Yesterday, the Wall Street Journal had one of those articles that seek to make people worry, a lot. The grim picture it paints is not one of a job market that will just be slow to recover — it claims that some Americans’ occupations may be lost forever (shudder!). It worries that some jobs that were lost during the recession may never come back. While certainly true on a sort of practical basis (if a firm goes under, its jobs are lost forever), the article argues a graver point: that the job market is changed forever.
That’s rubbish. The recession didn’t cause a sort of structural job shift that might have resulted from, say, a major technological innovation. It just created severe cyclical job losses in several specific industries. And while it might take a very long time for those job numbers to return to their pre-recession level, they will get back to a healthy level eventually.
Let’s consider what the WSJ says:
The downturn that started in December 2007 delivered a body blow to U.S. workers. In two years, the economy shed 7.2 million jobs, pushing the jobless rate from 5% to 10%, according to the Labor Department. The severity of the recession is reshaping the labor market. Some lost jobs will come back. But some are gone forever, going the way of typewriter repairmen and streetcar operators.
Oh c’mon. What industries were completely obliterated? I can’t think of a single one, though some were severely debilitated, and will take a while to reconstruct. Here are the sectors the WSJ mentions:
Many of the jobs created by the booms in the housing and credit markets, for example, have likely been permanently erased by the subsequent bust.
It later singles out construction. So did construction jobs go “the way of the typewriter repairmen and streetcar operators?” Unless I missed news about a new army of robots that now construct homes and office buildings, then of course not. The construction industry definitely suffered extraordinary job losses. Given the enormous excess inventory of housing and commercial real estate the bubble caused, I doubt those jobs will come back anytime soon. But they will come back eventually.
At some point, probably years down the road, the home and building inventories will begin to dwindle. Old construction will need more repairing, and population growth will demand additional housing, factories and office buildings. At that time, you’ll see construction jobs grow again. They’re hardly gone forever.
The same could be said for credit markets. True, you might not have as many little mortgage companies and shady mortgage brokers popping up around Southern California as there were pre-recession. But people will continue to need mortgages one way or another. Those jobs will just be for mortgage underwriters at good, old fashioned banks instead of subprime mortgages shops. Again, credit markets aren’t suddenly gone forever. Even securitization may rise again — unless regulation kills it.
I don’t mean to minimize the seriousness of the employment situation. It’s a major problem, particularly given how long it will likely take to get back to anywhere close to full employment. But I don’t buy into alarmist articles like this one from the WSJ, which simply exaggerate reality just to scare their readers.
