Sunday, September 5, 2010
Future hiring will mainly benefit the high-skilled
Whenever companies start hiring freely again, job-seekers with specialized skills and education will have plenty of good opportunities. Others will face a choice: Take a job with low pay — or none at all.
Job creation will likely remain weak for months or even years. But once employers do step up hiring, some economists expect job openings to fall mainly into two categories of roughly equal numbers:
• Professional fields with higher pay. Think lawyers, research scientists and software engineers.
• Lower-skill and lower-paying jobs, like home health care aides and store clerks.
And those in between? Their outlook is bleaker. Economists foresee fewer moderately paid factory supervisors, postal workers and office administrators.
That's the sobering message American workers face as they celebrate Labor Day at a time of high unemployment, scant hiring and a widespread loss of job security. Not until 2014 or later is the nation expected to have regained all, or nearly all, the 8.4 million jobs lost to the recession. Millions of lost jobs in real estate, for example, aren't likely to be restored this decade, if ever.
On Friday, the government said the August unemployment rate ticked up to 9.6 percent. Not enough jobs were created to absorb the growing number of people seeking work. The unemployment rate has exceeded 9 percent for 16 months, the longest such stretch in nearly 30 years.
The crisis poses a threat to President Barack Obama and Democrats in Congress, whose hold on the House and Senate appears to be at increasing risk because of voter discontent.
Even when the job market picks up, many people will be left behind. The threat stems, in part, from the economy's continuing shift from one driven by manufacturing to one fueled by service industries.
Pay for future service-sector jobs will tend to vary from very high to very low. At the same time, the number of middle-income service-sector jobs will shrink, according to government projections. Any job that can be automated or outsourced overseas is likely to continue to decline.
The service sector's growth could also magnify the nation's income inequality, with more people either affluent or financially squeezed. The nation isn't educating enough people for the higher-skilled service-sector jobs of the future, economists warn.
"There will be jobs," says Lawrence Katz, a Harvard economist. "The big question is what they are going to pay, and what kind of lives they will allow people to lead? This will be a big issue for how broad a middle class we are going to have."
On one point there's broad agreement: Of 8 million-plus jobs lost to the recession — in fields like manufacturing, real estate and financial services — many, perhaps most, aren't coming back.
In their place will be jobs in health care, information technology and statistical analysis. Some of the new positions will require complex skills or higher education. Others won't — but they won't pay very much, either.
"Our occupational structure is really becoming bifurcated," says Richard Florida, a professor at University of Toronto. "We're becoming more of a divided nation by the work we do."
By 2018, the government forecasts a net total of 15.3 million new jobs. If that proves true, unemployment would drop far closer to a historical norm of 5 percent.
Nearly all the new jobs will be in the service sector, the Labor Department says. The nation's 78 million baby boomers will need more health care services as they age, for example. Demand for medical jobs will rise. And innovations in high technology and alternative energy are likely to spur growth in occupations that don't yet exist.
Hiring can't come fast enough for the 14.9 million unemployed Americans. Counting part-time employees who would prefer full-time jobs, plus out-of-work people who have stopped looking for jobs, the number of "underemployed" is 26.2 million.
Manufacturing has shed 2 million jobs since the recession began. Construction has lost 1.9 million, financial services 651,000.
But the biggest factor has been the bust in real estate. The vanished jobs range from construction workers and furniture makers to loan officers, appraisers and material suppliers. Moody's Analytics estimates the total number of housing-related jobs lost at 2.4 million. When you include commercial real estate, the number is far higher.
One of them is Martha Escobar, who last month lost her $13.50-an-hour job cleaning an office tower owned by JPMorgan Chase & Co. in Century City, Calif. She was one of 16 janitors, mostly single mothers, who lost jobs as part of the real estate crunch that's squeezed landlords.
Some of them traveled to New York on Thursday to try to pressure JPMorgan to get its cleaning contractor to take them back, given that the bank earned $8.1 billion during the first half of this year.
"I don't know what I am going to do if I can't get my job back," Escobar, 41, said.
JPMorgan Chase spokesman Gary Kishner said the bank has no say over the layoffs, which he said are handled by the building's cleaning contractor.
On top of real estate-related job losses, manufacturing is likely to keep shedding jobs, sending lower-skilled work overseas. Millions who worked in those fields will need to find jobs in higher-skilled or lower-paying occupations.
"The big fear is the country is simply not preparing workers for the kind of skills that the country is going to need," says Gautam Godhwani, CEO of SimplyHired.com, which tracks job listings.
Sectors likely to grow fastest, according to economists and government projections, are:
• HEALTH CARE
The sector is expected to be the leading job generator, adding 4 million by 2018, according to Labor Department data. An aging population requires more doctors and nurses, physical therapists, home health aides and pharmacists.
Many of these jobs will pay well. Physical therapists averaged about $76,000 last year, according to the department's data. Others pay far less. Home health care aides earned an average of just $21,600.
Home health care and personal care aides are expected to add about 900,000 jobs by 2018 — 50 percent more than in 2008.
Jennifer Gamboa of Body Dynamics Inc., an Arlington, Va.-based physical therapy firm, says the drive to reduce health care costs should benefit her profession, which can treat pain less expensively than surgery. Gamboa plans to add two employees in the next year.
• INFORMATION TECHNOLOGY: Technology could be an economic elixir as computers and online networks expand ways to automate services, distribute media and communicate.
Companies will need people to build and secure those networks. That should boost the number of programmers, network administrators and security specialists by 45 percent to 2.1 million by 2018, the government forecasts. Most of these jobs will provide above-average pay.
Technology pay averaged $84,400 in 2008 — nearly double the average private-sector pay of $45,400, according to an analysis of the most recent full-year data by the TechAmerica Foundation, a research group.
• NEW INDUSTRIES: Deepak Advani, an IBM executive, has a title he says didn't exist five years ago: "Vice president of predictive analytics."
Companies and government agencies have amassed data on behavior ranging from shopping habits to criminal activity. Predictive analytics is the art of determining what to do with that data. How should workers' time be deployed? How best to target customers? Such jobs could grow 20 percent by 2018, the government predicts.
Still, economists say more will be needed to boost job growth. The answer may be some technological breakthrough akin to the personal computer or the Internet.
"Most big booms come from a particular sector that moves the rest of the economy," said Richard Freeman, a Harvard labor economist.
Technology spurred job growth after the 1982 and 1991 recessions. The PC became revolutionary in the early 1980s. Internet use exploded after the Mosaic Web browser was introduced in 1994. Housing eventually lifted employment after the 2001 dot-com bust.
"There's a lack of clarity on what the next big thing is going to be this time," said David Card, an economics professor at the University of California.
Until there is, many people will have to lower expectations and living standards as they enter fields with less pay and less job stability, said Dan Finnigan, CEO of online employment service Jobvite.
"People who are unemployed have to embrace this future that they are going to have many jobs," he said. "We will always be working on the next gig."