Building on Monday and Tuesday’s posts, let’s take a look at some data that might provide a basis for drawing a conclusion to the second question posed, namely:2.) What might be the extent of job losses related to corporate restructuring in preparation for and as a result of a prolonged recession?
Initially, I had anticipated plotting some of the payroll data for sectors directly and indirectly related to the housing-lending boom-bust and making some guesstimates as to how many jobs might be trimmed as the economy slows down.
But, after plotting the ratio of overall and private non-farm payroll as well as the payroll of various business sectors to overall non-institutional population (above 16 years old and not in jail or “juvee”), the last eight years seem to pose more questions than answers.
The payroll-population ratio concept simply provides a mechanism for better isolating the changes to payroll rosters by calculating the percentage of population that is employed in a given sector at any given time.
In the following chart (click for larger version) you can see the ratio of overall non-farm payroll and private non-farm payroll to non-institutional population from 1948 overlaid with all U.S. recessions in that period.
As you can see, there is a fairly strong correlation to declining percent of population employed in non-farm and private non-farm endeavors and recession with particularly good peak-trough alignment for all recessions prior to 1990.During the 2001 recession (and to a far lesser extent in 1990), although there where large declines to the ratio during the official recession period, the economy seemed to be able resume economic growth while the ratio continued to slide or stayed well below the peak of the prior expansion.
This is an interesting situation in that, although increases in population have been steady and could have replenished the literal number of jobs lost during the downdraft of 2000-2003, the latest expansion of payrolls has not been strong.
The following chart (click for larger version), on the other hand, the payroll ratio related to construction has remained above even the peak set in the 90s expansion but now seems to be coming down.
As you can see, although 3.27% of the population is currently employed in a construction related occupation, there is a chance that this percentage could drop below the trend resulting in 2,327,150 lost construction jobs for every 1% drop in ratio.Of course, these lost jobs could shift to some other part of the labor force but the point is, the current ratio appears poised to drop and with it will inevitably go many construction jobs.
The following is a list of other individual sectors and I’ll leave it up to you to interpret the results but by all means, comment with opinions.
I’ll try to offer some better analysis in a later post.
