US job growth engine badly broken

By John W. Schoen, Senior Producer

The job market seems to be perking up a bit, but it?s just not creating work fast enough. The problem may be that it?s badly broken.

A closer look at the numbers points reveals that entire sections of the labor market are simply not adding jobs because they?re ?structurally impaired, ? according to a recent research report from economists at Credit Suisse. And it looks like they?re going to remain crippled for some time.

From real estate, to finance to manufacturing, these sectors have all but shut down as job-creators. Together, these industries account for about half of the jobs lost from the January, 2008 peak to the January, 2010 trough. With little or no job growth from these sectors, it?s as if half of the job market?s cylinders just aren?t firing.

The hardest-hit sector, real estate, has created the biggest crater in the job market. After overall employment levels peaked, the housing bust wiped out nearly 2.5 million real-estate related jobs over the next two years. Since then, employment levels for the industry has more or less flat-lined. That sector accounts for 38 percent of the jobs lost since the job market collapsed, according to Credit Suisse.

Those jobs won?t come back until the housing market begins to show meaningful recovery. But with a house prices falling and a foreclosure backlog of some four million homes, most forecasters don?t expect to see a meaningful recovery until 2015 at the earliest. In the meantime, that ?structural impairment? will likely keep a lid on new hiring for real estate-related jobs.

The recession also took a big bite out of employment in the finance and auto industries: close to a million jobs went away, or about 14 percent of the lost jobs. Employment levels for those industries haven?t begun to recover, either. Major banks continue to shed jobs as they work to rebuild after the financial panic of 2008. Car makers are enjoying strong sales this fall, but at a pace well below pre-recession levels.

Manufacturing (other than cars) accounts for another 27 percent of the jobs lost since the 2008 peak. Though manufacturing companies have boosted sales and profits since 2008, they?ve done so by making their existing workforces more productive with ?heavy investment in new equipment to automate output. As long as those businesses can squeeze more widgets from the assembly line with advances in technology instead of more workers, lost manufacturing jobs are going to be tough to replace. That?s especially true for the workers who lack the skills to operate all that new high-tech machinery.

Since the job market trough in January 2010, a new sector has become ?structurally impaired? ? state and local governments, which have shed roughly half a million jobs in the past year alone. Those losses are expected to widen as governments plug budget holes opened up by lower tax receipts generated by a weak economy.

Source: http://bottomline.msnbc.msn.com/_news/2011/12/05/9228766-us-job-growth-engine-is-badly-broken

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