June 18 , 2003
The headlines derived from last week's employment report
were continued job loss and higher unemployment. However, the details of the report have changed dramatically,
and largely for the better.
Every May, the employment report shows changes in the
historical record of employment for the past two years.
This occurs because a better count of the job changes by employer is
available than the monthly estimates on which the monthly employment reports are
based. Once a year, the Labor
Department tries to make a full count of employment as reported for unemployment
Those changes are then used to adjust the estimates
backward and to derive new patterns of seasonal adjustment for employment.
For example, lost payroll jobs were 2.5 million since the beginning of
the recession in March 2001, not 2.7 million.
Those 500,000 lost jobs in the past three months through April were
actually less than 300,000 lost jobs after adjustment.
Furthermore, the original 48,000 reduction in jobs reported for April
were zero lost jobs after this new adjustment.
Despite the 17,000 decline in jobs for May, the employment
report had several positive characteristics.
First, private payrolls actually increased by 8000 jobs.
Government jobs were off by 25,000.
At the federal level the declining jobs were in the post office, as
private delivery services continued to erode post office activity.
(Electronic mail and checkless transactions also are causing postal
employment to fall more than 42,000 in the past year.)
Second, while both durable and nondurable manufacturing
continued to hemorrhage jobs, hours worked in durables began to expand.
This could be the beginning of activity by industries that provide
capital goods for domestic and international customers.
(By contrast, the import impacted nondurables continued to fall sharply.)
Third, most of the growth in construction reflected strong
housing activity; but general building contractors began to experience job
growth as well. The typical two
year slump in nonresidential building that normally begins early in a recession
may have run its course for this downturn.
Clearly, additional interesting characteristics of the
current labor market will be gleaned from these reports.
Also presented is greater detail and better organization of
industries than existed in the largely goods production based reports that
preceded a new identification of industrial classification.
Areas of job strength and weakness are easier to identify and analyze.
For example, the information economy suffered more than
originally thought. Since the
recession began, 417,000 jobs were lost in this sector.
Telecommunications accounted for most of the weakness.
Nevertheless, publishing, recording, broadcasting, ISP and data
processing all suffered significant job losses in the past year.
Furthermore, internet publishing and broadcasting, only 1 percent of the
information economy, also declined.
Financial activities, which created 140,000 jobs in the
past year, benefited from credit intermediation.
The vast majority of this has been the refinancing of mortgages.
Stock brokers and investment personnel fell more than 13,000 over the
year. Surprisingly, insurance
carriers and agents are responsible for more jobs than commercial banking.
Both showed significant job growth in the past year.
Transportation services, which was a single line on the
employment report when I began analyzing the job reports more than 35 years ago,
has become much more detailed. Air,
rail, water and trucking all receive their own line.
(All showed job losses in the past year.)
Also, trucking accounts for twice as many jobs as the others combined.
We also know about transit and ground passenger
transportation, pipeline transportation, sightseeing (a growth industry as
cruise ships surge), the previously discussed couriers and messengers, as well
I certainly was surprised to learn not only that electronic
components had fallen sharply (no surprise there) but so had computer systems
design services. Legal services are
growing, but the 1.5 percent job growth in the past year belies the conventional
wisdom of the importance of that sector (which is only slightly more than 1
percent of all private sector jobs.)
Jobs in the health care sector are 12.8 percent of all
private jobs and they grew by 300,000 in the past year.
Home health care services are showing the fastest job growth in health
while jobs in nursing care facilities are growing much slower than most people
probably believe. And jobs at
doctor's offices are almost twice as numerous as in the legal offices.
Unfortunately, most of this detail could not be worked back
beyond the last recession in 1990. Therefore,
we cannot easily determine what is normal employment behavior during a business
cycle for many of these newly detailed sectors.
Nevertheless, the new job details will substantially
improve our ability to determine where job growth and job decline are developing
over the business cycle and over time.
I cannot wait to see how my economic colleagues use this data to provide better guidance for students, industries and policy makers over time.