VITAL SIGNS INDICATOR Jobs by Industry (EC1)

FULL MEASURE NAME Employment by place of work by industry sector

LAST UPDATED July 2019

DESCRIPTION Jobs by industry refers to both the change in employment levels by industry and the proportional mix of jobs by economic sector. This measure reflects the changing industry trends that affect our region’s workers.

DATA SOURCE Bureau of Labor Statistics: Current Employment Statistics 1990-2017 http://data.bls.gov

CONTACT INFORMATION vitalsigns.info@bayareametro.gov

METHODOLOGY NOTES (across all datasets for this indicator) The California Employment Development Department (EDD) provides estimates of employment by place of work and by industry. Industries are classified by their North American Industry Classification System (NAICS) code. Vital Signs aggregates employment into 11 industry sectors: Farm, Mining, Logging and Construction, Manufacturing, Trade, Transportation and Utilities, Information, Financial Activities, Professional and Business Services, Educational and Health Services, Leisure and Hospitality, Government, and Other. EDD counts all public-sector jobs under Government, including public transportation, public schools, and public hospitals. The Other category includes service jobs such as auto repair and hair salons and organizations such as churches and social advocacy groups. Employment in the technology sector are classified under three categories: Professional and Business Services, Information, and Manufacturing. The latter category includes electronic and computer manufacturing. For further details of typical firms found in each sector, refer to the 2012 NAICS Manual (http://www.census.gov/cgi-bin/sssd/naics/naicsrch?chart=2012).

The Bureau of Labor Statistics (BLS) provides industry estimates for non-Bay Area metro areas. Their main industry employment estimates, the Current Employment Survey and Quarterly Census of Employment and Wages, do not provide annual estimates of farm employment. To be consistent, the metro comparison evaluates nonfarm employment for all metro areas, including the Bay Area. Industry shares are thus slightly different for the Bay Area between the historical trend and metro comparison sections.

The location quotient (LQ) is used to evaluate level of concentration or clustering of an industry within the Bay Area and within each county of the region. A location quotient greater than 1 means there is a strong concentration for of jobs in an industry sector. For the Bay Area, the LQ is calculated as the share of the region’s employment in a particular sector divided by the share of the nation’s employment in that same sector. Because BLS does not provide national farm estimates, note that there is no LQ for regional farm employment. For each county, the LQ is calculated as the share of the county’s employment in a particular sector divided by the share of the region’s employment in that same sector.

VITAL SIGNS INDICATOR Change in Jobs by Industry (EC2)

FULL MEASURE NAME Employment by place of work by industry sector

LAST UPDATED May 2019

DESCRIPTION Change in jobs by industry is the percent change and absolute difference in the number of people who have jobs within a certain industry type in a given geographical area

DATA SOURCE California Employment Development Department: Current Employment Statistics 1990-2017 http://www.labormarketinfo.edd.ca.gov/

CONTACT INFORMATION vitalsigns.info@bayareametro.gov

METHODOLOGY NOTES (across all datasets for this indicator) The California Employment Development Department (EDD) provides estimates of employment by place of work and by industry. Industries are classified by their North American Industry Classification System (NAICS) code. Vital Signs aggregates employment into 11 industry sectors: Farm, Mining, Logging and Construction, Manufacturing, Trade, Transportation and Utilities, Information, Financial Activities, Professional and Business Services, Educational and Health Services, Leisure and Hospitality, Government, and Other. EDD counts all public-sector jobs under Government, including public transportation, public schools, and public hospitals. The Other category includes service jobs such as auto repair and hair salons and organizations such as churches and social advocacy groups. Employment in the technology sector are classified under three categories: Professional and Business Services, Information, and Manufacturing. The latter category includes electronic and computer manufacturing. For further details of typical firms found in each sector, refer to the 2012 NAICS Manual (http://www.census.gov/cgi-bin/sssd/naics/naicsrch?chart=2012).

The Bureau of Labor Statistics (BLS) provides industry estimates for non-Bay Area metro areas. Their main industry employment estimates, the Current Employment Survey and Quarterly Census of Employment and Wages, do not provide annual estimates of farm employment. To be consistent, the metro comparison evaluates nonfarm employment for all metro areas, including the Bay Area. Industry shares are thus slightly different for the Bay Area between the historical trend and metro comparison sections.

The location quotient (LQ) is used to evaluate level of concentration or clustering of an industry within the Bay Area and within each county of the region. A location quotient greater than 1 means there is a strong concentration for of jobs in an industry sector. For the Bay Area, the LQ is calculated as the share of the region’s employment in a particular sector divided by the share of the nation’s employment in that same sector. Because BLS does not provide national farm estimates, note that there is no LQ for regional farm employment. For each county, the LQ is calculated as the share of the county’s employment in a particular sector divided by the share of the region’s employment in that same sector.

Professional, scientific and technical services have grown steadily, even amid macroeconomic volatility. The sector even grew in 2020 during the pandemic, as niche demand for HR consultants, accountants and engineers grew to address evolving consumer needs. Advertisers enjoyed heightened business as companies sought them out for pandemic-focused advertising campaigns. The need for quality, proficient and well-versed services in field such as corporate law were significant drivers of sector demand, as businesses sought out expert services to address core issues such as tax guidance. While inflationary spikes, which peaked at 9.1% in 2022 per the BLS, curtailed demand within the construction sectors, this trend began to show reversal in recent years. A 0.85% rate cut in 2024, per data from the Federal Reserve, provided critical respite to the construction space, as architects, engineers, lawyers and interior designers enjoyed rebounding interest in professional and technical services among residential and nonresidential clients alike. These broadly positive trends caused revenue to grow an annualized 3.1% to an estimated $3.3 trillion over the past five years, including an estimated 1.9% boost in 2025 alone. Nonetheless, the effects of elevated inflation are having a considerable effect on the overall sector, with profit stagnating in recent years. The gain in cloud computing and data analytics has greatly impacted the sector, prompting downstream businesses to hire consultants to upgrade outdated systems. Downstream markets’ attraction to these services has driven growth for IT consultants and management consultants. IT systems have become more prevalent as more consumers and businesses continue to embrace digitization and hybrid work conditions, with 28.2% of office workers operating in a hybrid work environment, per 2023 data from Forbes. Digital media has continued to shake up industries offering advertising-related services, as more emphasis is being placed on digital advertising to reach a wider range of downstream customers. The sector has also evolved as the Environmental, Social and Governance (ESG) changes have become increasingly important in guiding broader investment standards, facilitating higher specialization across business-facing industries such as lawyers and accountants. Moving forward, the overall sector faces steady growth prospects, fueled by anticipated growth in consumer spending and corporate profit. Higher government spending via major legislation such as the Bipartisan Infrastructure Law and the Inflation Reduction Act will provide consistent demand for engineers, architects, scientific and economic consultants over the next decade in the fields of new infrastructure projects and scientific R&D initiatives in areas such as renewable energy. Ongoing evolution in technological adoption, globalization and environmental needs will drive growth for many industry sectors. Servicers, such as advertisers, architects and engineers will begin adopting new innovations such as artificial intelligence (AI) and Blockchain to improve efficiencies. Over the next five years, revenue is expected to grow an annualized 2.6% to an estimated $3.7 trillion in 2030.