Jobenomics tracks both unemployment (see: Unemployment Scoreboard: June 2012) and employment (this posting). Highlights of this posting:
- Based on a goal of creating 20 million new jobs by 2020 (in the ‘90s the US produced almost 22 million jobs), the US should have produced 7.3 million jobs by June 2012. We have only produced 3.6 million, which represents a 49% shortfall.
- The private sector produced 4,200,000 jobs of which 95% were created by small business. However, the government sector lost -510,000 jobs, most (83%) government job losses occurred at the local level.
- In the service sector, 83% of all new jobs were produced by four industries in the service providing sector (Professional and business services; Education and health services; Trade, transportation, utilities; Leisure and hospitality). Manufacturing contributed 11%.
For six decades the US consistently produced tens of millions new jobs per decade. Then the bottom fell out with a loss of 1.2 million jobs in the ‘00s. Many believe that the Great Recession of 2008 caused such a catastrophic loss of jobs. Others believe that this is too simple an answer. Whatever the reason, it is critical that we produce a significant number of jobs this decade (’10s) for the US economy to recover. 20 million new jobs by year 2020 is a reasonable goal. Based on this goal, the US should have produced 7.3 million jobs by June 2012. We have only produced 3.6 million, which represents a 49% shortfall.
While the US has enjoyed steady employment growth since the beginning of this decade, America is only producing half as many jobs as needed (49% shortfall). The US produced only 3,690,000 jobs compared to the 7,250,000 jobs needed as measured against the traditional benchmark of 250,000 jobs per month (250,000 x 29 months = 7.25 million). Of the three employment sectors reported by the Bureau of Labor Statistics (BLS), the private sector’s service-providing industries created 3,677,000 jobs, the private sector’s goods-producing industries created 523,000 jobs, and the government sector lost -510,000 jobs.
Employment growth by sector is shown above. 83% of all new jobs were produced by four industries in the service providing sector (professional and business services; education and health services; trade, transportation, utilities; leisure and hospitality). Manufacturing contributed 11%. .
Private Sector Statistics. Today, the US private sector employs a total of 111.0 million people. As shown, 92.5M (83.5%) are in service-providing industries and 18.2M (16.4%) are in goods-producing industries. Manufacturing (a sector of the goods-producing supersector) employed 12.0M or 10.6% of the private sector workforce.
Service-providing sector. The US service-providing sector has grown 80% over the last three decades and averaged 4% growth since the beginning of this decade.
Employment statistics for industries in this sector are ranked by the number of jobs created between 1 January 2010 and 1 June 2012:
- Professional/business services: 17,815,000 employees, 1,346,000 jobs created, growth rate 8%.
- Education and health services: 20,307,000 employees, 957,000 jobs created, growth rate 5%.
- Trade, transportation, utilities: 25,318,000 employees, 756,000 jobs created, growth rate 3%.
- Leisure and hospitality: 13,576,000 employees, 643,000 jobs created, growth rate 5%.
- Financial activities: 7,724,000 employees, 45,000 jobs created, growth rate 0.6%.
- Other services: 5,365,000 employees, 43,000 jobs created, growth rate 1%.
- Information (non-internet): 2,628,000 employees, -113,000 jobs lost, growth rate -4%.
Goods-producing sector. The goods-producing sector currently has 18,307,000 employees and has created 523,000 new jobs this decade with a 3% growth rate. Employment statistics for industries in this sector are ranked by the number of jobs created between 1 January 2010 and 1 June 2012:
- Manufacturing: 11,953,000 employees, 487,000 jobs created, growth rate 4%.
- Mining and logging: 838,000 employees, 174,000 jobs created, growth rate 26%.
- Construction: 5,516,000 employees, -138,000 jobs lost, growth rate -2%.
While manufacturing has added approximately ½ million new jobs over the last 29 months, it has a long way to go to achieve peak levels in the 1980s and 1990s. While there have been positive signs with re-shoring of US manufacturing jobs and increased US productivity, Jobenomics forecasts limited upside jobs potential in manufacturing due to excessive government regulation, improved automation, and uncompetitive US labor rates.
Construction industries continue to decline. In the 2006-07 time period, peak construction employment was 7.7M. Today, it is 5.5M, a loss of -29%. Residential construction was hardest hit with a decrease of -42%. Commerical and heavy contruction fared slightly better with -23% and -18% losses respectively.
Mining (oil & gas extraction, coal and minerals mining, logging) continues to be a bright area for employment growth. An increase of 174,000 jobs, with a growth rate of 26%, is significant. With proper private and public sector support, this industry has significant upside potential.
Government Sector Statistics. Total government sector employment currently is 21,969,000. Since 1 January 2010, government has lost -510,000 jobs, a negative 2% growth rate. Employment statistics in this sector are ranked by the number of jobs lost between 1 January 2010 and 1 June 2012:
- Local government: 14,077,000 employees, -424,000 jobs lost, growth rate -3%.
- State government: 5,071,000 employees, -77,000 jobs lost, growth rate -1%.
- Federal government: 2,821,000 employees, -9,000 jobs lost, growth rate -0.4%.
The government sector continued to lose jobs with 83% of all job losses occurring with local governments (mainly teachers, police and firefighters), 15% at the state level and 2% in the federal government. Jobenomics predicts that government job losses will continue to decline and accelerate at the federal and local levels especially if the US economy suffers an economic disruption due to either domestic or foreign events (see: 5 Million Government Layoffs Ahead?).
The Jobenomics “20 by 20” goal is to create 20 million new private sector jobs by year 2020. To achieve 20 million jobs in a decade, the US needs to create 167,000 jobs per month (20 million/120 months). As of 1 June 2012, the US should have generated 4,843,000 private sector jobs. Measured against the Jobenomics benchmark of 167K jobs/month, America is producing jobs at a rate between 74% (3,560,000 jobs per ADP National Employment Report data) and 87% (4,422,000 jobs per Bureau of Labor Statistics data). Considering the sluggish US economy, this is a relatively good picture. However, Jobenomics has two major concerns. First the trend (green arrow) since the beginning of 2012 has been down significantly. Second, the Jobenomics forecasts that the US economy has a 50% chance of turning for the worse due to potential domestic and foreign disruptions, such as growing US deficits/debt, new conflicts (especially Iran), and continued fiscal problems in the Eurozone (especially Greece and Spain). The softening of the Chinese economy also could have a deleterious effect on the US economy.
Of the 3,381,000 private sector jobs created per the ADP National Employment Report (the BLS does not report on small versus large business), 95.0% of all new jobs were produced by small businesses with less than 500 employees. Large businesses produced only 5.0% of all new jobs. Very small business with less than 50 employees accounted for 46.8% of new jobs.
In conclusion, business and jobs creation is the number one issue facing US economic recovery. While some would argue that debt/deficits or entitlement/welfare are the biggest issues, it takes businesses to create lasting jobs that generate tax revenue to run government as well as supporting the less fortunate. The following chart is about as simple as Jobenomics can make it.
32% of all Americans are financially supporting the rest of the country. 101 million workers in the private sector are supporting 32M that work for government (including contractors), 88M that can work but choose not to work, 71M that cannot work (children, retired, disabled, etc.) and 23M that are looking for work (officially unemployed and unemployed). America’s number one priority is to grow the base with emphasis on small business creation, which produced 95% of all net new jobs this decade. It takes businesses to create lasting jobs that generate tax revenue to run government and support the less fortunate.