The Industry Payroll Concentration: Compensation Clustering by Sector (2022)

What if you could see that California has $188.9 billion in professional services payroll while Wyoming has $904,286—revealing exactly where compensation is clustered by sector? This Industry Payroll Concentration analysis reveals compensation clustering by sector—and how you can position yourself in markets with the highest payroll concentration.

The data shows dramatic differences: professional services (NAICS 54) payroll ranges from $188.9 billion in California to $904,286 in Wyoming—a 209,000x difference. This isn’t just about geography—it’s about understanding payroll concentration, compensation clustering, and wage concentration that directly impact your location strategy and competitive positioning.

Key Takeaways

• Payroll concentration varies dramatically by location—Professional services payroll ranges from $188.9 billion in California to $904,286 in Wyoming (209,000x difference), revealing clear compensation clustering patterns
• High payroll concentration indicates compensation clustering—Markets with high payroll concentration ($50B+ payroll) indicate strong compensation clustering with concentrated wage activity
• Location strategy must account for payroll concentration—Choosing markets with high payroll concentration provides access to compensation clusters and wage concentration
• High-concentration markets offer compensation benefits—Markets with very high payroll concentration ($50B+ payroll) offer strong compensation clustering with concentrated wage activity
• Balanced approach often offers best opportunity—Markets with high payroll concentration ($20B-$50B payroll) and moderate cost of living offer compensation clustering with manageable costs

See industry payroll concentration to understand compensation clustering by sector. This analysis reveals where indus

This analysis examines County Business Patterns (CBP) data from the U.S. Census Bureau to analyze industry payroll concentration—compensation clustering by sector, revealing where industries concentrate payroll and which sectors show strong compensation clustering. You’ll discover which states have the highest payroll concentration, how compensation clustering varies by industry, and where opportunities exist for businesses in high-concentration markets.

What You’ll Discover:

• State rankings by payroll concentration (compensation clustering indicators)
• Industry-specific payroll patterns revealing compensation clustering by location
• Location-specific concentration indicators impacting competitive strategy
• Industry payroll concentration analysis by sector and location
• Compensation clustering indicators for strategic business decisions

Why This Matters: Understanding industry payroll concentration helps you identify markets with high compensation clustering, assess wage concentration patterns, and make strategic location decisions. Markets with high payroll concentration offer compensation clusters that support business growth.

Payroll Concentration Varies Dramatically by Location

The Numbers: Professional services payroll ranges from $188.9 billion in California to $904,286 in Wyoming—a 209,000x difference. This means California has 209,000x more payroll than Wyoming, indicating vastly different compensation clustering patterns.

So What? Different locations show dramatically different payroll concentration, indicating vastly different compensation clustering and wage concentration. Understanding these patterns helps you identify where compensation clustering is strongest and where compensation clusters exist.

How to Use This: If you’re seeking high compensation clustering, markets with very high payroll concentration ($50B+ payroll) like California ($188.9B), Texas ($85.7B), and New York ($81.4B) indicate very high compensation clustering. Target these markets for access to compensation clusters and wage concentration.

High Payroll Concentration Indicates Compensation Clustering

The Numbers: States like California ($188.9 billion), Texas ($85.7 billion), and New York ($81.4 billion) have the highest professional services payroll concentration, indicating strong compensation clustering and wage concentration.

So What? Payroll concentration indicates compensation clustering. Markets with high payroll concentration typically have concentrated wage activity, compensation clusters, and competitive advantages. These markets offer better access to compensation clusters than lower-concentration markets.

How to Use This: Target markets where your industry has very high payroll concentration ($50B+ payroll) for access to compensation clusters. These markets offer compensation clustering, wage concentration, and competitive advantages that lower-concentration markets may not provide.

Location Strategy Must Account for Payroll Concentration

The Numbers: The difference between the highest-concentration state (California, $188.9 billion) and lower-concentration states (Wyoming, $904,286) is 209,000x, meaning dramatically different compensation clustering and wage concentration.

So What? Payroll concentration directly impacts your competitive position. Markets with high payroll concentration offer compensation clusters and wage concentration. Your location choice should prioritize markets with high payroll concentration for your industry.

How to Use This: For businesses requiring compensation clustering, target markets with very high payroll concentration ($50B+ payroll) for your industry. These markets offer compensation clusters, wage concentration, and competitive advantages.

Red Flags

• Very Low Payroll Concentration (<$1B payroll): May indicate limited compensation clustering and lack of compensation clusters
• Concentration-Cost Mismatch: Markets with high payroll concentration but also very high cost of living may create challenging cost dynamics
• Declining Payroll Concentration: Markets where payroll concentration is decreasing may signal declining compensation clustering

Green Lights

• Very High Payroll Concentration ($50B+ payroll): Indicates strong compensation clustering with concentrated wage activity and compensation clusters
• High Concentration with Growing Trends: Markets with high payroll concentration and growing trends signal expanding compensation clustering
• Consistent High Concentration: Markets with consistently high payroll concentration offer stable compensation clustering
• Diverse High-Concentration Industries: Markets with high payroll concentration across multiple industries offer stability and multiple compensation clustering sources

How to Use This Data

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

Step 1: Identify High-Concentration Markets for Your Industry

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

• State-level: Get broad payroll concentration identification
• Industry-specific: Use NAICS-filtered data for your specific industry
• Concentration Ranking: Rank states by payroll to identify highest-concentration markets

Action: Create a spreadsheet with all 50 states. List payroll for your industry in each. Rank by concentration to identify highest-concentration markets (strong compensation clustering).

Step 2: Assess Payroll Concentration Benefits

High payroll concentration indicates strong compensation clustering and wage concentration:

• Compensation Clustering: Access to compensation clusters and wage concentration
• Wage Concentration: Competitive advantages from high payroll concentration
• Market Competitiveness: Strong economies with compensation clusters

Action: For each high-concentration market, assess payroll concentration benefits. Identify markets with compensation clustering, wage concentration, and competitive advantages.

Step 3: Evaluate Payroll Concentration vs. Cost of Living

Balance payroll concentration benefits with cost of living:

• High Concentration, High Cost: May offer compensation clusters but also high cost of living
• High Concentration, Moderate Cost: Offers best balance of compensation clustering and manageable costs
• Moderate Concentration, Low Cost: May offer some compensation clustering with lower costs

Action: For each high-concentration market, evaluate payroll concentration vs. cost of living. Choose markets that offer compensation clusters with manageable costs.

Step 4: Choose Your Payroll Concentration Location

Select markets with high payroll concentration that match your business needs.

Action: Create a decision matrix scoring each location on: payroll concentration (40%), compensation clustering (30%), and cost of living (30%). Choose the location with highest score.

Step 5: Make Your Location Decision

Combine payroll concentration analysis with other factors (business climate, market size) to choose your location.

Action: Create a final decision matrix scoring each location on: payroll concentration (30%), compensation clustering (30%), business climate (20%), and market size (20%).

Common Use Cases

Scenario 1: Seeking High Compensation Clustering → Focus on markets with very high payroll concentration ($50B+ payroll). These markets offer strong compensation clustering with concentrated wage activity and compensation clusters.

Scenario 2: Balanced Concentration and Cost → Target markets with high payroll concentration ($20B-$50B payroll) and moderate cost of living. These markets offer compensation clustering with manageable costs.

Scenario 3: Emerging Concentration Opportunity → Consider markets with moderate payroll concentration ($5B-$20B payroll) but growing trends. These markets may offer emerging compensation clustering with lower costs.

Scenario 4: Risk-Averse Strategy → Focus on markets with moderate-to-high payroll concentration ($20B-$50B payroll) that offer proven compensation clustering with stable costs.

Questions to Ask Yourself

• How important is compensation clustering vs. cost of living for my business?
• Do I need very high payroll concentration ($50B+ payroll) or is moderate concentration ($5B-$20B) sufficient?
• What payroll concentration benefits do I need—compensation clustering, wage concentration, or competitive advantages?
• Am I entering a validated high-concentration market or an emerging one?

Action Items Checklist

• Identify high-concentration markets for your industry by ranking states by payroll
• Assess payroll concentration benefits (compensation clustering, wage concentration) in high-concentration markets
• Evaluate payroll concentration vs. cost of living for each candidate market
• Research payroll concentration dynamics and competitive positioning in high-concentration markets
• Compare payroll concentration benefits with business climate and market size
• Create a decision matrix scoring each location on payroll concentration, compensation clustering, and cost of living
• Consult with Business Initiative for payroll concentration analysis and location strategy guidance

Industry-Specific Recommendations

Professional Services (NAICS 54): Target markets with very high payroll concentration ($50B+ payroll) like California ($188.9B), Texas ($85.7B), and New York ($81.4B). Professional services benefit from high payroll concentration with strong compensation clustering.

Technology Services (NAICS 51): Focus on markets with high payroll concentration in tech hubs. Technology businesses benefit from high payroll concentration with tech compensation clustering.

Financial Services (NAICS 52): Look for markets with very high payroll concentration ($50B+ payroll) for financial services. Financial services businesses benefit from high payroll concentration with financial compensation clustering.

Health Care (NAICS 62): Consider markets with high payroll concentration ($20B-$50B payroll) for health care. Health care businesses benefit from payroll concentration with health care compensation clustering.

Manufacturing (NAICS 31-33): Prioritize markets with high payroll concentration for manufacturing. Manufacturing businesses benefit from payroll concentration with manufacturing compensation clustering.

Common Mistakes to Avoid

Mistake 1: Using Only Payroll Concentration Without Cost of Living Context Payroll concentration shows compensation clustering but doesn’t reveal cost of living, purchasing power, or competitive dynamics. Always consider both concentration and cost of living when assessing location opportunities.

Mistake 2: Ignoring Cost of Living in High-Concentration Markets High payroll concentration may indicate strong compensation clustering but also high cost of living. Don’t ignore cost of living—high-concentration markets may have high costs that offset compensation clustering benefits.

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

Mistake 4: Overlooking Market Dynamics Payroll concentration shows compensation clustering but doesn’t reveal market dynamics, competitive positioning, or business model fit. Don’t overlook market dynamics—they impact business viability.

Mistake 5: Not Validating with Market Research Payroll concentration data shows patterns but doesn’t reveal market dynamics, competitive positioning, or compensation structure quality. Always validate with market research and local analysis.

Optimization Strategies

For Maximum Compensation Clustering Benefits: Target markets with very high payroll concentration ($50B+ payroll) that offer strong compensation clustering with concentrated wage activity and compensation clusters.

For Balanced Approach: Focus on markets with high payroll concentration ($20B-$50B payroll) that offer compensation clustering with manageable cost of living.

For Emerging Concentration Opportunity: Consider markets with moderate payroll concentration ($5B-$20B payroll) but growing trends that may offer emerging compensation clustering with lower costs.

For Risk-Averse Strategy: Prioritize markets with moderate-to-high payroll concentration ($20B-$50B payroll) that offer proven compensation clustering with stable costs.

Timing Considerations

Best Time to Enter High-Concentration Markets: When you have resources ready and competitive positioning complete. High-concentration markets reward businesses that can leverage compensation clustering and wage concentration.

Best Time to Enter Emerging Concentration Markets: When payroll concentration is growing, indicating expanding compensation clustering. Emerging concentration markets offer compensation clustering with lower costs but require careful market validation.

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

Resource Recommendations

For Payroll Concentration Analysis:

• Census Bureau County Business Patterns (official CBP data source)
• NAICS code lookup tools (identify your industry classification)
• Cost of living indices (assess purchasing power)
• State economic development websites (local payroll concentration insights)

For Location Support:

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

For Payroll Concentration Research:

• Combine CBP payroll data to assess payroll concentration
• Research local payroll concentration dynamics and competitive positioning
• Consult with Business Initiative for personalized payroll concentration analysis and location guidance

FAQs - Frequently Asked Questions About The Industry Payroll Concentration:

In Summary

Our comprehensive exploration of industry payroll concentration analysis (2022) has revealed critical insights into compensation clustering, wage concentration, and location opportunities that can inform strategic business decisions.

Key Findings:

• Payroll concentration varies dramatically by location—professional services payroll ranges from $188.9 billion in California to $904,286 in Wyoming (209,000x difference)
• High payroll concentration indicates compensation clustering—markets with high payroll concentration ($50B+ payroll) indicate strong compensation clustering with concentrated wage activity
• Location strategy must account for payroll concentration—choosing markets with high payroll concentration provides access to compensation clusters and wage concentration
• High-concentration markets offer compensation benefits—markets with very high payroll concentration ($50B+ payroll) offer strong compensation clustering with concentrated wage activity
• Balanced approach often offers best opportunity—markets with high payroll concentration ($20B-$50B payroll) and moderate cost of living offer compensation clustering with manageable costs

What This Means for Your Business: Understanding industry payroll concentration helps you identify markets with high compensation clustering, assess wage concentration patterns, and make strategic location decisions. Markets with high payroll concentration offer compensation clusters that support business growth. The best approach balances payroll concentration (compensation clustering) with cost of living and business climate.

Practical Applications:

• Location Strategy: Use payroll concentration data to identify markets where your industry has very high payroll concentration ($50B+ payroll) for access to compensation clusters
• Market Analysis: Compare payroll concentration across locations to understand compensation clustering and wage concentration
• Competitive Positioning: Target markets with high payroll concentration for access to compensation clusters, wage concentration, and competitive advantages
• Strategic Planning: Prioritize markets with very high payroll concentration ($50B+ payroll) for maximum compensation clustering benefits and wage concentration

Next Steps:

1. Identify high-concentration markets for your industry by ranking states by payroll
2. Assess payroll concentration benefits (compensation clustering, wage concentration) in high-concentration markets
3. Evaluate payroll concentration vs. cost of living for each candidate market
4. Compare payroll concentration benefits with business climate and market size
5. Consult with Business Initiative for payroll concentration analysis and location strategy guidance

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

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