Growth But Low Pay: Georgia’s Professional and Business Services Sector

Professional and business services has been the success story for Georgia during its recovery. Since the beginning of the year, the sector has added 29,200 jobs, seasonally adjusted, according to the U.S. Bureau of Labor Statistics. Over the year, the sector has created 36,800 jobs, almost half of all nonfarm jobs created in the state.

This sector includes a wide range of industries that require different skills and offer different opportunities and rewards. At the top is management of holding companies followed by professional and technical services that includes consultants, law firms, accounting firms, engineering and architectural companies, as well as computer design companies. This group also includes advertising and public relations companies. Many of the jobs in these companies require extensive academic backgrounds with resulting relatively high pay.

The sector also includes a wide variety of administrative and support companies and includes telephone call centers, waste disposal companies, pest exterminators, and security guard companies. These tend to required less trained personnel and provide lower pay. Also included in this sector are employment services companies including temporary personnel firms.

By looking at the national hourly rate data, the wage differential becomes obvious. Professional and technical services companies reported average hourly pay of $36.51 in June compared to $17.81 an hour for workers employed by administrative and support services companies.

Since the beginning of the year, the good news on job growth within the professional business services must be tempered by the fact that growth has come from administrative support services companies, which contributed two-thirds of the sector’s increase.

Companies in the higher-paying professional and technical services sub-sector increased their job counts by 3.1 percent over the past six months, while the companies in the lower paying administrative support and waste services sector added jobs at more than twice that rate, up 7.1 percent since December.

The result of this lopsided growth in one subsector of the industry means that lower paying jobs are growing much faster than those at the higher end, resulting in a state where workers have jobs but in occupations that tend to pay at lower rates.

In Georgia, while job growth is important, the quality of those jobs must be considered also. Creating a great of number of low-paying jobs produces immediate value for workers but diminishes their prospects over the longer term.

The Census Bureau recently indicated that median income in the state has reverted to its 1979 level making it increasingly hard for working families to improve economic possibilities for their children.

The effect is that job growth is not translating to improvements in workers’ standards of living in the way that the raw numbers might indicate. As a result, Georgians might be employed but not feel the optimism that the top level job numbers would indicate.

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Georgia Records Impressive June Job Growth

Georgia recorded impressive employment growth in June, adding 11,100 jobs, its best recorded one-month increase since March, according to preliminary data released by the U.S. Bureau of Labor Statistics.

After months of just keeping pace with the nation’s nonfarm job growth on an annual basis, the boost resulted in Georgia recording 75,300 new jobs over the year, an increase of 1.9 percent compared to the nation’s 1.7 percent rise.

In June, strong job growth sectors included business and professional services (9,300), education and health services (4,900), construction (2,000) and manufacturing (1,700). Disappointing data were recorded for wholesale trade (-2,600), the information sector (-2,500) and government (-2,200).

Over the six months ending in June, business and professional services has been the dominant growth industry in Georgia, contributing 29,200 of the state’s 40,000 new jobs. Other industries showing strong growth over the past six months include education and health services (11,000) and leisure and hospitality services (6,300). Government continues to disappoint with a decline of 5,500 jobs since the beginning of the year.

Since June 2012, business and professional services has added 36,800 jobs, while education and health services added another 19,500 jobs and leisure and hospitality services added 17,300 jobs.

During that same time period, government employment in Georgia decreased by 14,700 jobs, with the majority of that loss centered on state employment, down 6,200, followed by local government, down 5,400.

Despite the increase recorded for the month of June, manufacturing employment in the state is barely holding its own with a small net loss of 400 jobs over the year.

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Albany, Rome, and Warner Robins Show Georgia’s Job Weakness

There was a time when manufacturing moved to Georgia looking for low cost, nonunion labor without requiring many skills. There also was a time when military bases in the state promised strong, steady paychecks even in parts of the state with anti-Washington feelings.

Job losses in the Albany, Rome, and Warner Robins metro areas show that this time is over. Combined these three areas lost 2,300 jobs in May, while the state as a whole lost only 700 jobs.

Over the year, these three areas are down a combined 1.7 percent compared to the state’s overall job growth rate of 1.7 percent.

The Dalton metro area, which is still suffering from the decline in housing-related manufacturing industries such as carpeting, also is experiencing this issue, although at a less dramatic rate, losing no jobs in May and posting a smaller 300 job loss over the year.

Since the end of 2006, Albany has lost 38 percent of its manufacturing employment, Dalton has lost 31 percent, and Rome has lost 24 percent. Warner Robins is just beginning its decline as the federal government shrinks, losing 800 federal jobs in the past year.

Job gains in Georgia occurred in the Atlanta area, which added 3,900 jobs in May plus another 700 jobs added in Gainesville metro area, which is adjacent to the Atlanta metro area.

Over the year, the state has gained 69,000 jobs, of which 49,500 were in the Atlanta-Gainesville metro areas.

Georgia can point to upcoming manufacturing growth from new Caterpillar and Baxter manufacturing plants, but note that these are springing up relatively close to the Atlanta metro area, not in the more distant metro areas of Albany or Rome.

Even the rest of the state that excludes all the metro areas is showing growth, up by 400 jobs in May and 17,900 jobs over the year.

For Georgia’s small metros – Albany, Dalton, Rome – manufacturing was the savior of areas that had depended on agriculture in the past. For Warner Robins, military bases were the solution.

With manufacturing’s decline and cutbacks to the federal government, who will come to the rescue of these small metro areas now?

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