Like the last two recoveries, initial unemployment claims have remained elevated moving into the recovery. As a result,
The unemployment rate has remained elevated.
Above is a chart of total establishment jobs for the last five years. Simply estimating the total jobs lost from peak to the current level we get about 7.6 million (roughly 138 million to 130.4 million).
Total durable goods jobs lost are equal to about 1.8 million. So while these jobs were a primary driver for the long-term employment issues in the last two recoveries, they are only part of the reason for the problems in the current recovery. These account for about 23% of all lost jobs.
Construction jobs (obviously related to the problems in the housing market) are down about 2 million, accounting for about 26% of the lost jobs.
Non-durable goods manufacturing has lost about 775,000,, or about 10 % of all jobs lost.
Before we move forward, remember the pattern from the previous expansions with durable goods employment. Output increased thanks to an increase in productivity. If that trend still holds (and it probably will) there is no reason to think that trend won't continue. That trend will also extend into non-durable goods employment. In addition, considering how overbuilt the housing and commercial real estate market is right now, it's doubtful construction employment will return to previous highs either. In other words, at least 60% to the jobs lost will take a long time to come back.
Something I don't know the answer to but would be very curious to find out is 1.) how many of the jobs lost are moving into early retirement and 2.) the average age of the manufacturing population for both durable and non-durable goods manufacturing. My thought here is we've seen manufacturing employment drop for nearly two decades. That kind of drop will lead to fewer and fewer newer hires as the trend to lower employment continues. So, are the job losses we're seeing really a case of accelerated attrition (companies simply getting rid of jobs they intended to get rid of at a faster pace) or is there another trend in place?
Professional and business services have lost about 1.7 million from peak to their current level, but this area of the economy has been adding jobs since the end of the third quarter/beginning of the fourth quarter of 2009. These jobs account for about 22% of all jobs lost.
Financial activities are still losing jobs, and have lost about 700,000 or 9% if jobs lost.
The biggest problem we face is the job losses in "blue collar" industries, which account for about 60% of all job losses. With the exception of financial activities, the other service sectors have either bottomed or are rebounding somewhat. However, it's the blue collar area that will cause the most trouble.
3 comments:
If you have time check year over year
equipment and software spending ( GDP numbers) versus year over year
nonfarm payroll growth....
Well, of course its all about housing, which is the usual engine of recovery growth. You set your 2million workers back to building houses, that people fill with durable goods. Just lend 'em the money and off we go again.
INHO it isn't going to work like that this time. Inventory is likely to be 11 months(see Calculated Risk)which will mean prices will go down again, which will mean more negative equity which will mean more defaults which will mean more problems for the banks. Eventually, if the gubberment lets it happen, houses will come to a level that 3 x wages will support. I think this is a long time off, and a stable housing market is surely a sine qua non for real recovery. I am afraid this could also be a USA problem, rather than a global problem.
You can't compare the unemployment rate from 1990-1993 to the current unemployment rate because the metric was changed/modified in 1994. The unemployment rate from 1990-1994 is basically the current U-4, which is now 11.0%.
Second, productivity gains have been wildly exaggerated during the last 10 years, and even in the last 20 years in durable good manufacturing. There hasn't been much new innovation over the last 20 years in US durable good manufacturing, far from.
The reason for productivity gains has been mostly from out-sourcing. Companies cut domestic production and staff, import the products cheaper, then sell for even higher prices. The drop in labor costs are far higher than the cost of the imports, though the increased in price from it should be had labor costs remained stable doesn't show up as inflation; so while this makes it look like productivity has increased, the reality is that only corporate profits have increased. This phenomena makes it appear that the actual work the company does continues to increase in value (high value add), while the work that becomes outsourced decreases in value (lower value add).
Third, many jobs in both the durable goods and non-durable goods industries are related to construction. HVAC, toilets, dishwashers, lightbulbs, windows, and numerous other things are examples.
Post a Comment