Jobs differ by sector; construction down, energy up

McClatchy NewspapersSeptember 27, 2012 

— In order to fix the sluggish job market, it’s important to first understand the underlying nature of the problem. The high unemployment rate dogging the nation is a symptom of complicated underlying causes.

Roughly 7.9 million jobs were lost during the Great Recession, which spanned a period from December 2007 to June 2009. About 4.5 million jobs have been created since the economy stopped shedding them and began a long and slow recovery. The turnaround date was somewhere around March 2010.

A McClatchy analysis of sector-by-sector hiring since 1998, as recorded by the Bureau of Labor Statistics, finds that some sectors of the economy are doing rather well, while others remain stuck in the dumps and drag against better employment numbers. These downers are keeping the unemployment rate stubbornly above 8 percent since February 2009.

The winners tend to be in health care, educational services and more broadly are white-collar professionals. In the broad category of professional and business services, there were 16.8 million Americans in this sector when George W. Bush took office in January 2001. That grew to just over 18 million when the Great Recession began. It fell sharply and stood at 16.4 million when the recession ended during the fifth full month of Barack Obama’s term.

However, in August 2012, the latest reporting period, almost 18 million Americans are now employed in this broad, largely white-collar category. That’s a gain of about 1.5 million jobs in the category since the recession’s end, and a total number about where it was at the start of 2001.

About 1.8 million Americans were employed as managers of companies and enterprises in January 2001, a number that grew to over 1.9 million at the recession’s start. At the end of the Great Recession, the number of managers had fallen to 1.86 million, but by August 2012 it stood above 2001 levels at 1.95 million. Some of that is thought to be reclassification of managers at financial firms.

The story differs for jobs that require less formal education, such as construction and some types of manufacturing. The fate of both sectors was strongly tied to the housing bubble, where home prices soared and created strong demand for everything from homes and additions to carpets, cabinets and lawn care chemicals.

More than 6.8 million Americans were employed in the construction sector in January 2001, and the number soared to 7.49 million at recession’s start in December 2007. By recession’s end, construction employment had fallen to just over 6 million, and despite a federal stimulus effort designed to boost employment in the sector the number of employed Americans working in construction fell to 5.5 million.

“The shortfall in hiring is due in significant part to the real estate bust, including housing and commercial construction. Employment in construction, and construction-related manufacturing, retailing, financial services and transportation and distribution remains very depressed,” said Mark Zandi, chief economist for forecaster Moody’s Analytics and a go-to analyst for both major political parties. “The good news is that this will soon change given the recent revival in the housing industry and improving conditions in commercial real estate. “

Some of the strongest hiring improvement has come from the energy sector and energy-related manufacturing.

The number of Americans working in oil and gas extraction rose from 123,500 in January 2001 to 153,500 at recession’s start. That number stood at 160,000 at the end of the recession and in August weighed in at 197,300.

Health care follows and as a sector also kept adding jobs during the Great Recession, at a slower pace. The same was true of educational services, which excludes public school teachers hired by local governments.

The number of health care jobs during the recession rose by almost 429,000 posts, and educational services rose by 120,400 jobs during a period when most employers were shedding them. From recession’s end through the end of August, health care added another 850,800 jobs while employment in educational services jumped by another 234,000.

This job growth in health care in large measure comes from the graying of America, as the 75 million baby boomers born between 1946 and 1964 reach retirement age and its associated health problems.

Other hiring trends also reflect long-term changes in sectors such as manufacturing. The number of manufacturing jobs stood at more than 18 million when Ronald Reagan left office in January 1989, about 16.8 million George H.W. Bush left office in January 1993, rose slightly to 17.1 million when Bill Clinton left office in January 2001, and stood at 12.5 million when George W. Bush left office in January 2009, 13 months into a profound recession.

By the end of the Great Recession in June 2009, there were 11.7 million people employed in manufacturing, and in August that number was up a bit to 11.9 million, well below numbers from the late 1980s because of automation, foreign competition and innovation.

Within the manufacturing sector, however, the picture is less clear. Employment at manufacturers of durable goods – big-ticket items such as airplanes, automobiles and auto parts – has bounced back. Non-durables – clothing, textiles, leather products and the like – peaked in the mid-1990s before global trade opened up and have remained on the slide. This is especially true of these for makers of textiles and wood products, once both staples of employment in the Carolinas.

Textile mill employment stood at 364,700 in January 2001, fell to 162,600 by the start of the recession, dropped further to 122,800 by recession’s end, and in August was down even further to 118,800. Similarly, employment in the manufacture of wood products stood at 589,700 in January 2001, 497,900 in December 2007, 353,800 in June 2009 and 328,000 in August 2012.

Meanwhile, employment making cars or car parts is bouncing back, although nowhere near levels of years past. This segment of manufacturing employed almost 1.25 million Americans in January 2001, dropping to 955,800 in December 2007, 624,000 at recession’s end and bouncing back to 780,700 by August.

“Since the recession, the industries that have done the best have been in the durable-goods sector – aerospace, motor vehicles, steel products, motor vehicles and computers to a certain extent,” said Chad Moutray, chief economist for the National Association of Manufacturers. “I would attribute a lot of it to increased exports. I think manufacturers have become a lot leaner, which gets into the productivity argument, and add into that some pent-up demand (post financial crisis).”

Email:; Twitter:@KevinGHall

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