Karl Smith writes here, here, and here about the types of jobs that have grown since the late sixties. Specifically he compares Goods Producing Industries + Government Workers to All other jobs (mostly service jobs). I do a similar exercise below except I compare Goods Producers to Others as a percent of non-farm employees, look at the private sector workers as a percent of non-farm employees, and look at how the two sectors have changed year over year historically.
It is the service-goods presence gap that I find most interesting. Generally, private employment has not changed as a percent of non-farm labor over time; it is really the structure of that employment that has changed. This is perhaps not surprising, but, with the exception of the mid- to late-1980s, peaks in the annual changes to private labor structure have occurred immediately following a recession. This has been driven mostly by stronger decreases in the goods producers at the beginning of the recession.
There are a couple of questions that need answering to really determine the complete meaning of this information:
- What is the level of wage stickiness in these two groups? Is it possible that service industry employees are simply more agile in an economic downturn because they have more flexible wages? There may also be a role for unionization issues if this is connected.
- Is there a structural element to these changes peaking around the time of recessions? Since recessions offer an opportunity to retool employee bases, is it possible that the economy has been using recessions to move workers out of old industries and into new industries?
Obviously more data is needed, but I think the exercise of looking at the spread between these two broad sectors of jobs is helpful in thinking about employment and the economy more generally.
Jake
Tyler
