A Decade of Labor Market Pain

In February 2001, nonfarm payrolls hit their business cycle peak of  132.5 million. Ten years later, the latest data pegs February 2011 payrolls at 130.5 million, a 1.5% decline. To put this in perspective, the ten-year period of the Great Depression, 1929-39 saw a 2.3% decline in nonfarm employment, roughly the same magnitude.

But even that 1.5% understates the extent of the pain for most of the workforce. I divide the economy into two parts. On the one side are the combined public and quasi-public sectors, and on the other side is the rest of the economy. Public, of course, refers to government employees.  ‘Quasi-public’, a term I just invented, includes the nominal private-sector education, healthcare, and social assistance industries. I call them ‘quasi-public’ because these industries depend very heavily on  government funding. For example, social assistance includes ‘child and youth services’ and ‘services for the elderly and disabled’, which are often provided under government contract.

The chart below shows employment growth in the public/quasi-public sector, compared to employment growth in the rest of the economy, with February 2001 set to 100. We can see that public/quasi-public employment rose steadily over the past ten years, and is now up 16%. By comparison, the rest of the private sector  is down 8% in jobs over the past 10 years. 

Once again, we look at the Great Depression for an analogy. From 1929 to 1939, government employment rose by about 30%. If we back that out, then private sector non-ag  jobs fell by 6%  over the Depression decade. That compares to the contemporary 8% decline in private non-ag non-quasi-public jobs since 2001.  So by this measure, the past 10 years have been worse for the labor market than the decade of the Great Depression.

Now let’s look by state. I put the chart beneath the fold, because it’s long and weird and I’m not sure if it going to come out right.

Here it is. This chart reports on the percentage change of private employment by state over the past ten years, leaving out the quasi-public sector.

 The worst hit states, not surprisingly, are Michigan, Ohio, and Indiana. Massachusetts has a big decline as well, though I’m not sure that it’s fair to remove healthcare and education, which have always been primary drivers of the MA economy.  Then we have some surprises, including CT and NJ.  NY,  At the other end, some of the natural resource states show job gains over the decade, as did DC, even after removing govt jobs.

Comments

  1. Those public and quasi-public sector jobs are next, they will be hit hard in the next decade or two. The perfect paradigm for me is the US post office. Their employment peaked at almost 800k in 1999 and is down almost 25% since, that’s what will happen to education and medicine soon. What’s killing the USPS? The twin forces of private competition and technology, ie Fedex and email, the same reasons why those other quasi-public sectors will be demolished. It was just easier to get email going than to set up online learning, so that was done first but those other sectors are next.

  2. This is why the female unemployment rate is 4 points lower than the male unemployment rate. Women dominate the public sector, while men dominate the private sector.

    Guess which sector generates more productivity?

  3. What is going on in ND?

  4. David Persky says:

    Do Dr. Mandel’s Great Depression government job figures include the WPA jobs? As I recall, WPA workers weren’t counted as employed since the WPA was regarded as relief for the jobless.

  5. Very nice post. I just stumbled upon your weblog and wished to say that I have really enjoyed browsing your blog posts.
    After all I’ll be subscribing to your rss feed and I hope you write again soon!

Trackbacks

  1. [...] A decade of labour market pain, especially for non-public or non-quasi-public sector [...]

  2. [...] This piece is cross-posted at Mandel on Innovation and Growth [...]

  3. [...] “A Decade of Labor Market Pain” (Mandel on Innovation and Growth) [...]

  4. [...] consider A Decade of Labor Market Pain by Mike Mandel. In February 2001, nonfarm payrolls hit their business cycle peak of 132.5 million. [...]

  5. [...] consider A Decade of Labor Market Pain by Mike Mandel. In February 2001, nonfarm payrolls hit their business cycle peak of 132.5 million. [...]

  6. [...] consider A Decade of Labor Market Pain by Mike Mandel. In February 2001, nonfarm payrolls hit their business cycle peak of 132.5 million. [...]

  7. [...] con­sider A Decade of Labor Mar­ket Pain by Mike Mandel. In Feb­ru­ary 2001, non­farm pay­rolls hit their busi­ness cycle peak of 132.5 [...]

  8. [...] consider A Decade of Labor Market Pain by Mike Mandel. In February 2001, nonfarm payrolls hit their business cycle peak of 132.5 million. [...]

  9. [...] a column called A Decade of Labor Market Pain, he posts some fascinating charts comparing the growth of public and quasi-public sector jobs with [...]

  10. [...] consider A Decade of Labor Market Pain by Mike Mandel. In February 2001, nonfarm payrolls hit their business cycle peak of 132.5 million. [...]

  11. [...] above chart is from A Decade of Labor Market Pain by Mike [...]

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  13. [...] piece is cross-posted at Mandel on Innovation and Growth Tagged Economy, Innovation, [...]

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