We’re starting a new series titled, Jobs 2012, which will drill down into the employment and jobs data. We’ll analyze what kind of jobs are being created and lost in the current recovery, look at short and long-term trends, and the overall structure of the U.S. labor force.   We feel the series is timely as jobs are the most important issue for voters in this Presidential election according to a recent Gallup poll.

(click here to view prior posts on the jobs market)

Our first post of Jobs 2012 is a big picture view of the U.S. labor market.   We’ve analyzed and charted the latest data from the Bureau of Labor Statistics (BLS) showing trends in the three major sectors of the jobs market:  1) Private goods-producing; 2) Private service-providing; and 3) Total government jobs.

We were surprised at what we found.

First, recognized by Iacono Research in 2010,  total government jobs at the federal, state, and local level, now exceed total employment in the private goods-producing sector,  including manufacturing, construction, mining and logging, which also includes oil and gas extraction.  We didn’t expect this.

Really? More government jobs than goods-producing jobs?  In the United States?

This is one data point, in our opinion, that embodies the U.S. zombie-like economic recovery and fiscal problems that the state and local governments are now experiencing.  It also helps explain the record level corporate profit margins.

We love our public sector employees,  but also recognize wealth and sustainable demand are created in the private sector.  Without asset inflation the conventional economic wisdom seems to be moving toward the view that quality goods-producing jobs are essential for a better economic future.

For example, if the house of a lower paid service worker, such as a retail clerk at Wal-Mart, is not appreciating on an annual basis,  it’s difficult for the global economy to generate the wealth induced aggregate demand to absorb the capacity it built out during the bubble.  Ask China.

Click here for an interesting (wonkish) piece on the rise of low paid service jobs and polarization of the U.S. labor market

Second, the trend toward a service-providing labor force began just after WWII and is hardly new though it did accelerate after the bursting of the dot.com bubble when corporations were caught with excess capacity.  The percentage of private goods-producing jobs of total nonfarm employment, for example,  peaked in 1943 at 44 percent during the wartime economy and has since been in a secular decline and now less than 14 percent in 2012.

The falling cost of automation, globalization, relative wages, productivity increases, consumer/worker preferences, the rise of the internet, and political forces, are just a few of the many causes of the shift to service jobs, which now make up almost 70 percent of nonfarm payrolls.

The causes and solutions for the weak U.S. jobs market are topics for Ph.D dissertations, beyond our pay grade,  and the scope of this simple post.   We’ll let the President and Governor Romney slug it out on how they plan to fix it.

More to come.   Stay tuned.

(click here if charts are not observable)

Category: Employment, Think Tank

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

3 Responses to “Jobs 2012: Government Jobs Exceed Goods-Producing Jobs”

  1. Futuredome says:

    Pfft, the pubic and goods sectors have both shrunk since 75 and you could argue the public sector could use more jobs on the local level. The Goods sector is mostly due to automation and some to offshoring. With the freed up capital, little surprise this goes into “leisure” activity.

    The easiest way to “inflate” the economy is major wage inflation in service jobs. If a part timer was starting out at 13$ at Wal-Mart and full timers in the 18 dollar ranges, that would probably suck up alot of that capacity. Instead, they go for big ROI at the shareholder level.

    This also creates the illusion of government deficits, when it is in fact, low wages.

  2. dumsperospiro says:

    Plot that PAYEMS time-series on a semilog scale and weep at how the Bush gang broke a 50 year long term.

    And while you’re at it, plot the product of manufacturing sector jobs and manufacturing sector output and weep at another long term trend broken by the Bush gang.

    To say it another way, the carnage in manufacturing jobs during the Bush years has really done us in.

  3. Rick Caird says:

    Te problem with the Gallup poll is that it allows multiple answers and no ranking. So, it is easy to say several things are very important. I once had a manager who noted that if everyone was ranked as a top performer, no one was a top performer.