The recent release of the October 2010 job figures by the U.S. Bureau of Labor Statistics revealed that the national economy was generating net new jobs (151,000) for the first time in recent months, with the private sector responsible for all of the net job growth. A careful look at the breakout of the job growth figures by major industrial sector revealed a very high concentration of growth in just four sectors: temporary help services, retail trade, fast food and other eating/drinking places, and health care/social services. Employment in the nation's goods producing industries (mining, construction, and manufacturing) as well as transportation services and utilities, the nation's key employers of blue collar workers, was basically flat. Since the national recession officially ended in June 2009, the U.S. economy still has not added any net new wage and salary jobs in its goods producing industries or in transportation services. Total employment in the construction, manufacturing and transportation industries combined was still 540,000 below its level in June 2009. There has been no recovery in these industrial sectors to date.
Given their above-average concentration in the above industries, the nation's blue collar workers (construction, installation and maintenance, production, and transport operators) remain trapped in a labor market depression, 16 months after the end of the recession. Between the fourth quarter of 2007 and the fourth quarter of 2009, 17% of all blue collar workers' jobs in the US were eliminated while the combined number of professional and management-related jobs were left unchanged. Over the June-September period of this year, we estimate that 17 to 18 percent of the nation's production workers and transportation operatives/material movers were left either unemployed or underemployed -- as were 28 percent of all construction and extraction workers. In comparison, only 4 to 6 percent of professionals and 6 to 7 percent of managers were facing one of these labor market problems.
The dire circumstances in which the nation's blue collar workers have found themselves in recent years can also be gleaned from a careful analysis of the findings of the recent BLS dislocated worker survey, which tracked permanent job losses over the 2007 to early 2010 period. Over this three year period, 15.4 million workers 20 and older were displaced from a job, equivalent to about 11% of all U.S. workers, the highest rate of job displacement in the approximate 30 year period for which such data are available. Over 5 million of these dislocated workers were employed in blue collar jobs at the time of their displacement, representing a near 17% dislocation rate. Nearly 16% of transportation operatives/ material movers, 17% of production workers, and 21% of construction workers were displaced. These job displacement rates compare to only 4-6% of professional workers and eight per cent of those holding managerial jobs.
The re-employment rate of these dislocated blue collar workers was only 44% at the time of the February 2010 survey, and fewer than two-thirds of those regaining employment were able to find a new blue collar position. Thus, overall, under three of every ten displaced blue collar workers were reemployed in blue collar jobs in early 2010. Those who had to switch occupational groups to become reemployed experienced an average 25% decline in their weekly earnings. Their lower weekly earnings will reduce their families' abilities to maintain consumption at prior levels, holding down aggregate spending, and thereby stalling the recovery.
The ARRA stimulus efforts and the private recovery in jobs have so far had little impact on employment prospects of the nation's blue collar workers. Other nations, including Denmark, Germany, Japan, and South Korea, implemented other workforce strategies, especially work sharing and training for part time workers who were kept on the firm's payrolls, to maintain the employment of blue collar workers and enhance their technical skills. Each of them were far more successful than the U.S. in avoiding steep declines in employment and sharp rises in their unemployment rates, especially for men and blue collar and service workers. The U.S. can learn from them on more effective policies to preserve jobs and prepare our workers for future job demands.
Prepared by: Andrew Sum and Mykhaylo Trubskyy, Center for Labor Market Studies at Northeastern University in Boston, Massachusetts.