The Business Services Industry Sets Pace in Employment Growth

By Howe, Wayne J. | Monthly Labor Review, April 1986 | Go to article overview

The Business Services Industry Sets Pace in Employment Growth


Howe, Wayne J., Monthly Labor Review


The business services industry sets pace in employment growth Just as businesses purchase raw materials, machinery, or office equipment from suppliers, they also purchase services. These services may be highly technical, such as the development and sale of specialized computer software programs, or they can be more mundane, such as building cleaning and maintenance. Also, the need may be year round, such as for payroll processing, or temporary, such as for a fill-in receptionist. In any case, the use of contractors to supply certain types of services gives an employer considerable flexibility, and often is less expensive than hiring permanent employees to provide the same services. Business services is the fastest growing industry in the economy, and, while still small in the aggregate, may be representative of changes in the way many American companies are doing business.

The business services industry is made up of seven major industries: advertising; consumer credit reporting and collection; mailing, reproduction, and stenographic services; services to buildings, including cleaning, maintenance, and exterminating services; personnel supply services, which includes both temporary help supply companies and employment agencies; computer and data processing services; and miscellaneous business services, which offer research and development, management and consulting, and protective services. These industries supply a variety of services to business establishments on a fee or contract basis. The heterogeneous mix of individual industries is also reflected in the diverse occupational distribution of employment in business services, which includes highly skilled managerial and administrative occupations, as well as lower skilled service occupations.

With employment doubling, the rate of job growth in business services over the past decade was more than four times that for all private nonagricultural industries. The growth of individual industries varied widely: employment in computer and data processing services and personnel supply services more than tripled, while moderate growth occurred in advertising; mailing, reproduction, and stenographic services; and services to buildings (although each of these industries grew much faster than the economy as a whole). Credit reporting and collection was the only business services industry that failed to increase its work force.

This article examines the rapid growth in the business services industry, particularly the computer and data processing and personnel supply services industries. It discusses the type of services offered by business services industries, the extent and nature of the employment expansion, and the occupations and earnings of the work force.

The data are from the Current Employment Statistics (CES) survey, the Current Population Survey (CPS) and the Occupational Employment Statistics (OES) survey. The CES survey is generally recognized as the major source of current information on employment by industry. CES statistics are derived from a sample survey of business establishments, designed to provide industry information on nonagricultural wage and salary employment, average weekly hours, average hourly earnings, and average weekly earnings. Data derived from this survey are used whenever possible. However, the CES survey provides no demographic information except gender, and no occupational information at all. The CPS is used to provide information on job tenure and self-employment.

Occupational distributions of employment are available from both the OES survey and the CPS. For this article, detailed OES employment data were aggregated into the major occupational groupings used in the CPS, which were used for economy-wide comparisons.

Computer and data processing services

The greatest employment growth in business services between 1974 and 1984 took place in computer and data processing services, which grew by more than 250 percent. …

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