Technically Speaking, Central Minnesota is Still Expanding

by Cameron Macht - cameron.macht@state.mn.us
July 2009

Technically Speaking, Central Minnesota is Still Expanding

Over the last five years Central Minnesota’s economy has expanded by just over 10,000 net new private-sector jobs, a steady 1 percent annual average growth rate. In the last year, however, the national and state recession crept into the region and led to the loss of nearly 2,000 private-sector jobs, a 1 percent decline – the first such year-over-year employment drop in 25 years.

But within professional and technical services, employment still expanded 8 percent from 2007 to 2008, gaining nearly 500 net new jobs. In fact, since 2004 professional and technical services added more than 1,100 private-sector jobs in Central Minnesota, a 22 percent increase. That was four times as fast as the total of all industries in the region and twice as fast as industry growth in the state as a whole, which climbed just over 11 percent from 2004 to 2008 (see Figure 1).

What’s accounting for all of the growth?

From getting a better picture of your financial situation to taking a better picture of you, professional and technical services is one of the broadest service industry classifications. Businesses in this sector range from accounting to photography, with many other types of services in between.

According to the definition in the North American Industry Classification System (NAICS), the sector “comprises establishments that specialize in performing professional, scientific, and technical activities for others. These activities require a high degree of expertise and training. … Activities performed include: legal advice and representation; accounting, bookkeeping, and payroll services; architectural, engineering, and specialized design services; computer services; consulting services; research services; advertising services; photographic services; translation and interpretation services; veterinary services; and other professional, scientific, and technical services.” [1]

Accounting and bookkeeping services accounted for nearly two-thirds of the net employment growth in this sector over the last year as local offices of public accountants and tax preparation services added to their payrolls in order to help handle the payrolls of other businesses. As the largest industry specialty in the region, accounting and bookkeeping services now has just over 1,600 jobs at 205 business establishments after gaining 282 net new jobs in 2008.

The next largest growing industry specialty in the region is computer systems design and related services, which gained 147 net new jobs over the last year. From designing, writing, and testing software to providing onsite management and support of clients’ information technology systems, average annual wages for these technically skilled workers clocked in at just under $72,000.

Central Minnesota also saw rapid employment expansion in management and technical consulting services, which added 51 net new jobs for a 25 percent rise, and scientific research and development services, where private-sector employment increased more than 28 percent in the last year. Other large sectors include legal services and architectural and engineering services, although both saw slight job declines in the last year (see Table 1).

Occupational Staffing Matrix

Because of the wide variety of professional and technical services provided, workers in the industry need a wide range of skills, knowledge, and abilities. According to the occupational staffing matrix used by the Bureau of Labor Statistics, occupations in demand in the industry range from high-skilled, high-paid jobs like computer software engineers and management analysts to lower-skilled, lower-paid positions like office clerks or freight movers.

For example, there are more than 15,000 janitors and cleaners employed in the professional and business services sector in Minnesota, making it the largest occupation in the industry. The typical education requirements for a janitor are a high school diploma or GED and some on-the-job training, with a median hourly wage of $11.49 in Central Minnesota. Less than 25 percent of workers in this occupation had any post-secondary training, including just 4 percent with a bachelor’s degree.

In contrast, 96 percent of accountants and auditors, which is the third largest occupation in the professional and business services sector, have some college experience including 79 percent with a bachelor’s degree or higher. Two-year programs available at community colleges and private business schools can prepare job seekers for bookkeeping jobs, while a bachelor’s degree in accounting is necessary for entry-level accounting or auditing jobs. To be a Certified Public Accountant, job seekers need to complete additional study and pass the Uniform CPA Exam. [2] The median hourly wage for accountants in Central Minnesota was $26.51 through the first quarter of 2009.

While the educational requirements for the main occupations in the professional and business services industry vary from short-term on-the-job training to doctoral degrees, all are expected to be in high demand over the next decade. From 2006 to 2016, 11 of the top 15 occupations in the industry are projected to grow faster than average, including four that are expanding more than 25 percent (see Table 2).

Interested job seekers can find more information about the training requirements, growth prospects, and typical wages for any of the occupations in the industry by exploring the Minnesota Department of Employment and Economic Development (DEED) labor market information Web pages (www.PositivelyMinnesota.com/lmi/) or the Central Minnesota regional careers Web site at www.iseek.org/central/ .

Biotechnology Boom

Because jobs in professional and technical services tend to be higher paying and faster growing, many state and local economic development agencies have focused on attracting these types of businesses. Perhaps the best example is the ongoing allure of biotechnology, which is classified under NAICS code 5417, scientific research and development services. States from California to Massachusetts have launched marketing campaigns targeting biotechnology.

According to DEED’s Web site, “Minnesota stands poised to become a world leader in the bioscience industries. We are already on the leading edge with our rich heritage of agricultural, industrial, medical and technological innovation, as well as our entrepreneurial energy, business expertise, skilled workforce and robust economic infrastructure. Today, we are in the early stages of a Minnesota bioscience revolution that will propel us into a position of national and global prominence in one of the most dynamic growth-oriented sectors of the economy.” [3]

As shown in Table 1, Central Minnesota is participating in the biotechnology boom. Although it is still a relatively small subdivision with 172 jobs at 16 business establishments, scientific research and development services was the fastest growing industry specialty in the region over the last year.

Growth is projected for the next decade as well, according to DEED’s 2006 to 2016 Employment Projections program. Scientific research and development services are expected to increase five-fold in Central Minnesota over the decade, but employment had already jumped over 300 percent from 2006 to 2008, meaning the 423 percent projection might actually be too conservative for the region’s potential.

Beyond biotechnology, several other professional and technical services are also projected to be among the fastest growing industry sectors in Central Minnesota over the next decade, growing nearly twice as fast as the economy as a whole. Employment in specialized design services, which includes interior design and graphic design, is projected to rise 81.5 percent, although it is also a smaller specialty. Management consulting, advertising, and accounting services are all expected to gain more than 35 percent as well (see Table 3).

Job seekers looking for opportunities for professional growth will find exciting potential in Central Minnesota, as the professional and technical services industry continues to expand and diversify in the future.

 [1] www.census.gov/naics/2007/def/NDEF54.HTM#N54
[2] www.iseek.org/careers/careerDetail?id=4&oc=100001
[3] www.PositivelyMinnesota.com/biozone/