A Sector by Sector Analysis of Jobs lost and Regained,
2007-2012
It's no secret that the recovery from the Great Recession has
been slow. From the beginning of the recession in December 2007 to
February 2010, when wage and salary employment bottomed, the
economy shed 8.7 million jobs. As of June, 2012, only 44% of those
jobs have been regained.
There is no way to sugarcoat this weak performance but it does
not look quite as bad if you break the numbers down by
sector. The weakness is concentrated in four major sectors-
Construction, Manufacturing, Retail Trade, and Finance. None of
these should be a surprise. The construction sector lost 2 million
jobs during the downtown and has regained only 1% of those jobs.
The Finance sector lost 564,000 jobs, and has recovered only 14% of
those jobs. It is not surprising that Finance and Construction have
lagged the rest of the economy as the recession was concentrated in
those sectors, and many of the problems that caused the
recession remain.
The manufacturing sector lost 2.3 million jobs and has recovered
only 22% of those jobs. Keep in mind that Manufacturing has been
declining for years, and from 2002 to 2007, lost 1.2 million jobs,
so a full recovery of the lost jobs was not to be expected.
The Retail Trade sector lost 1.2 million jobs, and has recovered
only 30% of those jobs. This is not surprising as weak employment
growth and declining consumer confidence has dampened consumer
spending.
I f these four sectors are excluded, the remaining sectors of
the economy lost 2.7 million jobs and have regained 2.9 million
jobs. The main areas of strength have been Professional and
Business Services which has regained 90% of jobs lost , Education
and Health Services which has regained 107% of jobs lost and
leisure and hospitality, which also regained 107% of jobs lost.
The only major sectors that have lost jobs since February 2010
are Information and Government, mainly state and local
government.
I think this analysis provides some guidance for future economic
policy. First, manufacturing is in secular decline and we are never
going to regain all the jobs lost in the last 5 years or the last
20 years, although policies to increase exports and reward
investment in the U.S. can be helpful. Second, due to the
structural changes in the industry and new regulations, it is
unlikely the jobs lost in Finance will be recovered for many years,
and it not clear that there are policies that will help this
sector. Third, construction employment will not come back until
housing prices stabilize and the economic outlook becomes more
promising. Policies to invest more in infrastructure and to speed
the process of reducing foreclosures will speed the recovery.
Retail trade is closely tied to the overall economy and any
policies to improve economic growth will help this sector. The best
policy for Retail Trade and for the overall economy would be the
adoption of a program of short-term stimulus and long-term deficit
reduction.
