The Cities Creating The Most White-Collar Jobs

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In our modern economy, the biggest wellspring of new jobs isn’t the information sector, as hype might lead some to think, but the somewhat nebulous category of business services. Over the past decade, business services has emerged as easily the largest high-wage sector in the United States, employing 19.1 million people. These are the white-collar jobs that most people believe offer a ladder into the middle class. Dominated by administrative services and management jobs, the sector also includes critical skilled workers in legal services, design services, scientific research , and even a piece of the tech sector with computer systems and design. Since 2004, while the number of manufacturing and information jobs in the U.S. has fallen, the business services sector has grown 21%, adding 3.4 million positions.

Given these facts, mapping the geography of business services employment growth is crucial to getting a grip on the emerging shape of regional economies. And because business services cover such a wide spectrum of activities, there is no one kind of area that does best. Business services thrive in a host of often different environments, far more so than the more narrow patterns we see in manufacturing or information. To generate our rankings of the best places for business services jobs, we looked at employment growth in the 366 metropolitan statistical areas for which BLS has complete data going back to 2003, weighting growth over the short-, medium- and long-term in that span, and factoring in momentum — whether growth is slowing or accelerating. (For a detailed description of our methodology, click here.)

Tech-Service Hubs

Increasingly much of what we call tech is really about business services. Companies that primarily use technology to sell a product generally require many ancillary services, from accounting and public relations to market research. Apple, Google, and Facebook clearly demand many services, and that’s one reason why San Jose-Sunnyvale-Santa Clara ranks first on our big metro areas list (those with at least 450,000 jobs). Since 2009, business service employment has expanded 34.7% in the area; just last year the sector expanded 7.9%. The Bay Area’s other tech rich region, San Francisco-Redwood City-South San Francisco, ranks second.

This linkage of tech with business services can be seen in other information-oriented parts of the country. Both third-ranked Raleigh, N.C., and No. 5 Austin, Texas, are also tech hubs, and boast rapidly expanding business service sectors. They are also much less expensive places to do business, which may suggest these areas will be well positioned to capture more service jobs if bubble-licious stock and real estate prices undermine some of the economic logic that has driven business in the Bay Area.

The key here may also be cultural. Workers in business services tend to be well educated, and younger employees may well share the lifestyle preferences that have led workers to the Bay Area, as well as such moderately hip places as Austin. Their higher wages help defray the spiraling costs of living in these desired locations and millennials’ and, at least until their 30s, keep them closer to the urban core.

Sun Belt Service Boom Towns

The balance of our top 10 business service locations are all in the Sun Belt. For the most part, these are lower cost places that have enough amenities and transportation links to attract and nurture business service firms. The strongest example is Nashville, ranked fourth on our list, where business service employment has soared 41.4% over the past five years. Much of this growth is tied to health services, entertainment and staffing services.

The re-emergence of No. 10 Atlanta-Sandy Springs-Roswell is particularly marked, as we saw in our overall rankings. Business service growth has led economist Marci Rossell to predict a net gain of 140,000 jobs for the metro area this year, which would be the first time it has netted more than 100,000 since 1999.

The Traditional Big Players

Business services have long clustered in the largest American cities. But with the exception of the Bay Area, greater Dallas and Atlanta, few of our biggest metro areas did particularly well on our list. Indeed of those areas with over 2 million business service jobs, the next highest ranking belongs to No. 21 Houston, which has seen a healthy 27.8% growth in this sector since 2009.

Other mega-regions have not done nearly as well. The largest business service economy, that of New York City, with over 4.1 million jobs in this sector, ranks 29th, with good but not spectacular 20.5% growth over the past five years. But New York, as we have seen on our overall list of The Best Cities For Jobs, consistently outpaces its major rivals. Chicago lags on our business services list in 42nd place, with 18.1% growth over the past five years, and Los Angeles, which once saw itself as a serious challenger to New York, ranks 44th, with 17.4% job growth over that span.

Perhaps the biggest surprise has been the relatively weak record of the capital area. A major beneficiary of the stimulus, it appears now to be slipping in ways no one could have anticipated. The Washington- Arlington- Alexandria MSA, with over 2.5 million business service jobs, ranked 65th out of the 70 largest metro areas; neighboring Silver Spring-Frederick- Rockville won the dubious distinction of coming in dead last, the only large metro area to actually lose business service jobs. Washington’s “beltway bandits” have long thrived during periods of government growth. But after a boom during the early stimulus, Republican controls on spending have filtered into the business service economy. “D.C.,” noted the Washington City Paper, “went from the star of the recession to the runt of the recovery.”

Potential Rising Stars

Some might type-cast business service jobs as the domain of large metropolitan regions, clustered particularly in well-developed downtowns. Yet growth also is occurring in small and mid-sized cities, which often enjoy lower costs than their big city cousins. These are clearly some advantages to being in a big urban center in terms of amenities and face-to-face connections, but smaller cities are generally more attractive to middle class families, particularly to middle managers who might not be able to live decently in the hyper-expensive areas.

One prime example is our fastest growing mid-sized region, Provo-Orem, Utah, where business service employment has surged 46.5% since 2009 to 29,600 jobs. Located south of Salt Lake City, and home to Brigham Young University, the area has long attracted manufacturers and tech firms, who provide a base for business service providers. Indeed small and mid-sized college towns have seen some of the most rapid growth. This includes our No. 1 small and overall metro area, Auburn-Opelika Ala., which has posted 66.7% growth in business services employment since 2009 (albeit off a small base – total employment in the metro area is just 60,700). Just behind is Tuscaloosa, Ala., another small town built around a big university (“Roll Tide”) and some smaller colleges. (For our overall top 10 list, click here.)

But, as we have seen elsewhere, business service growth also tends to be strongest in areas with expanding other industries. For example, Fayetteville-Springdale-Rogers, Ark., ranked fourth on our mid-sized metro area list, is also home to Walmart, a company that provides opportunities for local business service firms. Overall 11 of the top 12 areas for business service job growth are small and one, Provo-Orem, is midsized.

These rapidly growing service regions could prove big winners in the years ahead. As telecommunication technology consistently destroys the tyranny of distance, more service firms may find it less expensive, and convenient, to locate their activities elsewhere. Just as manufacturing shifted out of the bigger cities, we could soon see a movement of business service providers as well, which would be a great boom to hundreds of small and medium-size regions.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Michael Shires, Ph.D. is a professor at Pepperdine University School of Public Policy.

Big Tiger Paw" by Josh Hallett - originally posted to Flickr as Big Tiger Paw. Licensed under CC BY 2.0 via Wikimedia Commons.