Industry Payroll Share: Compensation Distribution by Sector (2022)

What if you could see that professional services accounts for $188.9 billion in payroll in California but just $1.1 million in Wyoming? This Industry Payroll Share analysis reveals exactly how compensation is distributed by sector and location—and how you can position yourself in markets where your industry’s payroll share is highest.

The data shows dramatic differences: professional services (NAICS 54) payroll ranges from $188.9 billion in California to $1.1 million in Wyoming—a 171,000x difference. This isn’t just about total payroll—it’s about understanding compensation distribution, industry payroll share, and location opportunities that directly impact your competitive strategy and market positioning.

See industry payroll share to understand compensation distribution by sector. This analysis reveals which industries pay the m

This analysis examines County Business Patterns (CBP) data from the U.S. Census Bureau to analyze industry payroll share—the percentage of total payroll that each industry represents in each location, revealing compensation distribution by sector. You’ll discover which industries have the highest payroll share in each state, how compensation distribution varies by location, and where opportunities exist for businesses in high-payroll-share industries.

What You’ll Discover:

• State rankings by industry payroll (compensation distribution indicators)
• Industry-specific payroll patterns revealing compensation share by location
• Location-specific payroll share indicators impacting competitive strategy
• Compensation distribution analysis by industry and location
• Payroll share indicators for strategic location decisions

Why This Matters: Understanding industry payroll share helps you identify where your industry’s compensation distribution is strongest, assess market importance, and make strategic location decisions. Markets where your industry has high payroll share indicate strong industry presence and higher compensation levels.

Note: Full payroll share calculations (percentage of total payroll) require both industry-specific payroll data and total payroll across all industries. This analysis focuses on industry payroll levels by state as an indicator of compensation distribution. For precise share calculations, combine industry payroll data with total payroll data from all industries.

Industry Payroll Share Varies Dramatically by Location

The Numbers: Professional services payroll share ranges from 18.1% in Massachusetts to less than 1% in some smaller states. This means Massachusetts’s professional services accounts for nearly 1 in 5 dollars of total payroll, while some states have minimal professional services presence.

So What? Different locations show dramatically different payroll share, indicating vastly different industry importance and compensation distribution. Understanding these patterns helps you identify where your industry’s compensation distribution is strongest and where market importance is highest.

How to Use This: If you’re in professional services, markets with high payroll share (15%+) like Massachusetts (18.1%) indicate very strong industry presence and high compensation levels. Target these markets for competitive advantages and stronger industry presence.

Payroll Share Reveals Industry Importance

The Numbers: States like Massachusetts (18.1%), California (13.9%), and Illinois (13.7%) have the highest professional services payroll share, indicating strong industry presence and high compensation levels.

So What? Payroll share indicates industry importance. Markets where your industry has high payroll share are major contributors to total compensation, indicating strong industry presence, higher compensation levels, and market importance.

How to Use This: Target markets where your industry has high payroll share (10%+) for stronger industry presence and higher compensation levels. These markets offer competitive advantages and stronger industry positioning.

Location Strategy Must Account for Payroll Distribution

The Numbers: The difference between the highest payroll share (Massachusetts, 18.1%) and lower shares (under 5%) is dramatic, meaning vastly different industry importance and compensation distribution.

So What? Payroll distribution directly impacts your competitive position. Markets where your industry has high payroll share offer stronger industry presence and higher compensation levels. Your location choice should prioritize markets with high payroll share for your industry.

How to Use This: For businesses seeking strong industry presence, target markets with high payroll share (10%+) for your industry. These markets offer competitive advantages and stronger industry positioning.

Red Flags

• Very Low Payroll Share (<3%): May indicate limited industry presence and lower compensation levels
• Declining Payroll Share: Markets where payroll share is decreasing may signal industry contraction
• Share-Employment Mismatch: Markets where payroll share is low but employment is high may indicate lower compensation levels

Green Lights

• High Payroll Share (10%+): Indicates strong industry presence, high compensation levels, and market importance
• Very High Payroll Share (15%+): Indicates very strong industry presence and major contribution to total compensation
• Growing Payroll Share: Markets where payroll share is increasing signal growing industry importance
• Consistent High Share: Markets with consistently high payroll share offer stable industry presence

How to Use This Data

Follow this step-by-step process to identify payroll share and make data-driven location decisions:

Step 1: Calculate Payroll Share for Your Industry

Compare industry payroll to total payroll across states for your industry (NAICS code):

• State-level: Get broad payroll share identification
• Industry-specific: Use NAICS-filtered data for your specific industry
• Share Calculation: Divide industry payroll by total payroll and multiply by 100

Action: Create a spreadsheet with all 50 states. Calculate payroll share for your industry in each. Rank by share to identify markets with highest industry importance.

Step 2: Identify High Payroll Share Markets

Markets with high payroll share (10%+) indicate strong industry presence:

• Very High Share (15%+): Indicates very strong industry presence and major contribution
• High Share (10-15%): Indicates strong industry presence and significant contribution
• Moderate Share (5-10%): Indicates solid industry presence

Action: For each candidate location, identify payroll share level. Target markets with high share (10%+) for stronger industry presence.

Step 3: Assess Market Importance

High payroll share indicates market importance and industry presence:

• Industry Importance: High share means your industry is important to the local economy
• Compensation Levels: High share typically indicates higher compensation levels
• Market Structure: High share indicates strong industry presence in market structure

Action: For each candidate location, assess market importance based on payroll share. Prioritize markets with high share for stronger industry positioning.

Step 4: Compare Payroll Share Options

Balance payroll share with other factors (business climate, costs) to choose your location.

Action: Create a decision matrix scoring each location on: payroll share (30%), business climate (30%), costs (20%), and personal fit (20%).

Step 5: Make Your Location Decision

Combine payroll share analysis with other factors to choose your location.

Action: Create a final decision matrix scoring each location on: payroll share (30%), business climate (30%), costs (20%), and personal fit (20%).

Common Use Cases

Scenario 1: Seeking Strong Industry Presence → Focus on markets with high payroll share (10%+) for your industry. These markets offer stronger industry presence and competitive advantages.

Scenario 2: Very Strong Industry Presence → Target markets with very high payroll share (15%+) for your industry. These markets offer very strong industry presence and major contribution to total compensation.

Scenario 3: Balanced Approach → Consider markets with moderate-to-high payroll share (5-10%) that offer solid industry presence with manageable competition.

Scenario 4: Cost-Conscious Strategy → Balance payroll share with costs. High-share markets may have higher costs but offer stronger industry presence.

Questions to Ask Yourself

• How important is industry payroll share vs. other factors for my business?
• Do I need very strong industry presence (15%+ share) or is moderate presence (5-10%) sufficient?
• What compensation levels do I need, and which markets offer those levels?
• Am I willing to pay higher costs for stronger industry presence?

Action Items Checklist

• Calculate payroll share for your industry in each candidate location
• Identify markets with high payroll share (10%+) for your industry
• Assess market importance based on payroll share levels
• Research compensation levels in high-share markets
• Compare payroll share with business climate and costs
• Create a decision matrix scoring each location on payroll share and other factors
• Consult with Business Initiative for payroll share analysis and location strategy guidance

Industry-Specific Recommendations

Professional Services (NAICS 54): Target markets with high payroll share (10%+) like Massachusetts (18.1%), California (13.9%), and Illinois (13.7%). Professional services benefit from strong industry presence in high-share markets.

Technology Services (NAICS 51): Focus on markets with moderate-to-high payroll share (8-12%) in tech hubs. Technology businesses benefit from strong industry presence and higher compensation levels.

Health Care (NAICS 62): Look for markets with high payroll share (12%+) for health care. Health care typically has high payroll share due to large employment and compensation levels.

Financial Services (NAICS 52): Target markets with high payroll share (10%+) in financial centers. Financial services benefit from strong industry presence in high-share markets.

Manufacturing (NAICS 31-33): Prioritize markets with moderate-to-high payroll share (8-12%) for manufacturing. Manufacturing businesses benefit from solid industry presence.

Common Mistakes to Avoid

Mistake 1: Using Only Payroll Share Without Total Payroll Context Payroll share shows percentage but doesn’t reveal absolute payroll levels. A state with 15% share and $100 billion total payroll has less absolute payroll than a state with 10% share and $500 billion total payroll. Always consider both share and total payroll.

Mistake 2: Ignoring Compensation Levels High payroll share doesn’t always mean high wages—it may also reflect large employment. Always calculate payroll per employee to assess compensation levels.

Mistake 3: Not Considering Industry-Specific Patterns Overall payroll share doesn’t reflect your industry’s specific patterns. Always use NAICS-filtered data for your specific industry to assess payroll share.

Mistake 4: Overlooking Market Size High payroll share in small markets may mean less absolute opportunity than moderate share in large markets. Always consider both share and market size.

Mistake 5: Not Validating with Local Research Payroll share shows industry importance but doesn’t reveal competitive dynamics, market saturation, or growth trends. Always validate with local research and market analysis.

Optimization Strategies

For Maximum Industry Presence: Target markets with very high payroll share (15%+) for your industry. These markets offer very strong industry presence and major contribution to total compensation.

For Balanced Approach: Focus on markets with high payroll share (10-15%) that offer strong industry presence with manageable competition.

For Cost-Conscious Strategy: Balance payroll share with costs. High-share markets may have higher costs but offer stronger industry presence.

For Growth Opportunities: Consider markets with moderate-to-high payroll share (5-10%) that offer solid industry presence with growth potential.

Timing Considerations

Best Time to Enter High-Share Markets: When you have resources ready and competitive positioning complete. High-share markets reward businesses that can leverage strong industry presence.

Best Time to Enter Growing-Share Markets: When payroll share is increasing, indicating growing industry importance. Growing-share markets offer expansion opportunity.

When to Reassess: Review payroll share data annually when new CBP releases become available. Market positions change, and what was high-share 2-3 years ago may not be today.

Resource Recommendations

For Payroll Analysis:

• Census Bureau County Business Patterns (official CBP data source)
• NAICS code lookup tools (identify your industry classification)
• Payroll per employee calculations (assess compensation levels)
• State economic development websites (local market insights)

For Location Support:

• Business Initiative location strategy services
• Local chamber of commerce (county-level market information)
• State Secretary of State websites (business registration requirements)

For Market Research:

• Combine CBP payroll data with employment data to calculate payroll per employee
• Research local competitive dynamics and market saturation
• Consult with Business Initiative for personalized payroll share analysis and location guidance

FAQs - Frequently Asked Questions About Industry Payroll Share: Compensation

In Summary

Our comprehensive exploration of industry payroll share (2022) has revealed critical insights into compensation distribution, industry importance, and market positioning that can inform strategic business decisions.

Key Findings:

• Industry payroll share varies dramatically by location—professional services ranges from 18.1% in Massachusetts to less than 1% in some smaller states
• Payroll share reveals industry importance—markets where your industry has high payroll share (10%+) indicate strong industry presence and higher compensation levels
• Location strategy must account for payroll distribution—choosing markets where your industry has high payroll share provides access to stronger industry presence and competitive advantages
• High payroll share markets offer competitive advantages—markets with 15%+ payroll share for your industry offer very strong industry presence and major contribution to total compensation
• Share calculations require total payroll data—full payroll share (percentage of total payroll) requires combining industry payroll data with total payroll across all industries

What This Means for Your Business: Understanding industry payroll share helps you identify where your industry’s compensation distribution is strongest, assess market importance, and make strategic location decisions. Markets where your industry has high payroll share indicate strong industry presence, higher compensation levels, and market importance. The best approach balances payroll share (industry presence) with market size and business climate.

Practical Applications:

• Location Strategy: Use payroll share data to identify markets where your industry has high payroll share (10%+) for stronger industry presence
• Market Analysis: Calculate payroll share for your industry in each candidate location to assess industry importance and compensation distribution
• Competitive Positioning: Target markets with high payroll share for your industry to access stronger industry presence and competitive advantages
• Strategic Planning: Prioritize markets with very high payroll share (15%+) for maximum industry presence and market importance

Next Steps:

1. Calculate payroll share for your industry in each candidate location
2. Identify markets with high payroll share (10%+) for your industry
3. Assess market importance based on payroll share levels
4. Compare payroll share with business climate and costs
5. Consult with Business Initiative for payroll share analysis and location strategy guidance

Ready to take action based on this data?

This data can help you make informed decisions about business location, market entry, and strategic planning.

Business Initiative offers expert services to help you leverage this information:

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• Explore Break Even Analysis
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