Economic Sectors - The Service Industry

The service industry combines two of the supersectors identified above: Professional and Business Services (NAICS 54–56) and Other Services (NAICS 81). The service industry includes businesses whose main function is to provide a professional or trade service rather than a product. Professional and business services include legal, accounting, architectural, engineering, advertising, marketing, translation, and veterinary services. This sector also comprises those who manage companies and all of the administrative support needed for a business to operate. In addition, security, surveillance, cleaning, and waste disposal services are also tracked in this sector. The second branch of the service industry, Other Services, includes such jobs as repairing equipment and machinery, administering religious activities, operating dry cleaning services, conducting personal care, death care, and pet care services, and supplying photo processing services. In 2004 the professional and business services supersector accounted for about 16% of all U.S. businesses, while other services made up 12.6% of business establishments, according to the BLS in Industry at a Glance. Representing approximately two-thirds of GDP, the services sector grew 2% in 2002 and 3.2% in 2003, according to a press release issued December 20, 2004, by the Bureau of Economic Analysis.

Revenue of Service Industries

Table 2.2 shows estimated revenue for taxable employer firms in different industries within the professional and business services sector between 1998 and 2003. In 2003 this sector generated $864.5 billion in revenue, with legal services accounting for $187.5 billion, accounting, tax preparation, bookkeeping, and payroll services earning $80.6 billion, architecture, engineering, and related services totaling $168.8 billion, and advertising and related services bringing in $66.7 billion.

Taxable firms offering administrative, support, and waste management services generated an additional $436.8 billion in 2003, according to the 2003 Service Annual Survey of the U.S. Census Bureau. This included $116 billion for employment services, including placement and temporary help services; $53.2 billion for such business support services as document preparation, telephone answering services, and telemarketing; $27.5 billion for travel arrangement and reservation services; $30.3 billion for investigation and security services; and almost $50 billion for services to buildings and dwellings, including exterminating, pest control, janitorial, and carpet cleaning services.

Table 2.3 lists estimated revenue for taxable employer firms in the other services sector between 1998 and 2003. In this sector automotive repair and maintenance businesses generated $80 billion in revenue in 2003. During that same year, businesses that repair and maintain electronic and precision equipment earned $17.8 billion; personal and household goods repair services, including furniture reupholstery and shoe repair shops, totaled $13 billion; hair, nail, and skin care businesses brought in $15.7 billion; death care businesses had revenues of $15 billion; and dry-cleaning and laundry services totaled $20.5 billion.

Employment and Wages

According to Industry at a Glance, the combined service sectors made up approximately 15.7% of the workforce in 2003, with professional, scientific, and technical services accounting for about 5.2%, management of companies about 1.3%, administrative, support, and waste management services about 5.9%, and other services about 3.3%. Jobs within the professional and business services sector hit their highest levels in 2000, declined slightly, and then leveled off in 2003, according to the Bureau of Labor Statistics. (See Figure 2.5.) Industry at a Glance reported that professional and business services averaged 15,997,000 employees in 2003, down from a peak of 16,666,000 in 2000; other services counted 5,393,000, employees in 2003, which the BLS identified as "an all-time high."

The increasing strength of the service sector within the American economy in terms of revenue was reflected in the wages earned by workers. The wages for those in nonsupervisory roles within professional and business services averaged $17.20 per hour in 2003, higher than the $15.35 national average for nonsupervisory production workers in private industry. However, when the national unemployment rate reached 6% in 2002, the unemployment rate for professional and business services workers had climbed to 8.2%. By October 2004, when the national unemployment rate had dropped to 5.5%, professional service workers still experienced a somewhat higher unemployment rate of 6.3%.