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Wholesale Trade in the Northwest

by Chet Bodin and Cameron Macht
April 2015

In the Middle

Although it often operates behind the scenes, Wholesale Trade has been one of the fastest growing and most important industries in Northwest Minnesota. Unlike the ubiquitous advertisements and store fronts in the closely related Retail Trade industry, wholesalers serve as an intermediate step in the distribution of merchandise, buying and selling products to other businesses and typically operating from a warehouse or office.1

The two main sectors in wholesale trade involve merchant wholesalers of durable goods, such as motor vehicles, machinery and equipment, construction materials, and more, and merchant wholesalers of nondurable goods, such as paper, chemicals, groceries and alcoholic beverages, farm products, petroleum products, and consumer products like apparel, footwear, books, and more. The region also has a small concentration of employment in wholesale electronic markets and agents and brokers, which arranges the sale of goods on behalf of the buyers and sellers.

Through the third quarter of 2014 wholesale trade provided just over 11,700 jobs at just under 650 business establishments in Northwest Minnesota, accounting for about 5.3 percent of total employment in the region. These businesses added 1,850 net new jobs over the last four years, a significant 18.8 percent increase, which was more than four times as fast as the total of all industries in the 26-county planning region grew (see Table 1).

Table 1: Northwest Minnesota Planning Region Industry Employment Statistics
NAICS Code NAICS Industry Title Third Quarter 2014 Data 3Q 2010 - 3Q 2014
Number of Firms Number of Jobs Quarterly Payroll Average Weekly Wages Numeric Change in Jobs Percent Change in Jobs
0 Total, All Industries 16,604 220,983 $1,960,479,773 $682 9,060 4.3%
42 Wholesale Trade 649 11,706 $140,811,963 $925 1,850 18.8%
423 Merchant Wholesalers, Durable Goods 261 6,508 $79,222,807 $936 1,621 33.2%
424 Merchant Wholesalers, Nondurable Goods 332 4,726 $56,208,408 $914 215 4.8%
425 Wholesale Electronic Markets, Agents and Brokers 56 472 $5,380,748 $876 14 3.1%
Source: DEED Quarterly Census of Employment & Wages (QCEW) program

Much of this recent job growth was concentrated in the durable goods sector which added over 1,600 jobs and jumped 33 percent from the third quarter of 2010 to the third quarter of 2014. The largest subsector was electrical and electronic goods merchant wholesalers, but the machinery, equipment, and supplies subsector also saw strong employment gains. Merchant wholesalers of nondurable goods also saw slower but steady job growth, gaining 215 net new jobs during that timeframe, particularly in farm products and miscellaneous nondurable goods.

Economic Impact

Not only does Northwest Minnesota have a high percentage of jobs in wholesale trade, the industry also provides a high percentage of the region's total payroll. As shown in Table 1, average weekly wages were over 35 percent higher in wholesale trade than the total of all industries, a difference of about $240 per week. For the average worker that would add up to more than $12,000 in additional wages over the course of a year.

Average weekly wages in the wholesale trade industry improved from $820 per week in the third quarter of 2010 to $925 in the third quarter of 2014, a 12.8 percent increase. That was right in line with wage growth in the total of all industries, but since wholesale trade was also adding a large number of jobs, its contribution to total payroll has been increasing much faster.

From that perspective, total payroll is a helpful indicator of the industry's economic impact on the region. Total payroll in wholesale trade increased over 30 percent over the past five years, twice as fast as the total of all industries, and now accounts for more than $550 million in wages (see Figure 1).

Figure 1: Wholesale Trade Employment and Wage Trends

Occupations in Demand

DEED's staffing matrix provides a list of occupations in wholesale trade, showing which jobs are most likely to be in demand in the industry in the Northwest Minnesota planning region. Wholesale trade firms reported employment in more than 300 different occupations, ranging from obvious ones like customer service representatives and truck drivers to less common jobs like multimedia artists and printing press operators.

In Minnesota one of the most prevalent careers in wholesale trade is sales representatives. Two of the important subsectors involve one track that is involved in sales of technical and scientific products and one that is not. Both occupational subsectors are in high demand among wholesalers and earn high wages, but they have very different educational requirements. Positions that sell technical and scientific products generally require a bachelor's degree and earn median wages of nearly $27 an hour. Sales representatives excluding technical and scientific products earn median hourly wages just over $25 an hour at the median but typically need just a high school diploma to get started.

Educational requirements vary widely in wholesale trade, offering opportunities for job seekers of all backgrounds. The majority (57.1 percent) of occupations in wholesale trade require a high school diploma or equivalent. Fifteen percent can be gained with less education than that. In contrast, about one-fifth (20.4 percent) require a bachelor's degree or higher, and about 7 percent need a postsecondary vocational award, certificate, or associate's degree (see Figure 2).

Figure 2: Education Requirements, Wholesale Trade Occupations

Among the top 30 occupations in the wholesale trade industry, more than two-thirds can be acquired with a high school diploma or less, and less than one-third demanded some postsecondary training or bachelor's degrees. Overall, wages for occupations in the wholesale trade industry were relatively high, but were commensurate with training — all but one of the jobs requiring a bachelor's degree were earning median wages well over $25 an hour, while median hourly wages were below $15 for seven of the 21 occupations that needed a high school diploma or less (see Table 2).

Table 2: Top 30 Occupations in Demand in Wholesale Trade, Northwest Minnesota Planning Region
Occupational Title Median Hourly Wage 2014 Estimated Employment 2012 Projected Employment 2022 Percent Change 2012-2022 Numeric Change 2012-2022 Replacement Hires 2012-2022 Total Hires 2012-2022
Jobs that require a high school diploma or equivalent
Sales Representatives, Wholesale and Manufacturing, Exc. Technical and Scientific Products $25.27 1,875 1,915 2.1% 40 360 400
Customer Service Representatives $14.71 2,043 2,157 5.6% 114 560 670
Sales and Related Workers, All Other $16.08 713 791 10.9% 78 140 220
Shipping, Receiving, and Traffic Clerks $15.20 859 857 -0.2% -2 230 230
Bookkeeping, Accounting, and Audit Clerks $17.26 4,366 4,594 5.2% 228 400 630
Office Clerks, General $13.23 5,096 5,152 1.1% 56 1,070 1,130
Light Truck or Delivery Services Drivers $12.72 1,390 1,429 2.8% 39 220 260
Business Operations Specialists, All Other $21.18 1,577 1,736 10.1% 159 220 380
Farm Equipment Mechanics and Technicians $17.77 485 570 17.5% 85 140 220
First-Line Supervisors of Office and Administrative Workers $20.36 1,470 1,572 6.9% 102 350 450
Executive Secretaries and Administrative Assistants $20.72 1,318 1,279 -3.0% -39 160 160
Installation, Maint., and Repair Workers $19.99 438 435 -0.7% -3 70 70
Mobile Heavy Equipment Mechanics $21.75 324 351 8.3% 27 90 120
Driver/Sales Workers $10.85 873 881 0.9% 8 140 150
Wholesale and Retail Buyers, Exc. Farm Prod. $21.86 102 113 10.8% 11 20 30
Truck Mechanics and Diesel Engine Specialists $21.87 652 674 3.4% 22 140 160
Order Clerks $16.33 317 298 -6.0% -19 80 80
Jobs that require less than high school diploma
Stock Clerks and Order Fillers $11.15 2,679 2,618 -2.3% -61 810 810
Parts Salespersons $14.83 592 638 7.8% 46 150 200
Industrial Truck and Tractor Operators $16.48 802 770 -4.0% -32 180 180
Cashiers $8.97 6,288 6,239 -0.8% -49 2,720 2,720
Jobs that require a postsecondary non-degree award
Heavy and Tractor-Trailer Truck Drivers $17.86 4,666 4,912 5.3% 246 750 1,000
Jobs that require a bachelor's degree
General and Operations Managers $33.08 2,761 2,986 8.1% 225 520 740
Sales Managers $33.19 615 661 7.5% 46 130 180
Sales Representatives, Wholesale and Mfg., Technical and Scientific Products $26.97 345 399 15.7% 54 70 120
Accountants and Auditors $28.30 1,409 1,570 11.4% 161 420 580
Software Developers, Systems Software $35.43 220 258 17.3% 38 30 70
Market Research Analysts and Specialists $21.98 294 352 19.7% 58 40 100
Chief Executives $52.49 663 694 4.7% 31 140 170
Financial Managers $41.90 603 633 5.0% 30 110 140

Still Looking Up

After a period of solid job growth, wholesale trade is projected to continue adding employment in Northwest Minnesota through 2022. With an expected growth rate of 7.7 percent, the industry would outpace the total of all industries in the next decade as well, welcoming more than 850 net new jobs (see Table 3).

Table 3: Northwest Minnesota Wholesale Trade and Related Industries, Employment Outlook, 2012-2022
NAICS Industry Title Estimated Employment 2012 Projected Employment 2022 Percent Change, 2012-2022 Numeric Change, 2012-2022
Total, All industries 254,122 269,121 5.9% 14,999
Wholesale Trade 11,144 12,001 7.7% 857
Manufacturing 27,195 28,176 3.6% 981
Utilities 1,184 1,068 -9.8% -116
Retail Trade 27,570 29,508 7.0% 1,938
Transportation and Warehousing 5,302 5,443 2.7% 141
Source: DEED Employment Outlook tool

However, wholesale trade is not the only industry expected to grow in the region that employs the occupations highlighted above. For example, both manufacturing and retail trade need similar workers, and are both anticipated to add more new jobs through 2022. Growth in all of these industries may lead to increased competition for job seekers and existing workers with the skills and experience that wholesalers desire.

In addition, as shown in Table 2 there will also be large numbers of replacement openings — jobs that become available as experienced workers leave an occupation or retire from the labor force — for new entrants to fill. These 30 occupations are projected to account for over 10 percent of total job growth in the region, with the fastest growth predicted in the jobs that require bachelor's degrees.

As the region's labor market conditions change, workers and job seekers with these skills will be sought after by many industries. Wholesale trade establishments looking to expand may need to market the job growth and high wages that make their industry attractive to work in and to partner with local secondary and postsecondary institutions to develop new interest in their firms, even as they continue to operate behind the scenes.

1Sector 42 — Wholesale Trade.

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