Ha! For all the talk about the financial industry getting its comeuppance, it really hasn’t been hit that badly in terms of lost jobs.
The Economist’s Free Exchange blog observes:
What may be unexpected is that unemployment in financial services is well below the national average—just 6.8%. The popular perception, at least outside of New York, is that there are no jobs in finance; Wall Street is clogged with people looking for work. The loose job market in finance is often used to justify the government’s meddling with finance pay and the hopelessly misguided decision to make hiring workers who require H1-B visas more difficult. The unemployment rate suggests that finance has fewer people looking for work than most industries.
The idea that there’s no “market” or competition for labour is absurd — something that could only really be argued by people not paying attention to the industry. We write about brokers and bankers getting poached every day. Almost every day there’s story of another financial industry superstar stalking out on their own to start something new.
Perhaps it’s wishful thinking; people would like to imagine that there can’s possibly be demand for banking talent, and thus pay should be next to nothing, but that’s just not the case.
Of course, that being said, we wouldn’t be surprised to see industry layoffs continue for some time, particularly as people realise this isn’t just a disruption and that the new normal will more closely resemble the current period rather than 2006/2007.
The same piece also makes an important point about unemployment in other industries:
Unemployment in construction is 21.1% and manufacturing is 12.1% (a little higher for manufacturing of durable goods). That is worrying because job losses in these areas are more structural than cyclical. Manufacturing has been in a slow decline for decades and there exists an excess supply of homes and commercial real estate. This means that many construction and manufacturing jobs will not be coming back, even in recovery. Many of these workers must switch fields and be retrained. How and with what resources we can retrain these workers will become a very important policy question. This is an issue that has not gotten nearly enough attention.
This idea goes along with what we’ve been saying, that the “recovery” will likely be a jobless one, and that we might not even recognise it as a recovery for a long, long time. These secular declines in certain industries — housing, gone! — are part and parcel of the economic shift. It’s impossible to imagine a recovery that just goes right back to the old way, with everyone making money building and flipping homes. Thus the process of finding jobs for these unemployed workers will necessarily take a long time (a lot of retraining, job searching) even in an economy that’s no longer in crisis mode.
That being said, we hope the decline in manufacturing jobs isn’t permanent. Without a plan to foster industry that can employ low-skill laborers, we’re screwed.