2009 Job Market Perspectives-Report

What a difference a year makes.

As we neared the end of 2007, warning signs were beginning to emerge of an economic slowdown. In 2008, these signs accelerated and transformed into a state of volatility and uncertainty for the U.S. and global economies. Many events contributed to make this a reality.

In our 2009 Job Market Perspectives report, we take an in-depth look at: 

  • The current and future state of our labor market.
  • The impact of the recent economic downturn on our country as well as on the global markets.
  • Where the economy stands now and where we think it’s headed.
  • Where the jobs are – by occupational sector and by region.

Domestic Job Market


2008 began with an immediate about-face for the U.S. labor market.

Following a year where over a million jobs were added to our economy, January 2008 marked the first month since the 2001 recession ended in which the Labor Department reported declines to payrolls.

This trend would only continue for the rest of the year, with unemployment rising from just under 5 percent to around the 7 percent mark combined with over 2 million total job losses for the year.

While these bottom-line numbers represent the sum total of what’s happening nationally, it’s important to dig deeper and look at how this picture changes vastly by region and by industry, as well as how our job market compares to those in other countries.

Global Job Market

According to the Organization for Economic Co-operation and Development (OECD) the average global unemployment rate reached 6 percent by the third quarter, tying closely to the U.S. average for the same time period at 6.1 percent. While our rate is weaker than some of our European neighbors like the UK and Italy, the U.S. continues to be positioned closely to other leading economies, even favorably as compared to Germany and France.
While unemployment varies widely around the world — Norway’s unemployment is less than 3 percent while South Africa is over 20 percent — it is safe to say that the world continues to become more connected and borders are less defined than ever. The economic slowdown is not only impacting the U.S., but is being felt globally, with the U.S. job market right in the center of it all.

Look at the past

While we are certainly living in historic times, just how historic are the current conditions from a job market standpoint? Feelings of uneasiness and concern certainly intensify when the unemployment rate rises beyond the 6 percent mark, but, over the last 50 years, national unemployment has fluctuated between a low of 4 percent and a high of 10 percent. So, while this is the highest unemployment rate we’ve seen in quite some time, it is still substantially lower than the 9 percent experienced during the mid-1970s.

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Additionally, when you look at the long-term view, there is more positive news for us to consider. Data from the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) that tracks expected job openings versus working population indicates that, in the coming years, 70 million Baby Boomers will reach retirement age while only 40 million workers are expected to enter the workforce during the same period. This means that, by 2015, the U.S. will face a shortage of more than 10 million workers. Despite the economic conditions, from a pure demographics and population perspective, demand for workers will be on the rise, creating opportunities in the coming years.

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2008 Perspective

Election season.
2008 marked one of the most momentous and closely followed presidential elections in American history. From the news media to office water coolers around the country, people were passionate and highly engaged around the issues and the varying stances presented by each candidate. In fact, 50 percent of American workers admitted to talking about politics at work according to our 2008 Workplace Insights series survey. On November 4, the country elected Barack Obama as its first African-American president while Congress moved to a democratic majority, emphasizing a general shift in alignment and focus for the American public. With continued rising unemployment and job losses, American workers will now be focused on seeing how the new administration can bring growth back to the economy and job market.

Pumped-up gas prices.
The price of oil was volatile throughout the year and many were alarmed and concerned when the average price of a gallon of gas rose beyond $4 in the middle of the summer. Prices sharply declined later in the year, but these temporary highs were enough to halt auto sales and keep highways and roads across the country less crowded than in previous years. In fact, while gas prices tied for third on a list of worries presented to American workers in 2007, it took the top spot in 2008, according to our 2008 Workplace Insights survey conducted in September 2008 when gas prices were at an all time high.

Credit crisis.
The credit crunch, which took form in 2007, boomed right into 2008 making it more challenging for consumers to get mortgages, leases and loans. Businesses also had to meet more stringent standards to secure lines of credit and access liquidity, making both business maintenance and expansion projects more challenging to pursue and execute. The credit crisis presented particular challenges for the credit intermediation sector of the economy, which lost thousands of jobs in 2008 as credit vehicles like mortgages, loans and leases were harder to come by and solicit.

Passing the bailout.
In early October 2008, following weeks of extensive debate and negotiation, Congress passed into law a $700 billion economic bailout plan meant to rescue and stimulate growth for the U.S. job market and economy. While leaders on Capitol Hill were able to agree on the need for a bailout, how to spend it is an entirely different issue. Many are divided on which institutions and industries should reap the benefits of this historic rescue package. From a workforce perspective, the bailout could potentially mean much needed relief for those workers in troubled sectors whose employers need an infusion of cash to help bring stability back to their business.

Financial services turmoil.
The banking industry experienced one of the most challenging years in its history. The subprime mortgage meltdown, credit crunch and continued market meltdown caused major financial institutions to file for bankruptcy, merge or require federal assistance. In September alone, we witnessed the combination of institutions like JPMorgan Chase and Washington Mutual, Wells Fargo and Wachovia, and Bank of America and Merrill Lynch. As of December 2008, the industry lost almost 150,000 jobs for the year, showcasing the direct impact of the turmoil on the workforce of these institutions.

Auto manufacturing struggles.
Following the release of third quarter earnings, the financial woes facing the country’s auto manufacturers were presented in a new light, raising red flags around the industry’s ability to maintain itself and bringing the big three auto manufacturers to Capitol Hill in search of government endorsed financial relief. Earnings reports revealed just how much the economic slowdown and credit crisis have impacted American consumers’ resources to buy cars, hindering manufacturers’ access to capital and ability to churn profits— yielding over 160,000 job losses in this sector from December 2007 to 2008.

2009 Outlook

Monitoring change.
Much of 2008’s election season revolved around the idea of “change.” In 2009, people will be watching closely to measure the effectiveness of the new presidential administration and Congress. These new leaders will be highly scrutinized for their ability to effectively navigate the country through the current turmoil and volatility, quickly needing to prove their ability to match campaign promises, improve the economy and bring job creation back to America.

“Green Collar” jobs.
The worldwide attention paid to global warming has spurred interest in the burgeoning field of “green collar” jobs. A fairly new segment of the workforce, these jobs, which support more environmentally conscious behaviors and practices — wind energy, alternative fuels, hybrid car manufacturing, etc. — are expected to grow much faster than the national average. Businesses of all kinds are creating positions to address sustainability issues as a result of legal requirements and public interest. Further, the government plans to continue to support green job growth in 2009. According to a recent study by the University of Massachusetts’s Political Economy Research Institute(PERI) and the Center for American Progress, which encourages the government to invest some $100 billion in “green” jobs, the country could stand to add some 2 million new positions to our economy in the coming years as a result of this initiative.

GDP growth.
Third quarter 2008 marked the first quarter in which we experienced GDP contraction which also continued into the fourth quarter. In addition to the National Bureau of Economic Research officially declaring that the U.S. has been in a recession since December 2007, we are now in a formal recession which hinges on two consecutive quarters of contraction. A major initiative in 2009 will be to stimulate production in the country in order to reverse these negative results and bring growth back to the American economy as swiftly as possible. Job creation and GDP growth typically go hand in hand, so it will be important to watch how both indicators shift and impact one another in 2009.

Healthcare reform.
While the 2008 election season saw a wide range of issues debated and scrutinized, one of the most important was healthcare reform. With over 17 million Americans claiming no health insurance, the need to deliver some sort of plan for reforms is high. 2009 will be an important year to see how the new administration plans to enact an overhaul of the current system. While the healthcare industry continues to stem major job growth, it will be important to sustain this momentum to help compensate for other declining industries throughout 2009.

Consumer spending.
Throughout 2008, consumer spending continued to weaken, making it an especially challenging holiday shopping season for retailers. In 2009, legislators will be looking for ways to increase cash flow to Americans in order to stimulate spending and enable a new flow of cash to filter into the economy. It will be key to see how legislation forms and where the bailout hits Main Street in order to encourage this process. Without the increase in consumer spending, it will be challenging for the retail job sector to begin adding more jobs to their payrolls and turn around the downward trend seen in late 2008.

Regulatory shifts.
While the early part of the decade was rocked by regulatory reforms coming in the form of SOX, there are new acronyms entering the corporate lexicon — XBRL (data tagging of financial statements) and IFRS (international reporting standards) — which will create challenges for today’s finance professionals. In recent surveys with the Institute of Management Accountants (IMA) the majority of finance professionals feel that their organizations are not prepared for implementation of either initiative. This will create a challenge for companies and their finance teams to maintain business as usual and focus on meeting the current high demand for their financial analysisskills while, at the same time, realigning their operations to adapt to these major industry shifts. On the other hand, it also increases demand for finance talent to help manage and implement these processes — a great opportunity for these highly skilled professionals.

Regional Snapshot
Just as a diversified investment portfolio is more likely to weather an economic downturn, regions with hybrid economies are also performing better in the current climate. Most of the regions that are suffering are feeling the impact of a decline in goods-producing sectors. On the other hand, the more stable regions rely less on a single sector and more on a number of stronger industries like healthcare, education, IT and professional services. Let’s take a closer look at all of these regions.

  • Northeast
  • Midwest
  • West
  • South

Northeast

Best jobs: Education, Healthcare, Finance/Accounting, IT

  • Throughout most of 2008, the Northeast was the region with the lowest or close to lowest unemployment rate, staying below the national average the entire year.
  • The economy in the Northeast is largely professional services oriented with a heavy emphasis on service- versus goods-producing industries.
  • Turmoil in the financial services industry has not only impacted New York City, but also the surrounding tri-state area which lost over 50,000 jobs in 2008.
  • Massachusetts had one of the lowest unemployment rates in the region largely due to the high number of educated workers — 52 percent of workers in Massachusetts have a college degree versus the national average of 24 percent.
  • Over the first three quarters of 2008, New Jersey saw only about 21,000 jobs disappear out of a total workforce of over 4 million people, allowing unemployment to remain below the national average.
  • Despite weakness in construction nationally, construction jobs have remained stable in Pennsylvania — the strongest job segments in the state are education, healthcare, natural resources and mining, which all continue to add hundreds of jobs each month.

Sources: BLS, MetroWest Economic Research Center, New York Times, New Jersey Department of Labor and Workforce Development, Associated Press

Midwest

Best jobs: Engineering, Construction

  • 2008 was challenging for the Midwest as the region frequently reported the highest unemployment rate in the country, coming in above 6.5 percent in the second half of the year.
  • For the past two years, Michigan was often the state with highest unemployment rate, coming in at 10.6 percent in December 2008 largely due to job losses in the manufacturing sector.
  • Kansas’ Labor Secretary noted that, from 2004 to 2014, the overall workforce is expected to expand by 12.3 percent in the state. He also reported several new policies were working to keep more Kansans employed and helping business expand — the state’s reduction in the unemployment insurance tax paid by employers meant that businesses were able to keep $78 million of their revenues in 2007, a figure that should grow to $90 million for 2008.
  • Illinois’ unemployment rate hovered around 7 percent for most of the year. According to the state’s Security Director, Maureen O’Donnell, the state is using programs like the Illinois Works jobs plan to create jobs in some of the hardest hit sectors, including construction which has lost 10,000 jobs over the last year.

Sources: BLS, Associated Press, Kansas Department of Labor

West

Best jobs: IT, Engineering, Finance/Accounting

  • The West has seen the largest year-over- year unemployment increase as compared to the other regions, rising by around 2 percent in 2008.
  • The financial and housing crises have had a big impact on California’s job market as the state unemployment rate rose to its highest level in 12 years in 2008 largely due to a halt in construction activity, falling home prices, and a decrease in consumer spending.
  • Despite the turmoil in California, Silicon Valley has held its own. The state has the highest number of tech workers in the country and IT jobs are still plentiful there.
  • Nevada economists estimate that the state unemployment rate will average about 8.6 percent for 2009, reaching 8.7 percent by the end of the third quarter. Las Vegas continues to see job growth in the hospitality jobs category, but construction has slowed, hindering the growth seen in recent years.
  • Washington saw its unemployment rate fluctuate in 2008 which, according to the state’s chief economist, indicates that “the economy is substantially better than it was during the 2001 recession, when Washington’s employment level declined for 20 consecutive months.” Major job growth is taking place in education, healthcare and publishing.

Sources: BLS, California EDD, Los Angeles Times, The Las Vegas Review-Journal, Washington Employee Security Department

South

Best jobs: Healthcare, Finance/Accounting, IT, Engineering

  • The South was one of the most stable regions, with unemployment remaining below the national average throughout 2008.
  • More than any other region, the South benefits from a hybrid economy with a good mix of goods- and service producing jobs that have allowed the industry to maintain stability through the current economic turmoil.
  • While Florida’s unemployment rate steadily rose throughout 2008, several portions of the state’s economy, including tourism and government, continued to add thousands of jobs. State economists forecast a return to normal job growth for the state in 2010.
  • Texas’ unemployment rate is far lower than most states, hovering at around 5 percent. The state’s job market has actually reaped some of the benefits of NAFTA and has been positively impacted by the oil and energy industries.
  • While Michigan has lost thousands of manufacturing jobs, Texas and Alabama are two states that have actually grown by the thousands when you look at their manufacturing workforce.

Sources: BLS, Associated Press, Miami Herald, Dallas Morning News, Wall Street Journal

Industry Snapshot

While sectors like manufacturing, construction, financial services and retail have been hit hard recently, it’s still difficult to make generalizations about the job market — especially when we still see a strong demand for professionals with higher levels of education and training in sectors like accounting, IT, engineering and healthcare. Here’s our analysis of some of the major sectors of the U.S. job market.

 

 

 

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