Job Growth and Industry Shifts

Footnotes

' Employment data used in this article are from the
Bureau of Labor Statistics Current Employment Statistics
(ces) program, a monthly survey of the number of employees
on nonfarm payrolls, their earnings, and hours for which they
This article presents only employment data. Other
ces data, including average hourly earnings and average
weekly hours, are presented each month in the Bureau's
publication, Employment and Earnings. Also included in this
publication are data for most manufacturing and many non-
manufacturing industries at the more detailed four-digit
Standard Industrial Classification (sic) level. State and area
estimates are presented at the industry division level. Data
are reported each month by a sample of over 300,000 estab-
lishments, and estimates are benchmarked annually to corre-
spond with the complete counts of employment that are
obtained primarily from administrative records of the Unem-
ployment Insurance System, The data presented in this arti-
cle have been reconciled with universe counts as of March
for each year up to 1988, the most recent year for which data
are available on the 1972 sic codes. For a description of ces
concepts and methodology, see 8Ls Handbook of Methods,
Bulletin 2285 (Bureau of Labor Statistics, April 1988), ch.
2.

> Comparisons are made at the three-digit sic level,
except in the relatively few cases where the CEs program only
publishes at the two-digit level. Data are based on the 1972

sic codes. Although the CES program introduced the 1987
codes in September 1990, substantial changes in many of the
industry series do not allow for analysis over the decade
under the new scheme.

5 For more detail on the export-driven resurgence in
manufacturing, see Christopher J. Singleton, “The 1987-88
surge in exports and the rise in factory jobs.” Monthly Labor
Review, May 1990, pp. 42-48.

* The Federal Government filed and won an antitrust suit
against American Telephone and Telegraph (AT@t) that re-
sulted in the divestiture of the Bell System in 1984. This
action ended AT&t’s “natural monopoly,” and competitors
were able to enter the market. Regulation of rates and other
important aspects of service also were ended at this time.

* For a discussion of the rapid growth in business serv-
ices during the early years of the recovery period, see Wayne
J. Howe, “The business services industry sets pace in em-
ployment growth,” and Max L. Carey and Kim L. Hazelba-
ker, “Employment growth in the temporary help industry.”
Monthly Labor Review. April 1986, pp. 29-36 and 37-44.
respectively.

® National Commission on Excellence in Education, A
Nation at Risk (Washington, pc, National Commission on
Excellence in Education, 1983)

Evolving technical jobs

Technical changes on the job tend to change basic skill requirements incre-
mentally. Sometimes these changes accumulate to the point of creating

new occupations. In manufacturing,
and tool and die maker are evolving
gist jobs. The same has happened wit

craft occupations such as machinist
quickly into technician and technolo-
ith the skill jobs of assembler, repair

person, and materials handler. In services, the secretary is evolving into
the information manager and the bank teller is becoming the financial ser-
vices portfolio consultant for individual customers.

—Anthony P. Carnevale, Lelia J. Gainer, Ann S. Meltzer
Workplace Basics: The Skills Employers Want

(Alexandria, va, The American Society for
Training and Development, 1989), p.3.

16 Monthly Labor Review September 1990


Letrtrtiist tit

Chart 4. Employment changes by major industry division, 1979-89

60 60 40 30 20 10 0
Percent

-10 -20 -30

Retail trade

Wholesale trade

Construction

Government

Transportation and
public utilities

Manufacturing

Mining

tion. Many small and marginal mines, which did
not have such equipment, were forced to close.
Metal mining also posted large job losses dur-
ing the 1980’s, losing 40,000 employees, or
nearly 2 of every 5 jobs. /ron ore mining led the
list of most rapidly declining industries, and cop-
per ore mining was close behind. Both lost about
3 of every 5S of their jobs over the decade, while
the output per hour worked more than doubled.

Construction. 1n contrast to the job losses suf-
fered in other goods-producing industries, con-

struction employment grew by 19 percent dur-
ing the 1980's. Being sensitive to business cy-
cles, construction lost employment during the
two recessions early in the decade. New housing
starts and the value of new construction (in con-
stant dollars) were at low points, while interest
rates were at a high point for the decade in
1981-82. Construction employment then grew
rapidly over the next 3 years with the economic
recovery and a sharp decline in interest rates.
Growth continued throughout the remainder of

Monthly Labor Review September 1990 7


12 Monthly Labor Review

Job Growth and Industry Shifts

than a quarter million jobs, or nearly half of its
employment, over the decade. Communications,
after growing by 25 percent during the 1970's,
lost 4 percent of its jobs in the 1980's. The
breakup of AT&T had much to do with this decline,
as new competition in the field led to cost cutting
and consequent job cutbacks.

Wholesale trade. Employment in wholesale
trade and each of its two components, durable
goods distribution and nondurable goods distri-
bution, grew at exactly the average rate for all
industries over the decade, 20 percent. Job
growth was restrained by the increasing tend-
ency of retailers to import products made abroad
in their own factories and of manufacturers to
sell goods directly to retailers, bypassing the
wholesaler. Strong parallels can be drawn be-
tween employment trends in manufacturing and
wholesale trade, as both are affected by exports.
Wholesale trade experienced moderate job

losses during the recessions, but the losses were
recouped by the end of 1983, and the strongest
growth of the decade followed in 1984. The
second half of the decade began with a weak
1985 performance and an even weaker 1986
showing as a strong dollar led to a reduced de-
mand for exports. Responding to a falling dollar
in 1986, the demand for exports rose, and em-
ployment growth in wholesale trade began to
pick up again in 1987-88. Growth decelerated
beginning in the second quarter of 1989.

Two industries within wholesale trade were in
the top 30 job gainers. Machinery, equipment,
and supplies distribution added 315,000 jobs.
Contained in this industry is the distribution of
computers and equipment (terminals, software,
printers) and office machines such as word proc-
essors. The market for these goods grew during
the 1980's due to improved technology and the
widespread use of this machinery at home and at
the office. Also in this industry, hospital and lab-

Table 5. The 30 industries adding the most jobs from 1979 to 1989
[Numbers in thousands)
‘ i Employees Change
Rank Industry sic T ~
1979 1989 Number | Percent
1 | Eating and drinking places 58 4,513.1 6,369.9 1,856.8 414
2 | Miscellaneous business services’ 739 4,277.5 2,256.5 979.0 76.6
3 | Grocery stores cee 541 2,001.9 2,889.1 887.2 44.3
4 | Hospitals 806 2,608.4 3,490.7 882.3 33.8
5 | Personnel supply services . 736 526.5 4,351.2 824.7 156.6
6 | Hotels, motels, and tourist courts | to 4,019.9 1,548.9 529.0 51.9
7 | Computer and data-processing services 737 270.8 763.4 492.6 181.9
8 | Offices of physicians 801 716.8 1,206.8 490.0 68.4
9 | Legal services : 81 459.9 896.3 436.4 94.9
10 | Nursing and personal care facilities 805 950.8 | 1,384.2 433.4 45.6
11 | Miscellaneous shopping goods stores... | 594 568.5 905.4 336.9 59.3
12 | Services to buildings - | 734 487.0 807.6 320.6 65.8
13 | Machinery, equipment, and supplies 508 1,260.8 1,574.0 313.2 24.8
14 | Trucking and trucking terminals 421.3 1,248.8 1,537.7 288.9 23.1
15 Colleges and universities | 822 716.9 990.9 274.0 38.2
16 | Amusement and recreation services 79 712.0 975.6 263.6 37.0
7 Engineering and architectural services 891 515.0 756.1 2414 46.8
18 Insurance agents, brokers, and service 64 430.1 659.8 229.7 53.4
19 | Residential care’... . 836 201.1 | 426.4 225.3 112.0
20 Accounting, auditing, and bookkeeping 893 299.0 920.4 221.4 74.0
21" Outpatient care facilities’ 808 113.0 317.3 204.3 180.8
22 Air transportation . 451.2 390.9 595.0 204.1 52.2
23 | Commercial and stock savings banks 602 1,369.3, 1,572.8 203.5 14.9
24 | Individual and family services’ 832 161.0 353.1 192.1 119.3
25 | Realestate agents and managers 653 360.2 550.6 190.4 52.9
26 | Groceries and related products | 514 648.1 837.9 189.8
27 | Offices of dentists g02 | 322.0 $11.6 189.6
28 | Department stores 531 1,878.1 2,056.2 178.1
29 | Security brokers and dealers . 621 164.7 336.5 171.8
30 Savings and loan associations 612 236.0 402.8 166.8
"Although published monthly estimates begin in 1982, the averages from the ces program. Industries are compared at
previously unpublished annual average for 1979 was com- the three-digit Standard Industria! Classification (sic) level,
puted and used for these comparisons. unless the ces program only publishes monthly estimates at
Nore: Figures shown for 1979 and 1989 are annual the two-digit evel.

September 1990



transition away from the goods-producing sec-
tor. While manufacturing’s long-term share of
total output has remained fairly stable, its share
of overall employment has declined steadily.
This phenomenon partially reflects the superior
productivity gains of manufacturing vis-a-vis
the service-producing sector. However, the lack
of long-term growth also stems from stiff for-
eign competition.

Manufacturing’s all-time employment peak
occurred in June 1979. Between then and July
1980, manufacturing firms lost 1.4 million jobs.
Only 40 percent of these jobs had been recovered
when the recession of 1981-82 began. This re-
cession, much more severe than the first, caused
manufacturers to eliminate 2.3 million jobs, or
10 percent of the work force. The subsequent
recovery lasted 20 months, but only 1.5 million

jobs were added—just two-thirds of those lost. In
the mid-1980’s, factories experienced another
slowdown while the overall economy continued
to expand. The strong exchange rate value of the
dollar rendered U.S. exports more expensive and
imports less costly. Consumer spending was vig-
orous during this period, but was increasingly
directed toward foreign goods. The dollar’s
value peaked in 1985, but the trade adjustment
process required 2 years before manufacturing’s
improved competitive position translated into
job growth. Between manufacturing’s January
1987 trough and March 1989 peak, 810,000 jobs
were added. After March, however, job losses
ensued as the major domestic markets for manu-
factured goods—housing, automobiles, and de-
fense—provided less demand and the growth of
exports slowed.’

Table 2. Continued — Employment change from 1979 to 1989, various sic Industry
groups
[Numbers in thousands]
1
I Change
sic Industry 1979 1989 | -——
Number | Percent
52-59 Retail trade |: 4,989.0 | 19,575.0 | 4,586.0 30.6
582 Building materials and garden supplies 629.2 769.8 140.6 22.3
53 General merchandise stores : 2,287.4 | 2,483.4 196.0 86
54 Food stores 2,296.8 | 3,269.5 9727 424
55 ‘Automotive dealers and service stations 1,812.3 2,187.1 344.8 19.0
56 ‘Apparel and accessory stores 949.4 1,191.9 242.5 25.5
57 Furniture and home furnishings stores 6149 | 8112 196.3 319
58 Eating and drinking places 4,513.1 6,369.9 1,856.8 414
59 Miscellaneous retail 1885.7 2,521.7 636.0 33.7
60-67 Finance, insurance, and real estate 4,975.0 | 6,814.0 1,839.0 37.0
60 Banking 1,498.5 | 1,774.3 275.8 18.4
61 Credit agencies other than banks 554.0 907.5 353.5 63.8
62 ‘Security, commodity brokers, and services 204.2 435.2 231.0 113.1
67 Holding and other investment offices . 114.2 212.0 100.8 90.6
63 Insurance carriers, 1,199.8 | 1,468.0 268.2 22.4
64 Insurance agents, brokers, and service 430.1 659.8 229.7 53.4
65 Real estate | 9545 | 1348.0 393.5 412
66 Combined real estate, insurance, etc. . 22.8 9.0 13.8 60.5
07,70-86,89,99) Services | 17,112.0 | 26,892.0 | 9,780.0 87.2
70 Hotels and other lodging places | 1,059.8 1,603.4 543.6 513
72 Personal services | 904.0 1196.4 292.1 32.3
73 Business services 2,905.9 | 5,788.7 | 2,882.8 99.2
75 Auto repair, services, and garages 575.1 898.7 323.6 56.3
76 Miscellaneous repair services 281.8 359.9 78.4 27.7
78 Motion pictures 2276 265.2 37.6 16.5
79 ‘Amusement and recreation services | 712.0 975.6 263.6 37.0
80 Heatth services 4,992.8 | 7,635.3 2,642.5 52.9
81 Legal services 459.9 896.3 436.4 94.9
82 Educational services 1,089.7 1,628.8 539.1 49.5
83 Social services 1,081.3 , 1,736.9 655.6 | 60.6
84 Museums, botanical and zoological gardens’ 32.2 52.5, 20.3 63.0
86 Membership organizations 1,516.2 1,761.6 245.4 16.2
89 Miscellaneous services | 940.7 | 1,459.3 518.6 55.1
Government 15,947.0 | 17,727.0 , 1,780.0 11.2
Federal Government 2.7730 | 2.9880! 215.0 78
State government 35410 | 4,134.0 | 593.0 167
Local government | 8693.0 10,608.0 | 9730 10.1
——— —_ 1
* Aithough published monthly estimates begin in 1982, the Nore: Figures shown for 1979 and 1989 are annual
previously unpublished annual average for 1979 was com- averages from the ces program
puted and used for these comparisons.
— —

Monthly Labor Review September 1990 9


8 Monthly Labor Review

Job Growth and Industry Shifts

the decade, at a somewhat slower but steady
pace.

Most of construction’s strength was in the
special trade contractors category, which added
nearly 850,000 jobs over the decade. Growth
was especially strong in skills such as carpentry,
masonry, electrical work, and roofing. Although
the number employed in special trade contract-
ing grew rapidly during most of the expansion
period, in 1989 the industry’s employment growth
fell to less than half that of 1984 and 1985. General

building contractors also added employees over
the decade, but at a much slower rate than did
special trades. In contrast, employment by heavy
construction contractors declined by 130,000
but ended the decade with a small rally.

Manufacturing. The decade of the 1980’s was
a period of tremendous structural change for
U.S. manufacturing. The two recessions at the
beginning of the period dislocated thousands of
factory workers and underscored the economy's

Table 2. Employment change from 1979 to 1989, various sic industry groups
[Numbers in thousands]
Change
sic Industry 1979 1989
Number | Percent
ape ee -

Total nonagricultural 89,823.0 | 108,581.0 | 18,758.0 20.9
07,10-86,89,99| Total private 73,876.0 | 90,854.0 | 16,978.0 23.0
10-39 Goods producing 26,461.0 | 25,634.0 | 827.0 3.1
10-14 Mining ........ 958.0 722.0 -236.0 -24.6
10 Metal mining 101.0 61.8 ~39.2 38.8
12 Bituminous coal and lignite mining 255.6 139.3 116.3 45.5
13 Oil and gas extraction 4742) 403.5 -70.7 14.9
14 Nonmetallic minerals, except fuels | 123.8 | 115.4 8.4 6.8
15-17 Construction . .. 4,463.0 | 5,300.0 18.8
15 General building contractors 1272.0 | 1,390.6 93
16 Heavy construction contractors 930.5 801.6 -13.9
7 ‘Special trade contractors 2,260.1 | 3,107.4 37.5
20-39 Manutacturing 21,040.0 | 19,612.0 68
24,25,32-39 Durable goods 12,760.0 11,536.0 96
24 ‘Lumber and wood products 766.9 769.5 03
25 Furniture and fixtures 497.8 §31.0 i 67
32 ‘Stone, clay, and glass products, 708.7 602.9 | 149
33 Primary metal industries 1,253.9 782.5 -376
34 Fabricated metal products 1717.7 1,445.3 -15.9
35 Machinery, except electrical 2,484.8 2,145.5 -13.7
36 Electrical and electronic equipment 2,116.9 2,037.7 -37
37 Transportation equipment 2,077.2 | 2,053.6 at
38 Instruments and related products 691.2 777.3 12.5
39 Miscellaneous manufacturing 444.8 391.2 12.1
20-23,26-31 Nondurable goods . 8,280.0 | 8,076.0 25
20 Food and kindred products 1,732.5 1,665.2 33.9
at Tobacco manufactures 70.0 52.9 24.4
22 Textile mill products . 885.1 726.1 -18.0
23 ‘Apparel and other textile products 1,304.3 | 1,091.5 16.3
26 Paper and allied products 706.8 697.2 14
27 Printing and publishing 1,235.1 1,606.9 30.1
28 Chemicals and allied products 1,109.3 | 1,092.9 15
29 Petroleum and coal products 209.8 162.5 -22.5
30 Rubber and miscellaneous plastics products 781.6 839.7 74
31 Leather and leather products 245.7 140.7 105.0 42.7
| Service producing 63,363.0 | 82,947.0 | 19,584.0 30.9

40-49 ‘Transportation and pubic utilities 5,136.0 5,705.0 569.0 114
40 Railroad transportation 556.3 294.8 2615 | 47.0
at Local and interurban passenger transit 262.6 331.3 68.7 26.2
42 ‘Trucking and warehousing 1,339.4 | 1,659.9 320.5 | 23.9
44 ‘Water transportation 215.9 176.0 -39.9 18.5
45 Transportation by air 438.2 691.8 253.6 57.9
46 Pipelines, except natural gas 20.1 18.8 1.3 65
a7 ‘Transportation services 188.7 341.6 152.9 81.0
48 Communication 1,309.0 | 1,254.0 55.0 4.2
49 Electric, gas, and sanitary services 805.7 936.3 130.6 16.2

|

50-51 Wholesale trade 5,204.0 | 6,234.0 | 1,030.0 19.8
50 Durable goods distribution | 3,081.0 | 3,696.0 615.0 20.0
51 Nondurable goods distribution 2123.0 2,539.0 416.0 19.6

September 1990


Iron ores .
Combined real estate, insurance, etc
Watches, clocks, and watcheases
Copper ores

Rubber and plastics footwear... ..
Handbags and personal leather goods
Railroad equipment

Railroad transportation

Footwear, except rubber

12 " Bituminous coal and lignite mining
393 12 | Musical instruments
153 13° | Operative builders
412 14 | Taxicabs
324 15 | Cement, hydraulic
332 16 | iron and stee! foundries
352 17 | Farm and garden machinery
353 | 18 | Construction and related machinery
333 19. | Primary nonferrous metals
221 20 | Weaving mills, cotton

Note: Figures shown for 1979 and 1989 are annual
averages from the ces program. Industries are compared at

the three-digit Standard Industrial Classification (sic) level,

Blast furnaces and basic steel products .

Table 4. The 20 most rapidly declining industries from 1979 to 1989

_ Change

Number | Percent

248 93 185 62.5
228 9.0 =138 | 605
277 113 =164 | 592
33.3 14.4 19.2 | 57.7
570.5 2743 | -296.2 51.9
207 11.0 “17 | 818
328 161 167 509
743 39.0 353 | 475

| 556.3 294.8 261.5 47.0
148.9 79.6 93 | 465
255.6 139.3 -1163 | 45.5
24.0 13.1 -10.9 45.4
83.3 45.7 -376 =45.1
59.6 35.1 24.5, And
32.7 19.4 13.3 40.7
240.7 143.6 -97.1 40.3,
1823 1098 =, ~725 39.8
382.8 237.0 | 145.8 38.1
725 45.4 27.1 37.4
150.9 95.9 55.0 36.4

unless the ces program only publishes monthly estimates at
the two-digit level

chinery became one of the most robust of the
manufacturing industries through most of 1989.
Yet, the employment level at the end of the dec-
ade was only 85 percent of its January 1980
all-time peak. The machinery industry group in-
cludes two of the most rapidly declining indus-
ties—farm and garden machinery and construction
machinery—which together lost more than 200,000
jobs. Productivity remained relatively constant in
these industries, as output and employment fell
proportionately over the decade.

Large numbers of jobs also were lost in the
textile and apparel industry groups. Throughout
the 1980's, both faced increasingly intense com-
petition from imported goods, particularly goods
from low-wage countries in the Far East. Imports
made up one-third of the apparel market and
one-fifth of the total textile and apparel market
by the mid-1980’s. In response to the growing
impact of imports, the textile industry invested
heavily in labor-saving capital equipment such
as shuttleless looms. The effect was to reduce
employment even further, but also to improve
competitiveness. Bolstered by a favorable ex-
change rate, import growth moderated for ap-
parel and imports actually declined for textiles in
1987-88, but the trade position was again slip-
ping at the end of the decade. Women's and
misses’ outerwear lost more jobs than any other
industry in the two groups (down 100,000), and

cotton weaving mills suffered the greatest per-
centage job loss (down 36 percent).

The service-producing sector

Transportation and public utilities. The slowest
growing of the private service-producing indus-
try divisions was transporataion and public utili-
ties, whose |1-percent employment increase
was half that of all industries. After job losses of
more than 4 percent of employment during the
two recessions, transportation and public utili-
ties posted slow but steady growth over the re-
mainder of the decade. The modest gains came
in the transportation and public utilities compo-
nents, while the communications component
lost jobs following deregulation.*

A review of the industries within transporta-
tion and public utilities shows dramatic contrasts.
Although the industry division experienced slow
growth, it included 3 of the 20 fastest growing indus-
tries—sanitary services, local and suburban tran-
sit, and air transportation services—and 2 of the
30 industries that added the most jobs—trucking
and air transportation, which together added a half
million jobs. Partially offsetting the rapid growth in
transportation were 2 of the 20 most rapidly de-
clining industries—railroads and taxicabs. The
railroad industry, which has been on a downward
trend since the middle of the century, lost more

Just over
three-fourths of

all jobs are now

in the service
sector.

Monthly Labor Review September 1990

1]


Lois M. Plunkert

Lois M. Plunkert is chief of
the Branch of National
Estimates, Division of
Monthly Industry
Employment Statistics,
Bureau of Labor Statistics,

The 1980’s: a decade
of job growth and industry shifts

Although employment grew
by nearly 19 million jobs,

its strength was uneven; three-fourths
of the increase was in services and retail trade,
while manufacturing and mining lost workers

years and then posted the longest peace-

time expansion on record. Although
growth did slow as the decade came to a close,
the service sector still added large numbers of
jobs month after month.'

Not all industries experienced the prosperity
of the 1980's. Many manufacturing and mining
industries never recovered from the two reces-
sions; others recovered their production levels,
but did so with fewer workers. Growth also was
uneven within service sector industries: 1 new
job in 4 was in business or health services, while
some service sector industries even lost jobs—
notably, communications, railroads, and water
transportation. Other industries, such as finance
and special construction trades, that showed
strong growth for most of the 10-year period
were experiencing job losses or sluggish growth
at the end of the decade. As a result of the inter-
play of job gains and losses among industries, the
1980's witnessed the shifting of another 6 percent
of employment from the goods-producing to the
service-producing sector. Just over three-fourths
of all jobs are now in the service sector.

This continued shift of jobs into the service
economy was not at the expense of manufactur-
ing output, which remained at about 23 percent
of GNP over the decade, while factory jobs
dropped from 23 percent to 18 percent of em-
ployment. During the two recessions early in the
decade, many marginal jobs were eliminated
throughout the economy. Marginal plants were
closed down, some permanently. With the start
of the recovery in 1983, industry began to take

T: 1980°s began with two recessions in 3

on a leaner look. In an effort to compete in a
worldwide market, many factories were modern-
ized during the 1980’s, with more and better ma-
chines enhancing workers’ output. At the same
time, the size of the labor force swelled: not only
did the working-age population grow by 21.5
million, but a larger percentage of women en-
tered the job market. As a result, women’s par-
ticipation in the labor force increased from 51 to
57 percent over the decade.

With labor plentiful, factory jobs scarce, and
many companies in financial trouble, some labor
unions agreed to reductions in wages or benefits.
Others agreed to continue the status quo until
conditions improved. Labor’s recommendations
for more cost-effective methods of production
played an important part in the turnaround in
many companies. Increasingly, labor had a direct
stake in companies’ profitability through profit-
sharing plans, employee stock ownership plans
(ESOP’s), or outright purchase of the company.
The outgrowth of these efforts was an increase in
productivity that improved the U.S. manufactur-
ing position in the world economy, as the index
of output per employee hour worked rose from
108 (1977 = 100) at the end of the last recession
to 140 by the decade’s end. The weakening dol-
lar in the mid-1980’s set the stage for a surge in
export orders in 1987, and U.S. manufacturers
were poised to fill the demand abroad as well as
the expanding markets at home.

The 1981-82 recession brought an end to 3
years of double-digit inflation. The annual
change in the CPI stayed under 5 percent from
1983 through the end of the decade and averaged

Monthly Labor Review September 1990 3


Thirteen of the
20 most rapidly
declining
industries are in
manufacturing.

14 Monthly Labor Review

Job Growth and Industry Shifts

specialize in several high-demand items that
were introduced in the 1980’s, such as VCR's,
compact disc players, cable-ready television sets,
and video camcorders. Personal computers also
are available at many of the stores. The industry
includes stores that rent or sell movies and tapes,
provided that they sell the electronic equipment as
well, and this aspect boosted employment further.

Finance, insurance, and real estate. The growth
rate for this relatively small industry division
was second only to that of services during the
1980’s and, at 37 percent, was nearly twice the
average for all industries. The prosperity was
shared among the three parts, with large gains in
several component industries. The rec
had little effect on employment in the division,
with only real estate showing minor declines.

Substantial shifts occurred within finance,
due largely to the impact of the Depository Insti-
tutions Deregulation and Monetary Control Act
of March 1980. Barriers to entry into the industry
were greatly reduced by this legislation, and
large gains were seen in all areas except banking,
which grew only moderately. As a result of its
slow growth, banking’s share of employment in
finance industries dropped from 63 to 53 percent
In sharp contrast to banking, 4 of the 20 fastest
growing industries were in nonbanking financial
industries: mortgage brokers, business credit in-
stitutions, security brokers, and holding and
other investment offices. Security brokers also
made the list of 30 industries that added the most
jobs. This industry posted even larger gains prior
to the November 1987 stock market crash, but
lost 25,000 jobs in 1988-89. The commercial
banks industry, although growing at a relatively
slow rate, also made the top 30 list of job gainers
due to its large employment base.

Within insurance and real estate, two more
industries were on the “most jobs added” list.
Insurance agents and real estate agents each in-
creased employment by 53 percent over the dec-
ade, for a combined total of more than 400,000
jobs. All the gains for real estate agents were
made after 1982. as some jobs were lost during
the recessions.

Services. The main reason for the impressive
1980’s expansion was the performance of the
services industries. which were responsible for
half of all job growth during the decade. Of the
20 fastest growing industries, |1 were services, as
were 17 of the 30 industries adding the most jobs.

The business services industry was both the
most rapidly growing and the biggest employ-
ment gainer of the industry groups within the
services division (table 2), doubling its employ-
ment and adding 2.9 million jobs. As businesses

September 1990

emerged from the 1981-82 recession, one ap-
proach taken by many to retain a lean posture
was to contract for some of the services that they
previously performed in-house. Employment
mushroomed in such services as advertising,
mailing and reproduction, services to buildings,
and management and public relations. Within the
business services industry group were five of the
most rapidly growing industries, including com-
puter and data-processing services, which
nearly tripled its employment by adding a half
million jobs. Much of the strength in computer
services was in specialized programming and
software. Personnel supply services grew nearly
as fast, adding 825,000 jobs. This industry is
dominated by temporary help supply firms,
which grew very rapidly during the recovery pe-
riod as organizations looked for ways to increase
their staffing flexibility.5 Although categorized
under miscellaneous services rather than busi-
ness services, the accounting, auditing, and
bookkeeping services industry profited from the
same demand factors affecting business services
in general and increased its employment by three-
fourths, adding 220,000 jobs over the decade.

Health services employment grew at half the
pace of business services, but this was still 3
times the rate for all industries. The large health
services industry group added 2.6 million work-
ers during the 1980's. Factors behind this growth
include the growing elderly population; techno-
logical advances that make new treatments pos-
sible; and more requirements for paperwork,
imposed by both Government and private insur-
ers. Employment growth was somewhat re-
strained by cost-cutting efforts aimed at reducing
inpatient hospital stays when care could be pro-
vided on an outpatient basis and shortening the
length of hospital stays when they were required.
As a result, employment in outpatient care facil-
ities nearly tripled over the decade, making this
component the second fastest growing industry,
while the hospitals industry, with a 34-percent
growth rate, was one of the slower growing
health services. Nevertheless, considering the
large number of persons employed in hospitals,
this moderate growth rate was sufficient to place
the industry fourth on the list of job gainers.
Offices of physicians also made this list, adding
nearly half a million jobs and increasing employ-
ment by two-thirds over the decade.

Another rapidly growing health service in-
dustry was nursing and personal care facilities,
the aging population was a factor behind a 46-
percent employment increase in the industry,
amounting to 435,000 new jobs. A related social
service industry, residential care, benefited from
the same demographics. Employment more than


oratory equipment distribution grew steadily,
because of its relation to the robust health ser-
vices field. Groceries distribution, also a top 30
job gainer, added 190,000 workers. This mirrors
the strength in food stores and restaurants and
the introduction of a wide range of innovative
food products, such as microwaveable items, sin-
gle-serving portions, and gourmet ice creams.
Companies introduced low-sodium, cholesterol-
free, or “lite,” versions of their products and
added items containing ingredients, such as oat
bran and fiber, for the health conscious. This
explosion of new product lines required more
workers to distribute, as well as to manufacture
and sell, the products.

Retail trade. The long economic expansion
during the 1980’s was reflected in strong em-
ployment growth in retail trade. Changing life-
styles, such as the increase in the percentage of
women who work outside the home and in that
of workers who have two jobs, also contributed
to growth. The combination of greater spending
power and less free time left its mark on retail
trade. Stores that sold products aimed at saving
time and work and stores that offered service
and convenience were among the most success-
ful retail establishments during the 1980's. Fast
food and carryout restaurants, as well as restau-
rants delivering food to the home. helped to
meet the growing need for meals on the run.
Eating and drinking places of all types headed
the list of industries that added the most jobs in
the 1980’s; 1 job in every 10 added over the
decade was in this huge industry. Mail-order
catalog sales also benefited from the inability of
busy consumers to find time to shop at stores.
Other rushed consumers started using personal
shoppers who preselected requested items, a
new service offered by many department stores
to facilitate many purchases in a short time.

Grocery stores also introduced features con-
ducive to the need for convenience and timesav-
ing, helping to spur growth that placed the
industry third on the list of job gainers. Many
grocery stores added flower sections, photo proc-
essing, pharmacies, and bakeries, making them
one-stop shopping places. Grocery stores also
began offering ready-made specialty foods and
salad bars, which appeal to busy people. Many
establishments extended their hours to accommod-
ate the growing number of families unable to
shop during the weekday. Partially because these
new services are labor intensive. | of every 20
jobs gained over the decade was in grocery
stores.

Many new shopping malls were built, and
many existing malls were renovated during the

Table 6. Employment growth in government from 1979 to 1989
[Numbers in thousands]
Change
Industry 1979 1989 —
| Number | Percent
Govemment 15,947.0 | 17,727.0 | 1,780.0 112
Federal Government! 2,773.0 | 2,988.0 | 215.0 78
Exeoutive : 27198 | 2,928.2 | 208.4 77
Department of Defense . 895.4 973.4 78.0 87
Postal service 660.9 932.2 | 171.3 25.9
Other executive 1,163.4 1,122.7 40.7 3.5
Legislative 39.8 379 “19 48
Judicial 13.2 21.4 82 62.1
State government 3,541.0 | 4,134.0 | 593.0 16.7
Hospitals 537.7 449.4 | -883 | -164
Education 1.3783 | 1,628.4 | 250.1 18.1
General administration 1,005.7 | 15218 | 5161 513
Local government .. | 9,633.0 | 10,606.0 | 973.0 10.1
Transportation and public utiities 594.2 4959 | -983 | -165
Hospitals wee 5706 649.4 78.8 138
Education 5,107.3 | 5,862.3 | 755.0 14.8
General administration 968.6 | 3.2433 | 2747 93
* Federal Government data are actual counts of Federal workers provided monthly by the
U.S. Office of Personnel Management.
Nore: Figures shown for 1979 and 1989 are annual averages from the ces program.

1980's. Retail developers tended toward the two
extremes of upscale and discount malls. Reno-
vated malls frequently catered to a more affluent
clientele, as did several well-known department
store chains that added name brand or celebrity-
endorsed merchandise. Other exclusive chains
expanded their markets. Many department store
chains experienced hard times during the decade
as local or regional chains were bought by in-
vestors. The debts incurred in these buyouts
proved disastrous to some stores: financial prob-
lems, combined with a consumer propensity for
buying merchandise only after several mark-
downs, caused many well-known chains to suf-
fer large losses. As a result, department store
employment grew at only half the average rate of
all industries. Because of the large number of
people employed in department stores, however,
the industry was nonetheless among the top 30
job gainers of the 1980's. In sharp contrast to
department stores. some apparel chains experi-
enced great success during the 1980’s and made
inroads into the market usually served by the
larger department stores. Other mall stores also
fared very well, with miscellaneous shopping
goods stores adding jobs at 3 times the rate for
all industries and making the list of the top 30
job gainers.

The fastest growing segment of retail trade
was radio, television, and music stores, which
increased employment by 71 percent over the
decade and added 110,000 jobs. These stores

Monthly Labor Review September 1990 13



Job Growth and Industry Shifts

Among the 20 manufacturing industry groups
(the so-called two-digit industries), only five
managed net employment growth during the
1980’s. Printing and publishing stands out in
sharp contrast to all other manufacturing indus-
tries, having grown by 30 percent and added
370,000 jobs. Helping to spur this growth was
the surge in numbers of new businesses and the
strong demand for print advertising. Two other
industry groups with net gains over the decade,
lumber (3,000) and furniture (35,000), are
closely tied to the fortunes of the construction
industries. Rubber and miscellaneous plastics
products (60,000) benefited from the increasing
substitution of plastics for other products. The
growth in the instruments industry (85,000) re-
sulted from a strong competitive market position as
well as the rising demand for medical products.

Of the 15 manufacturing industry groups that
lost jobs over the decade, primary metals, ma-
chinery except electrical, and fabricated metals
demonstrated the most weakness, losing a com-
bined total of more than a million jobs. These
durable goods industries were forced to undergo
significant restructuring to improve efficiency
and compete effectively. The outputs of all three
are important inputs for the production processes
of the rest of the manufacturing sector. Hence,
these industries suffered from manufacturing’s

overall structural decline. They also felt the ad-
verse effects of the strong dollar, especially its
impact on international competitiveness.

The breadth of the weakness in manufactur-
ing over the decade is demonstrated in table 4:
13 of the 20 most rapidly declining industries are
in manufacturing. Three of these are in primary
metals. Blast furnaces and basic steel products
showed the fifth highest rate of decline and lost
more jobs (nearly 300,000) than any other indus-
try. This industry was forced to restructure and
close inefficient plants, leading to a dramatic
turnaround in steel productivity, which nearly
doubled since the recession of 1981-82. As a
result of improved technology, more favorable
foreign exchange rates, concessionary labor
pacts, and import restraints, the basic steel indus-
try was able to stop the job erosion in 1987 after
losing just over half of its workers.

Employment in machinery manufacturing
dropped by 540,000—21 percent of the work
force in the industry—during the 1981-82 reces-
sion, During the subsequent recovery, only
250,000 jobs were restored. From mid-1984 to
the beginning of 1987, the industry underwent
another downtum, losing as many jobs as it had
previously recovered. The weak dollar of the lat-
ter part of the 1980's improved the industry’s
trade posture and spurred job growth, and ma-

[Numbers in thousands]
—— Te

sic ae

i Industry
|

{

| Outpatient care facitties'

Local and suburban transportation

" Although published monthly estimates begin in 1982, the
previously unpublished annual average for 1979 was com-
uted and used for these comparisons

Note: Figures shown for 1979 and 1989 are annual

Table 3. The 20 fastest growing industries from 1979 to 1989

oo ‘Computer and data-f “processing services
736 Personnel supply services

616 Mortgage bankers and brokers’ .
824 Correspondence and vocational schools
615 ; Business credit institutions’

832 Individual and family services’ .

733 Mailing, reproduction, stenographic
836 ) Residential care’

495 Sanitary services

376 | 11 | Guided missiles, space vehicles, parts
458 | 12 | Airtransportation services’

621 | 13” Security brokers and dealers

81 | 14 Legal services . .

67 15 Holding and other investment offices
274 16 Miscellaneous publishing

739 17 Miscellaneous business services’

731 18. Advertsing...

893 1 38 Accounting, auditing, and bookkeeping

ne

| Employees Change
| 19791989 Number | Percent
270.8 763.4 492.6 181.9
113.0 3173 204.3 180.8
526.5 4,351.2 824.7 156.6
62.3 148.8 86.5 138.8
44.9 105.1 60.2 134.1
30.2 67.1 36.9 122.2
161.0 353.1 192.1 119.3
113.3 245.1 131.8 116.3
| 201.1 | 4264 225.3 112.0
470 | 8 | 49.8 106.0
101.5 207.8 106.3 104.7
473 96.8 49.5 104.7
1647 | 336.5 1718 104.3
4599 | 896.3 436.4 94.9
111.2 212.0 100.8 90.6
46.1 82.8 36.7 79.6
12775 2,256.5 979.0 76.6
145.9 256.4 110.5 757
299.0 520.4 221.4 74.0
75.8 lL 130.3 54.5 719

averages from the ces program. Industries are compared at
the three-digit Standard industrial Classification (sic) level,
unless the ces program only publishes monthly estimates at
the two-digit level

10 Monthly Labor Review September 1990)


Job Growth and Industry Shifts

decade. Manufacturing’s share dropped by S per-
centage points to 18 percent. Government lost a
12-percentage-point share, while retail trade
gained about the same amount. Mining’s loss of
0.4 percentage point brought it to well under |
percent of employment. The remaining industry
divisions just kept up with overall growth and
ended the decade within a percentage point of the
share of employment they held in 1979.

Table 2 presents data on employment change
from 1979 to 1989 for each of the industry
groups. Tables 3, 4, and 5 view industries at the
next level of detail: table 3 selects the 20 indus-
tries that grew the fastest, table 4 shows the 20
that declined the most rapidly, and table 5 lists
the 30 industries that added the most jobs.”

The goods-producing industries

Mining. The decade of the 1980's dealt a se-
vere blow to the mining division and all of its
component industries. Half of all mining jobs
are in oil and gas extraction, which grew by 50
percent the first 3 years of the decade as the
price of crude petroleum soared. The number of
wells drilled. the number of oil rigs, and the

price of crude oil all peaked in 1982 and then
fell to less than half their peak levels by 1987.
Employment in oil and gas extraction followed
the same pattern, hitting an all-time high in
1982 and then losing all of the jobs gained ear-
lier in the decade, plus 75,000 more by 1987. A
small rebound developed in 1989 as 25,000 jobs
were added during the year. The decade ended
with 70,000 fewer jobs in the industry than in
1979, a 15-percent decline in employment.
Coal mining suffered even greater blows than
did oil and gas during the 1980’s, losing 115,000
jobs, or 46 percent of its employment. From
1979 until 1983, the United States was the larg-
est coal exporter in the world. Coal exports and
the U.S. share of world coal trade peaked in
1981, as did coal mining employment. Subsequent
employment declines were steady throughout the
remainder of the decade. Although coal mining
employment was reduced by nearly half over the
decade, coal production grew each year from 1985
forward and was at the high point for the decade
in 1989! This remarkable growth in productivity
resulted from the increased use of labor-saving
machinery such as continuous mining equip-
ment, which cuts and loads the coal in one opera-

Chart 3. Indexes of employment change during the 1980's, by industry sector
Index Index
(Jan. 1980100) (Jan. 1980=100)
140 : 140
130 130
120 Service producing | 120
110 oS 4 110
100 : 100

Goods producing
90 90
80 1 1 1 1 1 \ 1 80
1980 1982 1984 1986 1988
are recessionary periods, as designated by the National Bureau of Economic Re:

6 Monthly Labor Review

September 1990


Chart 1. Distribution of payroll employment by Industry sector, 1950 and 1989

1950 1989

Chart 2. Payroll employment, seasonally adjusted, 1969-89

Employment Employment

(in_ thousands) (in thousands)
120,000" —~ . 120,000
100,000 + ee 4 100,000

Total ae
nor
80,000 + 80,000
60,000 4 60,000
40,000 4 40,000
Goods producing
20,000 + 20,000
oO Bi 1 1 1 4: a8 1 1 1 1 vi 1 1 1 1 1 1 1 1 °
1969 1975 1980 1985 1990

NOTE: Shaded areas are recessionary periods, as designated by the National Bureau of Economic Research.

Monthly Labor Review September 1990



Job Growth and Industry Shifts

3.6 percent—its best performance since the
1960's. Thus, the stagflation of the early 1980’s
gave way to robust growth in real terms.

A slowdown in construction and domestic
consumer demand in 1989, especially for autos
and other big-ticket items, took a toll on manu-
facturing jobs. While exports were still growing,
the rate of increase was only half that of the
Previous year, and they were not able to offset
the slack domestic demand. Service sector jobs
continued to increase, but at a slower pace. The
decade of the 1980's ended with a slowing econ-
omy that led some forecasters to predict an im-
minent recession.

A tale of two sectors

The underlying theme of industry employment
shifts experienced in the 1980’s has been play-
ing for decades. At the middle of the century, 41
percent of all nonfarm jobs were in the goods-
producing sector. Forty years later, that propor-
tion had declined to 24 percent. Within the
service sector, the number of private jobs grew
faster than government jobs. (See chart 1.)

Although the goods-producing sector has ex-
perienced a decline in its share of jobs, the actual
number of jobs has remained relatively stable
over the years, falling during recessions and ris-
ing again during subsequent recoveries. The serv-
ice sector, on the other hand, survived the reces-
sionary years quite well and, in some cases, even
continued to add jobs. This resilience during
economic downturns was followed by rapid
growth during expansionary periods. Thus, the
shifting job distribution resulted from the combi-
nation of flat employment levels in the goods-
producing sector with steady growth in the
service sector. (See chart 2.)

The 1980's provide a good example of the
contrast between the two sectors during business

Table 1. Percent employed in major sic industries, 1979 and 1989

Industry division 1979 | 4999

Total nonagricuitural I 100 100
Goods producing . . 29.5 23.6
Mining 14 07
Construction 50 49
Manufacturing 23.4 18.4
Service producing . . .. 705 76.4
Transportation and public utiities 57 j 53
‘Wholesale trade . : i 58 57
Retail trade .. . 16.7 18.0
Finance, insurance, and real estate 55 63
Services . . . 19.1 24.8
Government . . 17.8 16.3

4 Monthly Labor Review September 1990

cycles. During the brief 1980 recession (January
through July), goods-producing industries lost
1.4 million jobs, while the service sector gained
310,000 jobs. This movement yielded a net loss
of 1.1 million jobs, or 1.2 percent of employment
in all industries. A more severe recession fol-
lowed | year later (July 1981 through November
1982), with the goods-producing industries los-
ing 2.8 million jobs, a full 10.7 percent of their
employment. The service sector, however, was
relatively unscathed, losing a mere 45,000 jobs.
The combined effect was a 3.1-percent decline in
total payroll employment.

Service sector employment started to grow
again in November 1982. The goods-producing
sector continued to lose jobs through the first
quarter of 1983, but then joined the service sec-
tor in the recovery. In 1984, the goods-producing
sector even outpaced the service sector in rate of
growth, increasing employment by 6 percent,
compared to 4 percent. The result was a near
5-percent increase in total payroll employment,
the fastest annual advancement in the recovery
period.

As usually happens, growth rates slowed as
the recovery matured over the next 2 years.
Trouble in manufacturing industries in 1986
brought total payroll employment growth down
to just over 2 percent, the slowest of the recovery
period through 1989. To the surprise of many,
this faltering year did not herald an end to the
expansionary period, but was followed by 3
more years of job growth running about 3 per-
cent a year. The decade ended with renewed
signs of slowing, especially in the goods-produc-
ing sector, but continued strength in most of the
service sector, as in 1986. (See chart 3.)

Trends in major industries

The uneven participation of various industry di-
visions in the job growth of the 1980s is readily
seen in chart 4. Mining lost an astounding 25
percent of its employment over the decade, and
manufacturing lost 7 percent. The only goods-
producing industry division to gain jobs was
construction, which grew by 19 percent. Gov-
ernment and transportation and public utilities,
the slowest growing of the service sector indus-
try divisions, each increased their employment
by 11 percent. The large services division—in-
cluding business, health, and other general serv-
ices—grew faster than any other division and
accounted for half of the job growth over the
decade.

The impact of these varying rates of change
on the distribution of jobs is seen in table 1,
Currently, | job in 4 is in the services division,
up from less than | in 5 at the beginning of the


doubled in residential care institutions, which
provide 24-hour, year-round personal care with
only incidental health care. The industry added
225,000 jobs over the decade, placing it on both
the list of biggest gainers and the list of fastest
growers. A similar performance was posted by
another social service industry—individual and
family services—which includes elderly day care
and senior citizens’ centers, as well as private
community social service agencies.

The legal services industry also is noteworthy
because of both its high growth rate, 95 percent,
and the large number of jobs added, 435,000,
over the decade. Part of this strength can be at-
tributed to the rising number of high-income
families that need and can afford more sophisti-
cated legal services.

Government. One of the two slowest growing
of the service sector industry groups, govern-
ment added nearly 1.8 million jobs during the
1980’s. Within this industry division, the num-
ber of State government jobs grew most rapidly,
with a 17-percent increase, and local govern-
ment added the most jobs, accounting for more
than half of the total added.

The Federal Government demonstrated slow
growth over the decade, with a 7.8-percent in-
crease in jobs. The substrata within the Federal
Government, however, showed divergent pat-
tems. Civilian employment in the Department of
Defense gained 80,000 jobs, reflecting the mili-
tary buildup during the 1980s; civilian defense
jobs had dropped by 3 times that amount in the
prior decade as the country adjusted from war to
peace. During the 1980's, the postal service
added 1 worker for every 4 already employed,
for a total of 170,000 new jobs. In sharp contrast,
all other executive agencies lost a total of 40,000
employees, reflecting, among other things, a cut-
back in the number of Federal grant programs
and their funding. The relatively small legislative
and judicial agencies also had divergent move-
ments. Legislative agencies lost 2,000 jobs, or 1
employee in 20, while the judicial branch added
3 employees for every 5 employed at the begin-
ning of the decade—a gain of 8,000 jobs and
almost as rapid a growth rate as for private legal
services. (See table 6.)

State and local government, affected by the
recessions and by the California-led revolt
against taxes (“Proposition 13"), lost 430,000
jobs in the early 1980°s. State and local govern-
ments later benefited from increased revenue at-
tributable to growth in the economy, State and
local tax increases, and increased income from

user fees and State lotteries. Although growth in
school enrollments decelerated markedly during
the 1980's, new resources were geared toward
initiatives to improve education following the
release of a critical report by the National Com-
mission on Excellence in Education.®

Against this backdrop, State general adminis-
tration added a half million jobs, or 1 new
worker for every 2 employed in 1979. State edu-
cation added another quarter million jobs, for an
18-percent increase, even though enrollment in
public 4-year colleges grew by only 4 percent.
State hospitals, on the other hand, lost 90,000
workers, reflecting, at least in part, the trend to
deinstitutionalize mental patients.

Like that of State education, employment
growth in local education cannot be explained
by enrollment trends. Schools added three-quar-
ters of a million jobs, for a 15-percent growth
rate, while enrollment in grades K-12 fell by 3
percent and the number of students in public
2-year colleges increased by just 2 percent.
Local general administration grew at a more
modest rate than State administration, but ac-
counted for more than a quarter million new
jobs. Local government hospitals added nearly
as many jobs as State hospitals lost, but trans-
portation and public utilities owned by local
governments suffered significant jobs losses
over the decade.

Into the 1990’s

What is the employment trend buried in the em-
ployment data for the first half of 1990? Little can
be known for sure at this point, but one develop-
ment is clear: the slowdown of the economic
expansion continued into 1990, with average
monthly growth in employment (excluding De-
cennial Census workers) considerably below that
of 1989—165,000, compared with 205,000.
Manufacturing continued the employment de-
clines begun in April 1989, averaging a loss of
20,000 a month during the first half of 1990.
Employment also was down in construction, and
growth slowed in trade. In contrast, health ser-
vices continued its robust and consistent employ-
ment expansion, adding 40,000 to 60,000 jobs
each month, and several other service industries
continued to grow without signs of slowing. The
current situation could be a repeat of the eco-
nomic slowdown in 1986, or the prelude to the
first recession in the decade of the 1990’s. Re-
gardless, the monthly employment estimates will
continue to provide early insight into the econ-
omy as it unfolds.

The services
industries were
responsible for
half of all job
growth during
the decade.

Monthly Labor Review September 1990

1S