September of 2008 is the month that marked the freezing of the nation’s capital markets and the politically disastrous bank bailouts that helped sweep Barack Obama into the White House a few short weeks later.
The nation’s workforce has changed since the banking system collapse and with the release of August employment data, the Bureau of Labor Statistics provides a window into how the U.S. economy has shifted in the eight years from the last month before the failure.
As might be expected, the shift of the workforce toward a more service oriented economy that had been occurring prior to September 2008, was exacerbated over the past eight years.
The number of non-farm employees producing goods dropped over the past eight years by 1.65 million workers, while the total number of workers increased by 7.135 million. The percentage of jobs in the goods producing sector of the economy dropped dramatically from comprising 15.5 percent of the overall private sector to a mere 13.5 percent today.
While the hits to the goods producing sector have been across the board, the manufacturing and mining/logging economy both suffered particularly hard losses and really have not come back. On the positive side, construction jobs had a more significant bounce back after large drops from the 2008 levels, but even construction remains at only about two-thirds of levels seen eight years ago.
On the flip side, the service sector has grown by more than 9.3 million jobs with the vast majority of the growth found in the retail, education & health, leisure & hospitality and professional business sectors.
One stunning outlier in this analysis is that with all the talk about our nation’s STEM education and the need to import IT workers, the Information sector is the only Services sector area to drop in number of jobs reported in the past eight years, declining by 6.5 percent since 2008.
On the household side of the two employment reports issued by BLS each month, the most significant eight-year trend is the continued drop in labor participation amongst workers 16 to 64 years of age. While levels of participation for people aged 65 and over has increased, participation levels amongst prime work aged individuals has fallen significantly.
The net effect of this decline is that, as I reported in a statement released after the July unemployment report, the unemployment rate would have almost doubled to more than 9 percent if the labor participation rate amongst people 16 to 64 had remained the same as it was in the year 2000.
While many argue in today’s political landscape that America does not have enough workers due to declining birthrates and other factors, the hard truth is that too many of those who in the past would have been working and striving for a better life, have simply dropped out of the above board economy. One of the great tasks of the next four years will be to encourage sufficient growth in the economy that this lost workforce re-emerges enticed by new opportunities that emerge to fulfill the American dream.
The employment story of the eight years since the banking crash of 2008 is one where high-paying, goods-producing jobs have been stifled while service jobs have thrived. It is a story of the continuing decline of workforce participation by those who should be the backbone of the workforce.
And it is a story where the headline unemployment numbers almost represent false advertising when it comes to relaying the actual state of the American worker.
It will be up to the next President to move past this new normal and set a course which restores real growth that produces not only goods and services, but a jobs renaissance to break the malaise which currently engulfs the workforce.
It has been eight years since the old normal was shattered, it is time to begin looking forward to reestablishing a robust job and wage growth environment in America once again.
This is a guest post by Rick Manning president of Americans for Limited Government.
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