management The first two require a higher skill level and educational attainment Educational attainment is a term commonly used by statisticans to refer to the highest degree of education an individual has completed.[1] The US Census Bureau Glossary defines educational attainment as "the highest level of education completed in terms of the . The last, administrative and support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services , generally provides routine services to business, including administrative services, janitorial and building support, travel services, and security. Employment services is the largest component of administrative and support services accounting for almost half of total business services. From an economic development standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the , administrative and support services serve an important role in overall staffing, especially during tight labor markets labor market A place where labor is exchanged for wages; an LM is defined by geography, education and technical expertise, occupation, licensure or certification requirements, and job experience . While all are important components in the PBS sector, the first two provide the technical support to other business sectors that enhances their ability to successfully compete in a global economy. The professional, scientific, and technical services subsector consists of activities such as legal advice, accounting, architectural, engineering, specialized design services, computer services Data processing (timesharing, batch processing), software development and consulting services. See service bureau, SaaS and ASP. , consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" , and research services. The management of companies sector consists of firms that hold equity securities in companies for the purpose of controlling and influencing management decisions. Employment in the professional and business services sector has demonstrated steady growth and reached an all time high in 2006 with 17.5 million employees nationally. PBS sector jobs export services to other geographic regions and often result in a strong multiplier effect Multiplier Effect The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends on the percentage of deposits that banks are required to hold on reserves. for local economies. The PBS sector stimulates innovation, creativity, and entrepreneurial en·tre·pre·neur n. A person who organizes, operates, and assumes the risk for a business venture. [French, from Old French, from entreprendre, to undertake; see enterprise. activity and is often credited with being a major factor determining new facility announcements between 1999 and 2005. (3,4) Indiana's Performance As the state continues to replace manufacturing jobs with service sector jobs, the PBS sector serves an important role in overall job growth and business attraction. In fact, one may view the professional, scientific, and technical subsector as another version of manufacturing: manufacturing of ideas and creativity. Since manufacturing is still an important component of Indiana's economy, changes for the goods-producing and manufacturing sector are also discussed. With the exception of Kentucky Kentucky, state, United States Kentucky (kəntŭk`ē, kĭn–), one of the so-called border states of the S central United States. It is bordered by West Virginia and Virginia (E); Tennessee (S); the Mississippi R. , Indiana has fared better than neighboring states in overall job growth, as well as job growth for the manufacturing and the professional and business services sectors. This article focuses only on percent changes and annual growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. as opposed to absolute changes. Total Nonfarm Payrolls Nonfarm payrolls is an economic employment report released monthly. It is a compiled name for goods-producing, construction and manufacturing companies. The data is released at 1:30pm BST on the first Friday of every month, or according to the U.S. Indiana lagged behind the United States with respect to change in total nonfarm payrolls from 1990 to 2006. The approximate 18 percent change in nonfarm payrolls lags the overall U.S. change of 24 percent (see Figure 1). However, Indiana surpassed its neighboring states with the exception of Kentucky. [FIGURE 1 OMITTED] Four metropolitan areas in Indiana The following is the list of metropolitan areas in Indiana as of January 1, 2004, with population estimates from 2000 through 2004. [1] Table Metro city Population estimates as of July 1 Census 2004 2003 2002 2001 2000 2000 See also 1 City (1990 pop. 51,972), seat of McLean co., central Ill.; inc. 1839. The economy is based on farming; electrical equipment is also manufactured. , Columbus Columbus. 1 City (1990 pop. 178,681), seat of Muscogee co., W Ga., at the head of navigation on the Chattahoochee River; settled and inc. 1828 on the site of a Creek village. , Elkhart-Goshen, and Indianapolis Indianapolis (ĭn'dēənă`pəlĭs), city (1990 pop. 731,327), state capital and seat of Marion co., central Ind., on the White River; selected 1820 as the site of the state capital (which was moved there in 1825), inc. 1847. all exceeded U.S. job growth over the period 1990 to 2006 (see Figure 2). Anderson Anderson, river, Canada Anderson, river, c.465 mi (750 km) long, rising in several lakes in N central Northwest Territories, Canada. It meanders north and west before receiving the Carnwath River and flowing north to Liverpool Bay, an arm of the Arctic , Kokomo Kokomo (kō`kəmō), city (1990 pop. 44,962), seat of Howard co., N central Ind., on Wildcat Creek; inc. 1865. Glass, motor vehicle parts, metal products, plastics, food and beverages, and plumbing fixtures are made in the city. , and Muncie Muncie (mŭn`sē), city (1990 pop. 71,035), seat of Delaware co., E Ind., on the White River; inc. 1854. It is a trade, processing, and manufacturing center. experienced negative changes in total nonfarm payrolls, with Anderson observing the largest decline. [FIGURE 2 OMITTED] Five-Year Trends: We observe lower annual growth rates over the most recent five-year period. Even though Indiana added jobs, the rate of growth slowed compared to the rate observed from 1990 to 2006 (see Figure 3). Despite this slower growth, Indiana added more jobs than its neighboring states, with the exception of Kentucky. Indiana again lagged behind the nation with respect to the annual growth rate. [FIGURE 3 OMITTED] Across all Indiana metro areas, we also observe average annual growth rates for the most recent five-year period less than the longer term sixteen-year growth rate (see Figure 4). One exception was the Elkhart-Goshen metro area. Its five-year annual growth rate of 1.72 percent slightly exceeded the sixteen-year growth rate of 1.68 percent. It should also be noted that Elkhart-Goshen observed healthy gains in both manufacturing and professional and business services over the five-year and sixteen-year period. [FIGURE 4 OMITTED] Goods-Producing Despite the stereotypical view of declining goods-producing sectors in general, Indiana has not experienced the declines observed in neighboring states, and actually surpassed the nation in overall job growth in goods-producing sectors (see Figure 5). Growth in goods-producing sectors was nearly flat for Indiana, outperforming its neighbors. Kentucky saw declines of over 1 percent, and Ohio saw the largest decline at 18 percent. [FIGURE 5 OMITTED] While some Indiana metro areas experienced deep declines in goods-producing sectors, other metro areas experienced significant gains; Bloomington, Columbus, Elkhart-Goshen, Evansville Evansville, city (1990 pop. 126,272), seat of Vanderburgh co., extreme SW Ind., a port on the Ohio River; inc. 1819. It is a rail and river shipping and commercial center for a coal, oil, and farm region. , Indianapolis, Lafayette Lafayette (lä'fēĕt`, lăf'ēĕt`). 1 City (1990 pop. 23,501), Contra Costa co., NW Calif., a residential suburb in the San Francisco–Oakland area; settled 1848, inc. 1968. , and Terre Haute Terre Haute (tĕr`ə hōt, tĕr`ē hŭt), city (1990 pop. 51,483), seat of Vigo co., W Ind., on the Wabash River; inc. 1816. all experienced positive changes (see Figure 6). Elkhart-Goshen far exceeded national and state changes with an increase of 31 percent. Metro areas showing significant declines in goods-producing payrolls include Anderson, Muncie, and Gary Gary, city (1990 pop. 116,646), Lake co., NW Ind., a port of entry on Lake Michigan; inc. 1909. Gary was founded by the U.S. Steel Corporation, which purchased the land in 1905 and landscaped it for a city. . Anderson saw the largest decline with a 55 percent negative change in goods-producing payrolls. [FIGURE 6 OMITTED] Service-Providing Indiana's transition to service-providing sector jobs again exceeded all neighboring states with the exception of Kentucky (see Figure 7). The addition of service-providing jobs in Indiana did not keep pace with changes in the macro-economy, however. The change in service-providing jobs for the United States stood at 32.5 percent. [FIGURE 7 OMITTED] Indiana's growth in service-providing industries was positive in all metro areas. Statewide growth in service-providing sectors was approximately 26 percent, with some metro areas significantly exceeding this level of change (see Figure 8). [FIGURE 8 OMITTED] Indianapolis experienced the largest change in service-providing jobs and Bloomington, Columbus, and Elkhart-Goshen also experienced increases that exceeded the state average. Indianapolis and Bloomington were the only two metro areas where the change in service sectors exceeded the national average. Smaller increases were also evident in metro areas that observed smaller changes in nonfarm payrolls. Anderson, Kokomo, Terre Haute, and Muncie all observed changes in service-sector jobs that did not keep pace with Indiana or the U.S. economy. Manufacturing Indiana observed significant swings in manufacturing payrolls across metro areas. Indiana observed a 6.6 percent decline, or a total of 40,000 jobs over the sixteen-year period analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. (see Figure 9). This percentage change in manufacturing employment pales in comparison to the national economy, and was significantly less than the three neighboring states of Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. , Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). , and Ohio. Manufacturing job losses for the United States stood at 20 percent and Illinois, Ohio, and Michigan all exceeded 20 percent. Kentucky job losses in manufacturing were 4 percent, slightly less than the 6.6 percent decline for Indiana. [FIGURE 9 OMITTED] Within Indiana, the largest decrease (62 percent) in manufacturing occurred in Anderson (see Figure 10). The largest positive change occurred in the Elkhart-Goshen metro area with an increase exceeding 30 percent. Columbus, Lafayette, Terre Haute, and Evansville also registered positive changes in manufacturing employment. Anderson, Gary, Michigan City Michigan City, city (1990 pop. 33,822), La Porte co., NW Ind., on Lake Michigan; inc. 1836. Michigan City produces machinery, consumer articles, kitchen and transportation equipment, concrete and wire products, chemicals, apparel, and cast iron boilers. , and Muncie all declined more than the nation overall. [FIGURE 10 OMITTED] It is interesting to note that the largest positive changes in manufacturing employment were experienced by the metro areas that observed the largest changes in service-providing payrolls. Professional and Business Services Sector Indiana saw significant percentage gains in the professional and business services sector. Gains in the PBS sector exceeded gains in the United States and surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. states except for Kentucky (see Figure 11). The 80 percent change for Indiana was also almost double the changes observed in Ohio and Illinois. Equally impressive, gains in certain Indiana metro areas far exceeded neighboring states and the nation as a whole (see Figure 12). [FIGURES 11-12 OMITTED] The Lafayette metro area experienced the largest percentage change in the PBS sector at 325 percent. The smallest increase in PBS sector employees was observed for the Anderson metro region. Anderson also observed the steepest decline in manufacturing jobs. While not all gains in the PBS sector were associated with positive gains in the manufacturing sector, it is interesting to note that the two largest PBS gains, Lafayette and Elkhart-Goshen, were also associated with positive gains in manufacturing. In fact, Elkhart-Goshen had the largest increase in manufacturing at 31 percent and the second largest increase in PBS growth of 125 percent. Bloomington, Columbus, Elkhart, Indianapolis, and Lafayette all experienced changes in PBS employment that exceeded Indiana and U.S. changes. Average Weekly Wages Across all Indiana metro areas except for Kokomo, average weekly wages for two out of the three subsectors in the PBS sector exceed the average weekly wage for that region. Wages for the professional, scientific, and technical and management of company's subsectors exceeded the average weekly wages in each respective metro area (see Table 1). In all but one metro area, average weekly wages for the management of companies subsector exceeded average weekly wages for manufacturing. Across all metro areas, the administrative and support services was the lowest paid in terms of average weekly wages. This subsector was less than the average weekly wage in each metro across all industries. Administrative and support services jobs are generally lower skilled positions and require less preparation in terms of education and training, but do provide important support to the overall growth of the PBS sector, as well as other firms. Conclusion Indiana has experienced growth in the PBS sector that exceeds both national and neighboring state changes. While the overall PBS sector is small relative to traditional services of education and health care, and the goods-producing manufacturing sector, its overall comparative growth does show promise. Given that manufacturing continues to decline, the PBS sector is a viable alternative and likewise contributes to economic development at the regional level. Economic developers in Indiana should be familiar with PBS sector growth potential in their region, and might think of explicit strategies to foster and grow this important sector. References (1.) Harpel, Ellen, 2006. Professional and Business Services in Regional Economies, The IEDC IEDC International Economic Development Council IEDC Indiana Economic Development Corporation Economic Development Journal, 5(4):50-57. (2.) Dice Tech Salary Survey, 2006. (3.) Gillis, William R., 1987. Can Service-Providing Industries Provide a Catalyst for Regional Economic Growth? Economic Development Quarterly, 1(3):249-256. (4.) Harpel, Ellen, 2006. Professional and Business Services in Regional Economies, The IEDC Economic Development Journal, 5 (4). (5.) Gattrell, J.D., 2002. Business Services, Productivity and Wages: Metropolitan and Nonmetropolitan Michigan Counties, 1977-1997, The Professional Geographer, 54 (3): 365-378. Uric u·ric adj. Relating to, contained in, or obtained from urine. uric pertaining to the urine. uric acid Dufrene Sanders San´ders n. 1. An old name of sandalwood, now applied only to the red sandalwood. See under Sandalwood. Chair in Business, School of Business, Indiana University Southeast History The Indiana University Falls City Area Center was established by Floyd McMurray in 1941 as an extension center of Indiana University in New Albany, Indiana and Jeffersonville, Indiana. James Altmann Professor of Economics, Indiana University Southeast
Table 1
Average Weekly Wages in Indiana Metros, 2006
Professional,
Scientific,
Weekly and Technical
Metro Wage Total Manufacturing Services
Louisville Average $595 $728 $712
Percent 100% 122.4% 119.7%
Anderson Average $611 $989 $657
Percent 100% 161.9% 107.5%
Bloomington Average $584 $766 $706
Percent 100% 131.2% 120.9%
Columbus Average $719 $960 $838
Percent 100% 133.5% 116.6%
Elkhart- Average $698 $798 $758
Goshen Percent 100% 114.3% 108.6%
Evansville Average $692 $1,057 $848
Percent 100% 152.7% 122.5%
Fort Wayne Average $674 $920 $910
Percent 100% 136.5% 135.0%
Gary Average $682 $1,204 $790
Percent 100% 176.5% 115.8%
Indianapolis Average $766 $1,105 $1,056
Percent 100% 144.3% 137.9%
Kokomo Average $874 $1,585 $866
Percent 100% 181.4% 99.1%
Lafayette Average $662 $899 $753
Percent 100% 135.8% 113.7%
Michigan Average $596 $770 $623
City Percent 100% 129.2% 104.5%
Muncie Average $580 $880 $734
Percent 100% 151.7% 126.6%
South Bend Average $677 $916 $858
Percent 100% 135.3% 126.7%
Terre Haute Average $596 $826 $748
Percent 100% 138.6% 125.5%
Management Administrative,
of Companies Support and
Weekly and Waste
Metro Wage Enterprises Management
Louisville Average $914 $431
Percent 153.6% 72.4%
Anderson Average $1,369 $390
Percent 224.1% 63.8%
Bloomington Average $2,303 $391
Percent 300.7% 67.0%
Columbus Average $1,250 $483
Percent 173.9% 67.2%
Elkhart- Average $1,570 $410
Goshen Percent 224.9% 58.7%
Evansville Average $1,143 $395
Percent 165.2% 57.1%
Fort Wayne Average $1,027 $440
Percent 152.4% 65.3%
Gary Average $1,209 $477
Percent 177.3% 69.9%
Indianapolis Average $1,872 $493
Percent 244.4% 64.4%
Kokomo Average $626 $304
Percent 71.6% 34.8%
Lafayette Average $1,224 $393
Percent 136.2% 59.4%
Michigan Average $906 $403
City Percent 152.0% 67.6%
Muncie Average $932 $283
Percent 160.7% 48.8%
South Bend Average $1,660 $355
Percent 245.2% 52.4%
Terre Haute Average $1,088 $401
Percent 182.6% 67.3%
Source: STATS Indiana, using ES-202 data
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