Professional, technical services disproportionately large here

By Patrick Jones

One of the startling aspects of the greater Tri-City economy is the juxtaposition of a large agricultural sector with one formerly called the white-collar sector. In the terminology of labor economists, the latter consists of professional and technical services. It, too, looms large in the two counties.

Today, we might call the components of professional and technical services the anchors of “knowledge economy.” That is, brainpower is the primary asset necessary for a good portion of the jobs in the sector.

Industries included are legal services, accounting firms, architectural and engineering offices, specialized design services, computer systems design shops, scientific research and development organizations, advertising and marketing firms, as well as general management and consulting services companies.

Obviously, knowledge workers populate other industries as well.

Every sector runs on a certain number of occupations that require at least a bachelor’s degree in arts or science. Think of health care, with its large presence in Benton and Franklin counties, or consider information technology, albeit with a very small presence here. Certainly manufacturers employ professionals who bring to the job higher education training.

For sure, the professional and technical services sector employs many whose job requirements don’t run to a four-year degree. Yet, compared to most large sectors in any economy, with the exception of information, this one demonstrates a high proportion of highly-educated workers.

Why do we care? For one, people working in professional and technical services firms bring talents into their community.

Known as “human capital” among economists, these skills can be vital in a variety of areas, such as education, cultural life and a general civic engagement. But since this is a business publication, it’s important to underscore role of wages and salaries that this sector contributes to the local economy.

Consider its average annual wage in 2018 for the two counties: $98,553 in Benton and $53,129 in Franklin.

As Benton-Franklin Trend data shows, these represent wages far higher than the overall annual wage averages in each county: $55,214 in Benton County and $42,362 in Franklin County.

Only one industry paid more in Benton County, “Management of Companies,” at about $128,000 annually. This small industry covers financial holding companies and managing regional offices. Two industries paid a bit more in Franklin County: wholesale trade and finance/insurance.

Wages and salaries make up the largest component of income, so any local economy welcomes higher wage jobs.

Generally, the question revolves around how many of these jobs can an economy attract and support. Specifically, how big a professional and technical services sector can the economy of greater Tri-Cities support?

As the Trends data reveals, the sector is currently not among the top five in the regional economy, by headcount. In 2018, it ranked seventh.

By the numbers, it counted 9,127 among its ranks, or a little more than 7 percent of the entire workforce in the two counties.

The ranking of sectors by total wages earned tells a different story, however. In 2018, professional and scientific services was the second largest contributor, with total earnings of $876 million. Government, ranked second by headcount, came in first, at $1.2 billion.

Yet over time, the numbers in professional and technical services here have diminished, as a share of the total workforce and even by headcount.

They peaked in 2011 at 12,200. From 2003-12, the sector was among the top five by headcount. Since then, it has been bumped down, first by administrative and waste services, then by the hospitality industry (eating & drinking plus accommodations).

Yet from 2003 to the present, professional and scientific services has always ranked first or second in total wages paid in the local economy.

As we look toward the economic future of the greater Tri-Cities, can professional and technical services resume its status as one of the top five employing sectors?

Not if recent trends hold true. Headcount numbers have actually declined by 7 percent since 2014. Fastest growing, by percentage, have been the construction industry (48 percent), hospitality (22 percent), followed by waste and administrative services (10 percent).

Yet, even if the sector doesn’t crack the top five by headcount, it is likely to remain a very significant presence in the local economy. This can largely be chalked up to the thousands employed at Pacific Northwest National Laboratory in Richland. At 7 percent, the sector was slightly larger than its counterpart statewide in 2018, which claimed 6 percent of the workforce. It stands far larger than its counterpart in all Eastern Washington metro areas.

The closest was Spokane County, with 4.5 percent of its workforce in the sector.

Ranked by wages and salaries earned, this vital group of industries is likely to remain in the top sectors three for the greater Tri-Cities. That’s a happy place for this economy.

D. Patrick Jones is the executive director for Eastern Washington University’s Institute for Public Policy & Economic Analysis. Benton-Franklin Trends, the institute’s project, uses local, state and federal data to measure the local economic, educational and civic life of Benton and Franklin counties.