February 25, 2014
Six U.S. sub-sector job markets with lessons for Canada
Sometime this summer, U.S. total employment will finally return to its pre-recession peak level of January 2008. The shortfall is currently 870,000 jobs. Private service-sector employment has already far surpassed its prior record and many sub-sectors are also doing quite well.
There are six job sub-sectors that I particularly like to keep an eye on, since they capture broader trends in the economy and they provide insight into how Canada is doing, relatively speaking.
U.S. auto sector demand has picked up and domestic assembly and parts plants, as reflected in staffing levels, have been sharing in the improvement. Several forms of restructuring have helped U.S. auto-makers raise profitability. Union labour agreements have reduced the cost of new hires. Production shifts to lower-cost states and those with “right to work” legislation have also trimmed costs. Pension and health care expenses have been moved to separate trust companies.
In Canada, Chrysler is seeking government help to augment new major investment in Windsor. Ontario’s opposition Conservative Party, gearing up for the next provincial election, is proposing worker-rights measures similar to what have been adopted in many neighbouring U.S. states.
Parents tell their children, “If you grow up and become a lawyer, your future is assured.” Not if your livelihood is dependent on a real estate market that can collapse, as it did in the U.S. Nor if your area of expertise is wills, trusts, and similar products that can be standardized and uploaded to the World Wide Web, along with instructions for filling out and processing. Then you have to branch out. No wonder there are so many personal injury attorneys promoting their services through TV ads.
Employment in accounting and bookkeeping soared between 2005 and 2008. After retreating about halfway in the Great Recession, it has been edging higher again since mid-2010. Tighter capitalization requirements for financial firms are raising the need for more record keeping.
Architectural and engineering employment has recovered more than 50% of its peak-to-trough decline. The revival of U.S. housing starts, especially multi-family units, has been a blessing. This sector still needs healthier expenditures on non-residential building projects and civil works.
Further employment gains are hampered by tight spending controls at the federal level, although a shift to more public-private partnerships (P3) is easing access to financing for many projects. Canada’s non-residential building and design sector has benefited from a longer history of P3 involvement, plus our governments have been fairly responsive to growing infrastructure needs.
Employment in computer system design services has been growing almost steadily since mid-2003, with only a minor setback in 2009. The U.S. is the world’s high-tech leader. Corroborating evidence can be found in the performance of the NASDAQ, which has increased 200% since its trough in February 2009. A 200% increase means its level has improved by a factor of three.
Employment in “amusements, gambling and recreation” is a proxy for fun. The appetite of Americans for enjoyment is clearly reviving. This comes after years of scrimping and saving to relieve debt problems. Plus, U.S. consumers have seen their home prices increasing rather than falling and their job prospects on the mend. Some celebratory partying may be in order.
In Canada, personal debt remains high and needs addressing, according to the experts. But our relatively upbeat real estate market has helped underpin family net wealth. The decline in value of the Canadian dollar, versus the greenback, will provide an incentive for Canadians to stay at home for their pleasure, while offering a sound cash advantage for Americans to come and visit.
(seasonally adjusted data)
Data source: Payroll Survey, Bureau of Labor Statistics (U.S. Department of Labor).
Chart: Reed Construction Data - CanaData.