Metros at your service

American Demographics, May, 1996 by Shannon Dortch

It's impossible to ignore the shift in U.S. employment from goods-producing jobs to those that generate services. In 1970, 32 percent of jobs were in goods-producing industries, such as farming and construction. This year the estimated share of employment in goods-producing jobs dwindled to 15 percent. More than eight in ten U.S. workers currently labor to produce services, such as transportation, retail trade, and finance.

Service-producing industries, broadly defined, include any business whose product is not a material good. About 35 percent of service-based employment is in the "services industry" subset, which includes some of the nation's fastest-growing industries - health-care services, entertainment, and business services.

The growth of services jobs is a nationwide trend that is also subject to the influences of local and regional economies. New projections from Woods & Poole Economics show where numerical growth in services jobs may be greatest, and where the rate of growth could be fastest.

Jobs in the services industry subset span a huge number of businesses from beauty salons and law firms to the most specialized and financially lucrative medical practices. The largest number of services industry jobs are in the nation's biggest metropolitan areas. But these places won't necessarily have the biggest growth. Chicago and Los Angeles are in the projected top-20 for absolute growth in services industry jobs to 2010, but so are smaller metros such as San Diego, Tampa, Orlando, and Las Vegas.

Chicago tops the list of metros for the number of projected new services jobs, at 276,000 by 2010. The city of big shoulders and its surrounding metropolitan counties smoothly made the transition from a manufacturing-based economy to one driven by services jobs. The Chicago metro lost an estimated 308,000 manufacturing jobs between 1970 and 1996, according to Woods & Poole. It created more than twice that many services jobs, at 849,000. Aggregate earnings of all workers increased by almost 50 percent in constant 1987 dollars, to an estimated $125 billion.

The Washington, D.C., metropolitan area, which includes parts of Maryland, Virginia, and West Virginia, is a close second to Chicago in projected new services jobs, at 268,000 by 2010. In this metro, what's bad news for government workers is good news for private-sector services employment. "Coming out of the last recession, the strongest growth [in services employment was in business services, primarily in computing and data processing," says Robert Riva, regional economist for the Regional and Economic Studies Program at the University Baltimore. Suburbs in southern Virginia and southern Maryland are the seat of this growth. "As the government downsizes, there are jobs that still have to get done," Riva says. "They're just being contracted out instead of being done in-house by government workers."

Despite presidential campaign talk about reducing the size of government, Woods & Poole projects that federal civilian jobs in the Washington metropolitan area will grow a slight 3.6 percent, which means an additional 14,000 jobs by 2010. This is slightly faster growth than for civilian federal employment nationwide, projected at 3 percent over the period. It makes sense for federal civilian employment to grow slightly faster in Washington, since an estimated one in ten government services is based there. Federal military employment in the area is projected to hold steady at about 92,000 to 2010.

Nearby Baltimore also makes the top-20 list for projected numerical growth in services employment. Like many north-eastern cities, Baltimore used to be a manufacturing town. The decline of factory employment there followed the national pattern until around 1990, when the metro was hit hard by federal defense cutbacks, says Riva. Manufacturing employment in Baltimore declined an estimated 16 percent between 1990 and 1996, according to Woods & Poole, compared with 2.3 percent for the U.S.

Certain manufacturing jobs, such as in printing and chemical production, are holding steady in Baltimore, Riva says. But services employment is a bright spot in the metro area economy. "The strongest demand is coming from home health care and nursing," says Riva. Other growing services in Baltimore include social services, business services, and engineering and management.

Faster-than-average growth in services employment should take place in metros that were slower to create services jobs n the 1970s and 1980s. Fast growth may also occur where large universities create demand for many business and personal services. Yet the top-ranked metropolitan area for growth in services employment has an entertainment-based economy. Orlando, Florida, provides entertainment services to nonresidents who greatly outnumber the resident population. Tourism is expected to fuel a 59-percent increase in services employment in Orlando to 2010.

Las Vegas is a similar case. The popularity of gaming is expected to generate a 39 percent increase in services employment there by 2010. Las Vegas is one of a few metros to make the top-20 for both growth rate and absolute growth.