Major Components of Employment
Job growth will be the key to the nature of the recovery in the months ahead. There is a growing consensus that this recovery will join the club of jobless recoveries of 1991 and 2001. As the economy recovers, employment gains are most likely to be seen in the service sector. Service sector employment (including government) makes up about 85% total employment (see chart 1).
Factory employment is about 9% of total employment (see chart 2). Factory jobs have diminished in both relative and absolute terms (see charts 2 and 3).
Historically, factory employment bottomed out at the end of a recession until the 1981-82 recession (see chart 3). The 1991 and 2001 business cycles have been different to the extent that the level of factory employment continued to decline through the recessions and picked up somewhat after the 1991 recession but has shown a declining trend for the most part of the last ten years. A pickup in total factory jobs during this recovery will be a noteworthy event, if it occurs.
Construction employment (see chart 3) is close to 5% of total employment (see chart 3). During the expansion which ended in December 2007, the share of construction jobs registered a new high since the 1950s in the (see chart 4). Given the massive shake up of the housing sector, it should be surprising if construction employment’s share establishes a new record in the next decade.
