When considering what industry sectors to prioritize for workforce and economic development efforts it is important to look beyond basic employment numbers. This is because, while a sector might have a lot of jobs, it might not actually be producing a lot of income for the region, which is also very important for overall economic health and vitality.
Sectors that generate more income per worker tend to have much bigger ripple effects, which means that a lot more people are impacted as a result of direct and indirect spending.
What we’ve done here is to list the 2-digit NAICS sectors by employment and sales.
Here are some basic observations:
1. Manufacturing is still king
At $4.4 trillion, manufacturing is by far the biggest income generator in our nation, despite a fairly rapid decline in employment (manufacturing has slipped to fourth in overall employment). Despite these trends manufacturing still manages to far outperform all other industries in terms of pure capital creation. Each individual that works in manufacturing generates roughly $370,000 per year. This is a very important fact to consider in a day and age when many folks advocate for improving the service sectors. Should we consider trying to retain manufacturing? What will the impacts be if we lose too much of our manufacturing base?
2. Government: high on employment but low on productivity
The government sector is twice the size of the manufacturing sector (in terms of employment) but only produces $3 trillion in earnings, which is largely a result of tax dollars, or $130K in income per worker. Government is a bit trickier to analyze using the sales per worker criteria because the government is essentially capturing tax dollars and spending them on various services (education, military, infrastructure). Government can provide a lot of stability to regional economies, but it’s not really a growth industry (unless you’re in DC!).
3. Finance and insurance and utilities – low employment but high sales/job ratios
The utility and finance sectors have lower employment (ranked 8th and 21st, respectively) but rather large sales to job ratios (250K per worker and 650K per worker, respectively). Keep in mind, the utility sector has a lot of overhead and equipment that factor into the equation. There is a huge amount of capital in play in this sector that requires a relatively small workforce. Finance and insurance can generate very large amounts of capital, and they have much less overhead.
4. Health care is not a ‘growth industry’
Health care has become the second-largest employment sector in the country, yet it produces only $90K in sales per worker, which is pretty low compared to manufacturing, information, or finance. Basically, the health care sector is important for obvious reasons, but it’s not really an “economic driver” that is going to propel our nation into greater prosperity.
5. Retail trade vs. information
The retail trade and information industry sectors have similar income generation ($1.19 trillion and $1.13 trillion, respectively). The thing to note about this is the relative employment size for each industry. Retail trade is five times the size of information in terms of employment, yet information generates a comparable amount of money. This is why every economic developer is looking for “the next Facebook” and not “the next Napa Auto Parts.” Retail trade only generates $70K per worker while information generates $350K per worker.
|Industry||Name||Sales (Millions)||Jobs||Employment Rank|
|52||Finance and Insurance||$2,335,933.01||9,276,170||8|
|62||Health Care and Social Assistance||$1,671,157.72||18,983,244||2|
|54||Professional, Scientific, and Technical Services||$1,482,841.09||11,711,344||6|
|53||Real Estate and Rental and Leasing||$1,391,188.10||7,374,135||11|
|48-49||Transportation and Warehousing||$770,349.92||6,084,630||12|
|72||Accommodation and Food Services||$691,474.95||11,872,079||5|
|56||Administrative and Support and Waste Management and Remediation Services||$601,899.91||10,138,827||7|
|81||Other Services (except Public Administration)||$502,463.48||8,872,041||10|
|55||Management of Companies and Enterprises||$376,055.18||1,935,179||19|
|11||Agriculture, Forestry, Fishing and Hunting||$360,520.71||3,456,096||17|
|21||Mining, Quarrying, and Oil and Gas Extraction||$355,245.81||1,410,588||20|
|71||Arts, Entertainment, and Recreation||$208,984.06||3,780,900||16|
The following table is organized by sales per worker. Sales per worker is derived by dividing the total sales for an industry by total employment for a particular year.
|Industry Sector||Sales Per Worker|
|Finance and Insurance||250K|
|Mining, Quarrying, and Oil and Gas Extraction||250K|
|Real Estate and Rental and Leasing||190K|
|Management of Companies and Enterprises||190K|
|Professional, Scientific, and Technical Services||130K|
|Transportation and Warehousing||130K|
|Agriculture, Forestry, Fishing and Hunting||100K|
|Health Care and Social Assistance||90K|
|Accommodation and Food Services||60K|
|Administrative and Support and Waste Management and Remediation Services||60K|
|Other Services (except Public Administration)||60K|
|Arts, Entertainment, and Recreation||60K|
If you have questions or would like to see this data for your area, please email Rob Sentz.
Illustration by Mark Beauchamp