In Part I, we noted that the information industry (defined as processors, producers and distributors of data, informational, and cultural products) shed over 750,000 jobs between 2001 and 2011, making it the sector that accounted for the second biggest loss of jobs after manufacturing, as per this recent interactive info-graphic on America’s Incredible Shrinking Information Sector. We also pointed out a recent WSJ article on Where Job Growth Will Come Over This Decade and noted that, despite the claims put forward in the article, the sectors mentioned are rather unlikely to add the 12M+ jobs the BLS (Bureau of Labour Statistics) is predicting, and stated that even if the jobs materialized, the sectors won’t save the US economy on their own. But we didn’t explain why. So today we’re going to dive into the sectors one by one.
The boomers are becoming older and their need for health care is increasing. The BLS is predicting that 5.5 M jobs will be added between 2010 and 2020 and given that the number of people in the US aged 65 and older is going to double in the next 30 years (as chronicled in America’s Aging Population from PRB) from over 40 Million to over 80 Million, the US is definitely going to need a lot more health care (and senior care) workers. While SI is not sure if the sector is going to add that many jobs in the next decade, it’s a safe bet that the healthcare industry will add that many jobs in the next two decades.
Leisure and Hospitality
The BLS is predicting that 1.3 Million jobs will be added in this sector. While SI doesn’t expect much of an increase in international travel to the US like the article does, and thus doesn’t expect any new jobs in the sector for this reason, it does expect that this job growth will occur as a result of the retiring boomer population. Most of the retiring boomers have money, realize they can’t take it with them, and don’t want to leave too much for their heirs because “they had to walk uphill both ways through waist-high snowdrifts when they were young and then had to work all day to earn a dollar when they got out of school” and believe that hard work is good for you. So they are going to spend their money and enjoy their retirement, which means people will need to wait on their tables, maintain their golf courses, sell them theatre tickets (as some of them don’t like that new fangled technology that requires you to punch buttons on your phone to buy a ticket), and show them to their seats. While these are not the most glamorous of jobs, they are jobs nonetheless.
Medium Skilled Jobs
The trades aren’t going away — plumbers, electricians, builders, chefs, etc. will always be needed, and these jobs can’t be outsourced. As the population steadily increases, and old buildings get older, there will be a slightly greater need for these jobs tomorrow than there are today. While the growth might not be high, it will be there.
Business and Financial Operations
According to the article, the BLS expects the field to add over 1.1 Million jobs like credit councillors, financial examiners, and compliance officers. With regulations getting more intensive and reporting requirements continuing to multiply like Fibonacci’s rabbits around the globe, the compliance industry is definitely going to boom and could create almost this many jobs on its own (which is good because there’s already a plethora of credit councillors out there and SI doesn’t expect too many jobs to be added in this industry).
Professional and Business Services
According to the BLS, this sector, comprising consultants and other professionals skilled in areas such as legal services, accounting, and advertising, will generate 3.8 Million jobs this decade. There will definitely be growth in this sector as companies continue to farm out more back-office functions, as financial reporting regulations get more complex, and as (global trade) laws continue to get more complicated, but SI has a hard time believing that 3.8 Million jobs will be added unless something changes. And most of the consulting jobs will just be replacing jobs that disappear from the other sectors — so, without a pressing need, most of the new jobs will just be cancelling out jobs lost in other sectors. However, it is certainly a better sector to focus on than Manufacturing, IT, or Traditional Media!
Technology and Information Services
According to the BLS, this decade will add over 750,000 jobs (and effectively replace the jobs that were shed last decade). As far as SI is concerned, this is a pipe dream. While there is a greater need for Business Intelligence, most of the work is going to be outsourced to cheaper countries. And the jobs that are created in the information-security analysis space (in the government and its contractors) are barely going to make up for the non-classified private industry jobs that are going to be shed to lower cost locales in India, China, and the EU. While there shouldn’t be any more decline overall, the rapid growth of the 90’s will not be repeated.
In other words, most of the jobs are going to be in health-care and in service sectors that support the retiring boomers (about 2/3rds by SI’s estimation). And with a steadily increasing population, in the long run (with some estimates adding another 100 Million, or more, to the US population over the next 30 years), the boomer retirement is not going to create enough jobs over the long-haul. So what’s going to save the US Economy?
Come back tomorrow for Part III and SI’s thoughts on the matter.