Design Services: Self-Employed vs. Salaried Employees

Background: EMSI recently released four new datasets that let our users look at different worker categories (like covered employees and the self-employed). This is a pretty cool development. In this post, we look at a few industries that display why this update is so helpful.

Since most businesses are now online or using computers as their primary production tool, the demand for what we will refer to as “design services” is strong. Everyone from small businesses to large corporations uses design — for mocking up a new product, putting a marketing campaign together, building and maintaining a website, or developing a web-based application. Using our latest dataset, let’s take a closer look at the key design services industries.

To better understand the characteristics of the design industries, we’ll consider the five primary sub-industries: industrial design services (NAICS 541420), graphic design services (NAICS 541430), other specialized design services (NAICS 541490), custom computer programming services (NAICS 541511), and computer systems design services (NAICS 541512).

For each sector, we’ll examine two classes of worker: salaried employees (people who are on the payroll at companies) and the self-employed (people who work for themselves and have no employees).

INDUSTRIES OVERVIEW

If we consider both salaried employees and self-employed together, these five sub-industries grew by 28% (an additional 379,000 jobs) from 2001-2012. This growth is pretty impressive given how hard the recession hammered many industries.

EMSI estimates about 1.74 million total jobs (salaried employees and self-employed) across these five industries. A vast majority of these jobs now fall in the computer programming and design sectors. Over 200,000 establishments (places of work) are captured under these industries. And industry earnings are pretty good — topping $100K per year. Note: Industry earnings take into account all the earnings from all the occupations within these industries; it doesn’t mean that everyone who works in this sector is actually making this kind of money.

About 58% of the workers in these five industries are between 25 and 44 and 67% are male, which likely has a lot to do with the number of computer programmers, engineers, and analysts captured in this data.

Below is a visual taken from Analyst.

EMPLOYEES VS. SELF-EMPLOYED

As we mentioned in the summary, we can now more clearly break out employees from the self-employed. Again, employees are workers who receive wages and salaries (from companies) for the work that they perform. This dataset is captured and reported by the Bureau of Labor Statistics and does not include workers who are self-employed. The self-employed are people who work as independent consultants/contractors, and are captured and reported by the Census Bureau’s American Community Survey and other sources.

Read more about the characteristics of the self-employed.

This is an important distinction that will ultimately help us understand how the different types of workers are performing in the labor market. The rest of our analysis will break out the two classes of workers so that we can see the differences.

1. Employees

This first table provides a look at those design industry workers who are employees. The main source of this data is BLS’ QCEW.

Observations:

• Computer systems design services and custom computer programming services represent over 94% of the jobs for the industries. Together, these two industries have added some 360,000 jobs since ’01, and have the highest industry earnings — each over $110,000 per year. These are good sectors to consider if you’re hunting down a career.

• With 67% growth since ’01, industrial design services has had the best overall growth, although it is a smaller sector by comparison.

• Graphic design services, the only group to decline from 2001-2012, dropped nearly 19,000 jobs or 23% of its workforce. It is also the lowest-paying sector.

2. Self-Employed

This table uses the same industries, but shows only the workers classified as self-employed. These workers are captured by the American Community Survey.

A few striking differences jump out between the wage-and-salary jobs and the self-employed occupations.

• First, the largest employment category for the self-employed is graphic design services. It is also the only industry out of the five we selected where more people are self-employed (67,000 jobs) than are employed as wage and salary workers (64,000 jobs). All the other industries have significantly more jobs in the wage-and-salary category.

• Also notice how self-employed graphic design services grew by 13% (+7,500 jobs) while the wage-and-salary workers declined by 23% or 19,000 jobs. It would seem that a lot of companies are shedding these employees and hiring them back as independent contractors.

• Overall employment is much lower for the self-employed. There are about 1,550,000 wage and salary jobs for computer and design services compared to just 186,000 for the self-employed. This has a lot to do with the fact that computer programming and computer design services have a ton of wage and salary workers, which means there are some pretty big companies in these two sectors.

• Also notice the vast difference in pay. Self-employed jobs have significantly lower industry earnings as compared to their wage and salary counterparts ($30K compared to $110K), largely because the self-employed frequently work part-time. In addition, computer programming and computer design services are really pushing up the earnings figures for the wage-and-salary workers. However, even without those two, wage-and-salary workers are earning a lot more.

• The self-employed enjoyed 18% growth over the same time period, which is good, but not as high as 29% growth for wage-and-salary workers.

TRENDS — EMPLOYEES

Computer and design services has had steady growth since the early 2000s. The recession didn’t slow it down much, either. (Again, a lot of this growth is due to impressive growth in computer programming and design.)

TRENDS — SELF-EMPLOYED

Self-employed computer and design workers saw stellar growth from 2001-2004, but that growth has since leveled off. The recession appears to have hit these jobs harder than the previous group.

DEMOGRAPHIC COMPARISON

Here is a quick look at the demographic differences.

Most designers are male — especially the salaried designers. Sixty-seven percent of salaried employees are male, compared to 62% of self-employed. The percentages go the other way for women. More females are self-employed (38%) than salary (33%).

Nearly 60% of the salaried employees are between the ages of 25-44, while slightly less then half of all the self-employed designers are 25-44. Basically, the younger workers tend to work for someone besides themselves. Nearly 50% of the self-employed designers are 45 and above, which is much higher than the salaried workers (only 34%) in that same age group.

STAFFING PATTERNS

Up to this point we’ve been talking about industries, which are categories of economic activity. But which actual jobs are we referring to? We can get an idea by analyzing the overall staffing patterns for wage-and-salary workers and the self-employed. In this case we will aggregate all the industries together. If you want to look at a staffing pattern for a particular industry, please contact us.

Employees

These are the top five occupations that show up in the staffing pattern. Not surprisingly, the wage-and-salary category is dominated by computer occupations. (Remember, 94% of the employment was in computer industries.)

A few observations:

• About 12% of all employment across these sectors is computer software engineers, applications, which is closely followed by computer systems analysts and systems software engineers.

• Engineers are in high demand here, just as they are in many areas of our economy.

• The most common and in-demand jobs require a bachelor’s degree.

Self-Employed

On the flip side, nearly 20% of self-employed workers are graphic designers. Again, this isn’t a big shock considering that graphic design services is the largest industry sector for the self-employed.

Take a look at the top five jobs in the industry:

• Notice the strong presence of computer-related occupations. Network systems & data communications, computer systems analysts, and computer programmers round out the top five most common occupations.

• Like the salary occupations, the most common, in-demand jobs require a bachelor’s degree.

TOP CITIES FOR DESIGN SERVICES

Here are some observations about how design jobs have performed in the larger metros over the past 11 years. NOTE: We’ve limited this analysis to cities that have at least 4,000 design jobs.

Most Jobs

• The Washington, D.C. metro, perhaps surprisingly, has the most design jobs (161,000). A lot of these are likely tied to government-related work. Think about the huge amount of computer programming and systems design services used by the federal government.

• The New York MSA is next (135,000 jobs). NYC is a huge center for all sorts of media, which is a heavy consumer of design services.

• San Francisco (73,000 jobs) is third on the list, which is also not surprising given the abundance of tech companies.

• The Los Angeles metro is No. 4 (67,000 jobs). This probably relates to the media and entertainment industries.

• Other cities with large amounts of design jobs are Boston (60,000), Chicago (56,000), and San Jose (55,000).

Most New Jobs

• Over the past 11 years, the D.C. metro has added the most new jobs (48,000), more than twice what NYC has added.

• The NYC metro is second with 21,000 new jobs since 2001.

• San Francisco added 15,000 new positions.

• Columbus, which was a bit of surprise to us, added 11,000 new design jobs since 2001. Seattle and Dallas also added 11,000 jobs in this same time period. That could be worth a closer look.

• Baltimore and Philadelphia both added about 10,000 design jobs.

Fastest Growth

Here are the gazelles — the cities that have experienced the fastest growth over the past 10 years. Notice that the bigger players (D.C., NYC, LA, San Fran) don’t make the list.

• Tucscon grew by 131%
• Buffalo grew by 100%
• Jacksonville grew by 90%
• Richmond grew by 84%
• Columbus grew by 81%
• Raleigh-Cary grew by 78%
• Las Vegas grew by 73%

Greatest Concentration

These are the cities with the higher per capita presence of these jobs. You could think of this as a measure of specialization.

• San Jose-Sunnyvale-Santa Clara (5.77). Employment in the design industries is almost six times greater here than in your typical region.

• D.C. metro (4.01). Design employment in D.C. is four times greater than the typical region.

• Boulder, Colorado (3.38). Boulder is third on the list for design employment concentration.

• Huntsville, Alabama (2.88). Huntsville is a surprising fourth. Its spot in the top five likely is related to services being rendered to the aerospace industries.

• San Francisco-Oakland-Fremont (2.63). This seems odd. You would expect a city like San Francisco to be ahead of Boulder and Huntsville.

• Colorado Springs (2.59). Another surprise.

Highest Pay

These are the cities that offer the highest pay for these jobs. (Again, these are industry earnings, which factor in a bunch of occupations.) We’re curious about the relatively high pay scales at the top of the list. Also, note that a lot of the wages are driven by, among others, in-demand software engineer/application engineer jobs.

• San Jose – $174K
• Boston – $143K
• San Francisco – $135
• New Haven, CT – $130K
• Bridgeport, CT – $125K
• D.C. – $124K
• NYC – $114K
• Baltimore – $114K
• Huntsville - $107

Conclusion

Breaking out the different classes of workers is enormously helpful for studying the industries and occupations across different regions. Here are the big takeaways from this post:

• Salaried employees are seeing greater stability, job growth, and wages compared to their self-employed counterparts.

• Computer engineering is a great target if you’re after high wages and steady employment.

• A large number of graphic designers are becoming self-employed.

• Younger workers tend to be salaried employees, while older workers seem to be moving into the self-employed categories.

• The D.C. metro is probably the best city for designers. After that, New York, San Francisco, San Jose — and even cities like Hunstville and Columbus — are worth a look.

Data and analysis from this report was created using Analyst, EMSI’s web-based labor market tool. Please contact Rob Sentz ([email protected]) if you have further questions. Follow us @desktopecon.

Read more at Economic Modeling Specialists (EMSI blog)