Major changes seem to often follow a pattern where they take a long time to develop and then suddenly seem like they happen over night.
This can be said for some of the major employment trends that we are seeing today.
The economic recovery that has taken place to put us now in a supposed “full employment” economy has taken place without a robust increase in jobs.
What is exactly happening?
The USA has been in a transformation from a manufacturing economy to one driven by information and technology. This has produced tremendous innovation and created significant wealth. It also has been accomplished without a resultant increase in jobs.
An excellent example of how this jobless transformation has taken place can be seen in a recent New York Times article “The Decline Of The Baronial CEO” by Nelson D. Schwartz where he provided the following insight from the McKinsey Global Institute of how the top three Silicon Valley companies compare to the Big Three automakers in terms of revenues and employees.
In 1990, the revenues of Detroit’s Big Three automakers totaled $250 billion while they employed 1.2 million people, according to a study by the McKinsey Global Institute.
Silicon Valley’s top three companies in 2014 had almost the same revenues before adjusting for inflation — $247 billion — but with 137,000 employees, they required a workforce just one-tenth the size.
To put this into perspective, here is the revenue per employee comparisons:
Big Three Automakers - $20,833/employee
Big Three Silicon Valley - $1,824,817.52/employee
Aside from the fact the tech companies are immensely more profitable, the comparison shows how the jobless recovery is working.
Another example is how retail employment has been significantly impacted by the steady move to online shopping. We all have read about the recent troubles that major retailers like Macy’s and Sears (along with a number of other specialty retailers) have been having and how they have had to experience significant layoffs.
What is interesting is this trend has been taking place for quite some time now and has flown under the radar of many. I read an interesting blog from the always on target Steve Boese titled “Chart Of The Day: All Jobs Matter” where he compared the relative job losses in retail to that experienced in coal mining. The numbers tell a fascinating story:
Number of Job Losses By Sector – 2017
Retail – 26,800 jobs lost
Coal Miners – 2,800 jobs lost
There was a recent CNN.money article “Department Stores Have Lost More Jobs Than Coal Mines” that also showed how significant the decline in traditional retail jobs really is.
Between 2001 and 2016, jobs at traditional department stores fell 46%, according to Labor Department data.That's a much steeper drop than other troubled industries. For example, coal mining jobs dropped 32% during the same 15 years. Factory employment fell 25%.
The CNN article goes on further to talk about the societal impact that the decline in retail employment is having:
About 60% of department store employees are female, compared to 47% of workers overall. Minorities, the elderly and teenagers are also far more likely to find jobs in department and discount stores than they are elsewhere. Teenagers hold 8% of department store jobs, compared to 3% of jobs overall.
Some 3,300 store closings have been announced so far this year, according to Fung Global Retail & Technology, a retail think tank. That's double the number in the same period in 2016.
Steve Boese also (courtesy of Bloomberg and The Bureau of Labor Statistics) shared an interesting chart showing the top ten job losing sectors for 2017.
Steve Boese pointed out that the above chart has one common theme:
'Wired' telecommunications jobs seeing the most losses so far in 2017 is not terribly surprising. More and more folks have abandoned a hard phone line at home, and I bet it won't be too much longer until most companies do the same for their employees.
Most of the rest of the impacted job sectors are in the physical retail space. Department stores, sporting goods stores, general clothing stores, all are under significant pressure from the likes of Amazon, Walmart, and others. I went to one of the local malls a week or two ago, (weird, I know), and it was half-empty and I issued an over/under of 11 months until it closes for good.
The reason for this sea change in employment? We can look to automation, outsourcing, technology as the main factors. As I mentioned at the beginning of this post, these changes seem to have happened suddenly but they have actually been building for quite some time.
Where is this all going? That will be a subject for another post.
Some final thoughts:
- Major employment shifts like these have a human element. Look beyond the statistics and you will find real people with careers, household budgets, and families. It is not always that simple to just say that retraining or finding a new career will solve this. I know.
- Everyone has to always be on alert regarding whether their position, company, and industry sector is relevant and growing. There are big prices to pay when you find yourself in an industry or career that is in systemic decline. In past years people in the printing felt the hurt, today the pain is being felt in retail, tomorrow it may be you.
