Commentary by Robert Kleine: A Sector by Sector Analysis of Jobs lost and Regained, 2007-2012

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.






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