One of the recurring themes that Dave Schuler and I have advanced since the global recession began is that we’re seeing a massive realignment of the economy and that many of the lost jobs will never come back. That’s especially true of the financial sector. There will simply be fewer people making big money moving money around, speculating on stock and commodities futures, and all the rest in 2017 than there were in 2007. And it’s not at all clear what the rebounded economy — which will eventually happen — will look like.
A front page piece in today’s NYT by Catherine Rampell makes a related point: The global meltdown is speeding up the permanent abolition of jobs that were eventually going to go away, anyway.
Many of the jobs lost during the recession are not coming back.
Period.
For the last two years, the weak economy has provided an opportunity for employers to do what they would have done anyway: dismiss millions of people — like file clerks, ticket agents and autoworkers — who were displaced by technological advances and international trade. The phasing out of these positions might have been accomplished through less painful means like attrition, buyouts or more incremental layoffs. But because of the recession, winter came early.
[…]
[Prototypical anecdotal character to humanize the story, much to my annoyance] is one of 1.7 million Americans who were employed in clerical and administrative positions when the recession began, but were no longer working in that occupation by the end of last year. There have also been outsize job losses in other occupation categories that seem unlikely to be revived during the economic recovery. The number of printing machine operators, for example, was nearly halved from the fourth quarter of 2007 to the fourth quarter of 2009. The number of people employed as travel agents fell by 40 percent.
This “creative destruction” in the job market can benefit the economy. Pruning relatively less-efficient employees like clerks and travel agents, whose work can be done more cheaply by computers or workers abroad, makes American businesses more efficient. Year over year, productivity growth was at its highest level in over 50 years last quarter, pushing corporate profits to record highs and helping the economy grow.
But a huge group of people are being left out of the party.
Millions of workers who have already been unemployed for months, if not years, will most likely remain that way even as the overall job market continues to improve, economists say. The occupations they worked in, and the skills they currently possess, are never coming back in style. And the demand for new types of skills moves a lot more quickly than workers — especially older and less mobile workers — are able to retrain and gain those skills.
These shakeouts happen with every recession but seldom to this extent. It’s looking like an economic realignment rather than just the normal operation of the business cycle.
What’s particularly interesting — and frightening — to me is that, typically, the jobs that are lost are those at the lower end of the skill pool. The example I always use is gas station attendants, who were employed in the millions when I was a kid and are now virtually non-existent outside New Jersey (where self-service gas stations are outlawed). Many assembly line workers have been replaced by robots or cheap foreign labor and, to a certain extent, clerical workers have been replaced by computers. And, of course, most farmers and old-style tradesmen (blacksmiths, cobblers, etc.) have been replaced by more efficient (if lower quality) production techniques.
While traumatic at the personal level — few 40-year-old gas station attendants or textile workers shifted into software development and high finance — it was good for the overall economy. Jobs that should have been held by robots or illiterate Third World peasants went there and the next generation of Americans were forced to become better educated and move into safer, more enjoyable work.
Now, though, we’re seeing the loss of very high skill, upper middle class jobs. And it’s not clear to me how we’re going to train and educate our way out of this one.
