June data from payroll accounting firm ADP suggest that the job market is bouncing back from its abysmal performance in May. The new figures provide a hopeful prelude to Friday, when the Bureau of Labor Statistics will release the government's official June employment numbers. But the emerging employment scene is distinctly different from the one the country knew before to the recession.
Today, ADP released figures estimating private-sector job growth of 157,000 in June, nearly three times the size of May's total job growth figure. And the Department of Labor reported that last week, initial unemployment claims dropped 14,000 to land at 418,000—a number all the more positive given that last week's shutdown of the Minnesota state government added 2,500 new unemployment claims in that state. Altogether, tomorrow's unemployment report is expected to be a welcome relief from May's figures, with unemployment staying steady at 9.1 percent. [Read more about unemployment]
Of course, job growth will have to pick up substantially before the economy is healthy again. According to the Bureau of Labor Statistics, job growth in the recovery has not outpaced population growth. The ratio of employed people to total U.S. population has been flat for nearly a year and a half. And even once the economy starts adding jobs at a healthier clip, the result will be a jobs market much changed from that the country knew in 2006—one with anemic to nonexistent construction growth, shifting gender representation, and prolonged high natural rates of unemployment. Here are five ways the job market has changed since the recession began:
Construction Jobs Still Far From Recovery
The construction industry currently has nearly 2.2 million fewer jobs than it did at its pre-recession peak in 2006. But then, the housing bubble of 2006 and 2007 gave the industry far to fall. A combination of economic growth and financial innovation encouraged home-buying pre-recession, driving housing demand—and thus, construction--sky high, according to Joel Prakken, chairman of Macroeconomic Advisers, an economic consulting firm. In order for construction jobs to grow again, the current glut of unoccupied houses will first have to be purchased, and demand for new homes will also have to drastically increase. "The previous peak [in housing] was unsustainable," summarizes Prakken. "I hope we learned that lesson and won't drive back toward that peak unless there's demographic reason to build houses."
Healthcare an Even Bigger Part of Economy
Statistics from the Department of Labor show that throughout the recession and recovery, employment in healthcare and social assistance has trended steadily upward, uninterrupted, even as other industries have suffered. According to John Ryding, chief economist at economics consulting and advisory firm RDQ Economics, healthcare can expect to see continued job growth, as graying baby boomers create increased demand for healthcare services. "When you look at demographics, we're going to have resources shifting toward dealing with an aging population," says Ryding.
A Bigger Place for Women (but Maybe Not for Long)
As the U.S. economy hemorrhaged jobs in 2008 and 2009, the phrase "mancession" was coined to describe a wave of job losses that disproportionately affected men. During the recession—that is, between December 2007 and June 2009—men lost nearly 5.4 million jobs, compared with 2.1 million for women. But a new report from the Pew Research Center shows that this tide may be turning. Since the recovery started in June 2009, men have fared better, regaining 768,000 jobs, compared to a loss of 218,000 for women. Though Pew did not find definitive answers as to why men are bouncing back, the report lists several possible reasons that may be contributing to this phenomenon. For example, women are more heavily concentrated in the government sector, which has been facing steady job cuts in recent months as many state and local governments in particular face budget crises. Men are also making gains in manufacturing, retail trade, and finance, while women are losing ground in those sectors.
Small Businesses Still Feeling the Pain
The ADP report gave some encouraging news to small businesses, showing that these firms added 88,000 new jobs in June. That figure is up from May's 27,000 new jobs. But the jobs situation for small businesses remains mixed. The National Federation of Independent Business, an association that represents small and independent businesses, reports that, while reported job losses per firm were down in June, 9 percent of small business owners added jobs in June, compared with 16 percent that reduced employment. These statistics are important, says Ryding, because small businesses have historically driven job creation in recoveries. In the current recovery, however, the engine of small business appears to be stuck in neutral. "They've been extraordinarily cautious in committing to hiring people." In order to accelerate job growth, says Ryding, encouraging small business hiring is going to be key.
A New Definition of "Full Employment"
Many economists agree that the definition of "full employment" has changed since the recession started, and for the worse. "Full employment," or the "non-accelerating inflation rate of unemployment" in economist-speak, has grown since the start of the recession. Pre-Great Recession, the NAIRU was at around 5 percent, meaning that unemployment below 5 percent could in fact create economic turmoil by triggering inflation. Now, the country may have to get used to higher natural rates of unemployment for some time. "I think there has been an increase in structural unemployment," says Prakken. "The so-called NAIRU has risen from close to 5 [percent] before all of this began to something like 6 now, maybe to 6.5." While he says that this rate might eventually drop back to 5 percent, that decrease may not occur for several years.