Rutgers’ report: Each downturn leads to longer job-recovery period

NEW BRUNSWICK – Each successive economic downturn will take longer and longer for the number of jobs lost to return, given the growing proportion of service-sector occupations that make up much of the national economy and employers’ intense focus on efficiencies, according to a new report.

The report, “The Nation’s Tepid Employment Recovery,” said the Great Recession and the 2001 economic downturns serve as examples of economies where manufacturing, which once made much of the economy, has taken a proverbial back seat to service industries like retail, leisure and hospitality, and business services.

Whereas jobs that were lost in past recessions would eventually return once demand picked up, that is not so much the case anymore. Going, forward, it will continue to take longer for jobs to come back, the report states.

“In old recessions, job losses may have been driven by temporary factory and construction layoffs, with “rehirings of the same type of jobs in these same sectors occurring as recoveries gained momentum,” the report said.

“In ‘new’ recessions, job losses appear to be more permanent and may be the result of adapting to perceived new economic realities and the emergence of new business models.”

Some of the jobs may not return at all or may have changed dramatically, the report said.  

“Postindustrial recessions may now spark a process of long-term economic restructuring, driven by globalization and advancing information technology,” the report added. “Recoveries now produce jobs new and different from those lost; and the job creation phase may be much more deliberate, thus taking far more time than that of the job destruction phase.”

The report was prepared by James Hughes and Joseph Seneca, economics professors at the Edward J. Bloustein School of Planning and Public Policy.

The report showed how much of a slice the service sectors make up in the job pie, and how prone they are to being on the chopping block.

In the 1981-82 recession, only 30,000 service jobs in the private sector were lost, or 1.1 percent of all job losses. 

But in the 2007-10 recession, service jobs made up 51 percent of the 8.8 million jobs lost in the private sector. In total, 4.5 million private service-sector jobs were cut.

The report also affirmed that healthcare and education jobs are “recession-proof.” Jobs in those areas increased by 841,000 during the Great Recession. 

Public sector jobs actually grew during the peak of the recessionary period, creating 94,000 jobs at all levels of government. But it has recently been contracting, losing some 524,000 jobs at state and local levels in the last two years. 

The report also found that growth in mid-level and mid-salary jobs has been largely “missing,” creating a bifurcated economy.

“There has been a dual labor market consisting of labor shortages for highly skilled jobs and a simultaneous oversupply of applicants for jobs in lower paid positions.”

Moving forward, this doesn’t bode well for a lot of workers who’ve lost jobs.

“While there are glimmers of light at the end of the tunnel, the hole remains deep and mired in the post recession employment losses across many of the nation’s service industries.”

 

Rutgers’ report: Each downturn leads to longer job-recovery period