The State of the Labor Markets in the Metro North Region, Massachusetts, and the U'S'

1
The State of the Labor Markets in the Metro North
Region, Massachusetts, and the U.S.

• Neeta P. Fogg
• Center for Labor Market Studies
• Northeastern University
• Boston, Massachusetts
• October 28, 2009

2
A THUMBNAIL SKETCH OF THE ECONOMIC CRISIS

• An Economy out of Balance
• Total GDP 2000 to 2007 92.5 Trillion
• Total Purchases of GS 97.0 Trillion
• Difference -4.5 Trillion

3
HOW DID WE PURCHASE MORE THAN WE PRODUCED?

• Purchased Goods from Overseas
• U.S. Balance of Trade Deficit increased by about
  4.5 Trillion

4
HOW DID WE PAY FOR EXCESS CONSUMPTION?

• Household debt doubled by 6.8 trillion
• Between 2000 and 2005 average home price doubled
• Almost half of this debt secured by mortgages
• Savings rate fell to zero

5
A HOUSING BUBBLE IS FORMED

• Unlike equity bubbles housing bubbles quickly
  convert to spending
• Banks make your home work for you
• Out of 6.8 Trillion increase in debt, 4.2
  Trillion NOT spent on housing
• Consumer electronics/autos/trucks

6
HOW DID HOUSING BUBBLE BURST?

• Mortgage loans made to people with no hope of
  making payments
• Sub-prime home equity loans based on assumption
  of perpetually rising housing prices
• Teaser rates
• Home values collapse - down 25 percent since mid
  2006

7
PROBLEM IS NOW WELL BEYOND MORTGAGE BACKED
SECURITIES AND HOUSING MARKET

• Commercial lending
• Credit card lending
• Auto lending
• All suffering rising default problems
• So banking system sharply reduces lendingmoney
  multiplier collapsesliquidity trap

8
ASSET VALUES DECLINE

• Sharp decline in housing values25 percent
  decline in mean price level
• Equity assets declined by 50 percent since peak
• Estimated 30 Trillion losses in wealth around
  the world wiping out about 1/3rd of value of
  world wealth last year
• U.S. wealth value fell by about 11 trillion in
  2008

9
FINANCIAL MELTDOWN HAS LED TO DEFLATION

• Deflation is a downward pressure on prices that
  sharply reduces the level of output, employment
  and income
• Deflation is a self-reinforcing downward spiral
  based on future expectations about prices that
  reflect overall economic conditions

10
DECLINE ACCELERATES

• Employment losses lead to real income declines
• Households make effort to raise savings rate
• Expectations of future prices of asset values
  falldecrease purchases of assets-further reduces
  their price
• Values of housing declines
• Value of equities declines
• These paper declines feed back into a new round
  of cutbacks in the real economy- an adverse
  feedback loop or deflationary spiral

11
A Summary of Job Losses in the Nation

• Recession began in December 2007.
• Payroll employment decline averaged 137,000 per
  month through August 2008
• September to October 2008 job losses accelerated
  to 351,000 per month
• November to April job losses in U.S, averaged
  645,000 per month
• May through September job losses have averaged to
  307,000

12
TRENDS IN MONTHLY PAYROLL EMPLOYMENT CHANGE IN
THE U.S. DECEMBER 2007 TO SEPTEMBER, 2009 (1000s)
Total Job Loss 7.2 million
13
Trends in Mean Monthly Payroll Employment Change
in the U.S. 2008 to Sep. 2009 (1000s)
14
TRENDS IN PAYROLL EMPLOYMENT LEVELS IN THE U.S.
BY INDUSTRY (1000s)
15
TRENDS IN NUMBER OF EMPLOYED PERSONS BY
OCCUPATION, SEPTEMBER 2007 SEPTEMBER 2007, U.S
16
TRENDS IN NUMBER OF EMPLOYED PERSONS BY
OCCUPATION, SEPTEMBER 2008 SEPTEMBER 2009, U.S
17
Job Vacancies in the U.S.
18
TRENDS IN JOB VACANCY LEVELS, DECEMBER 2007
JULY 2009, U.S. (1000s)
19
TRENDS IN JOB VACANCY RATES, DECEMBER 2007
JULY 2009, U.S.
20
THE RELATIONSHIP BETWEEN UNEMPLOYMENT AND JOB
VACANCIES AND LABOR MARKET PROBLEMS AND JOB
VACANCIES, DECEMBER 2007 JULY 2009, U.S. (1000s)
21
Ratio of Unemployed to Job Vacancies in the U.S.,
1999-2009
22
EXPERIENCED UNEMPLOYED AND JOB VACANCIES, BY
INDUSTRY, JULY, 2009, U.S. (1000s, not
seasonally adjusted)
23
The Recession and Labor Market Outcomes in the
U.S.
24
TRENDS IN THE NUMBER OF EMPLOYED PERSONS, BY
GENDER, DECEMBER 2007 SEPTEMBER 2009, U.S.
25
TRENDS IN THE NUMBER OF UNEMPLOYED PERSONS, BY
GENDER, DECEMBER 2007 SEPTEMBER 2009, U.S.
(Numbers in Thousands)
26
TRENDS IN THE LABOR FORCE PARTICIPATION RATE, BY
GENDER, DECEMBER 2007 SEPTEMBER 2009, U.S.
27
TRENDS IN THE EMPLOYMENT TO POPULATION RATIO, BY
GENDER, DECEMBER 2007 SEPTEMBER 2009, U.S.
28
TRENDS IN THE UNEMPLOYMENT RATE, BY GENDER,
DECEMBER 2007 SEPTEMBER 2009, U.S.
29
He-Session

• Men have been hit hardest by this recession due
  to most job losses having been in industries
  dominated by males such as construction and
  manufacturing.
• Together, the construction and manufacturing
  industries accounted for about 15 percent of
  pre-recession employment in the nation, yet
  one-half of the net job loss that has occurred
  since the end of 2007 has been concentrated in
  these two industries.
• Of the over 7.4 million people that have lost
  jobs across the United States during the
  recession, almost 70 percent have been men. This
  has caused this particular recession to be dubbed
  a he-session by Georgia Department of Labors
  Michael Thurmond due its effect on men.

Source Georgia Men Hit Hardest by Recession
December 2007 to May 2009, Michael Thurmond,
Georgia Department of Labor, July 2009.
30
TRENDS IN TEEN LABOR FORCE STATUS, DECEMBER 2007
SEPTEMBER 2009, U.S.
31
TRENDS IN THE NUMBER OF EMPLOYED PERSONS, BY
EDUCATIONAL ATTAINMENT (25), DECEMBER 2007
SEPTEMBER 2009, U.S.
32
TRENDS IN THE RATES OF UNEMPLOYMENT, BY
EDUCATIONAL ATTAINMENT (25), DECEMBER 2007
SEPTEMBER 2009, U.S.
33
TRENDS IN THE NUMBER OF EMPLOYED PERSONS BY AGE,
DECEMBER 2007 SEPTEMBER 2009, U.S.
34
TRENDS IN LABOR MARKET PROBLEMS, SEPTEMBER 2007
SEPTEMBER 2009, U.S. (1000s)
35
Job Losses in Massachusetts
36
Trends in Payroll Employment in Massachusetts
Dec. 2007-Sep. 2009
37
Trends in Payroll Employment in Massachusetts,
1999-Sep. 2009 (seasonally adjusted)
38
Trends in Mean Monthly Losses in Payroll
Employment in Massachusetts during the Current
Recession
39
Trends in the Seasonally Adjusted Unemployment
Rate In Massachusetts, 1999-Sep. 2009
40
Trend in the Unemployment Rates, US. And
Massachusetts, 1999 to Sep. 2009
41
TRENDS IN NON AGRICULTURAL EMPLOYMENT LEVELS IN
MASSACUSETTS BY INDUSTRY (1000s)
42
TRENDS IN NON AGRICULTURAL EMPLOYMENT LEVELS IN
THE METRO NORTH AREA BY INDUSTRY
43
The Recession and Labor Force Outcomes in
Massachusetts
44
Trends in the Number of Employed Persons in
Massachusetts, by Gender, Jan. to Sep. 2007 2009
45
Trends in the Number of Unemployed Persons in
Massachusetts, by Gender, Jan. to Sep. 2007 2009
46
Trends in the Labor Force in Massachusetts, by
Gender, Jan. to Sep. 2007 2009
47
Trends in the Employment Rate in Massachusetts,
by Gender, Jan. to Sep. 2007 2009
48
Trends in the Employment to Population Ratio in
Massachusetts by Age, Jan. to Sep. 2007 2009
49
Trends in Teen Labor Force Outcomes in
Massachusetts, Jan. to Sep. 2007 2009
50
Why We Should Care About Employment Among
Teenagers

• There is a strong path dependency in teen and
  young adult employment
• The more teens works at 16-17, the more work they
  do when 18-19
• The more a teen works at 18-19, the more likely
  they work in their early 20s, especially those
  not attending college full-time
• Those who work more in the senior year of high
  school are more likely to be working the first
  year after graduation, including those attending
  college
• More work in the high school years, especially
  jobs providing new skills, raises hourly wages on
  jobs in the first few years following graduation

51
Continued

• More work in the teenaged years and from age
  20-23 raises hourly and weekly wages on jobs held
  in the mid-20s
• More work in the teenaged years and early 20s
  increases the likelihood of receiving
  apprenticeship training and formal employer
  training from ages 22-24
• Every spell of apprenticeship and formal training
  increases the hourly and weekly wages of the
  employed by 7 to 14 percent
• Males from lower income families, especially
  Black and Hispanic males, who work in high school
  are more likely to graduate from high school than
  their peers who do not work
• Teenaged women who live in local labor areas with
  higher teen employment rates are less likely to
  become pregnant

52
Trends in the Labor Force Outcomes of 20-24 Year
Olds in Massachusetts, Jan. to Sep. 2007 2009
53
Trends in the Labor Force Participation Rate
Massachusetts, by Education (25 Older), Jan. to
Sep. 2007 2009
54
Trends in the Employment to Population Ratio in
Massachusetts, by Education (25 Older), Jan. to
Sep. 2007 2009
55
Trends in the Unemployment Rate in Massachusetts,
by Education (25 Older), Jan. to Sep. 2007
2009
56
Trends in the Underutilization Rate in
Massachusetts, by Education (25 Older), Jan. to
Sep. 2007 2009
57
Job Vacancies in Massachusetts and the Metro
North Area
58
Trends in the Number of Job Vacancies in
Massachusetts and the Greater Boston Region,
Fourth Quarter 2007 to Fourth Quarter 2008
59
Trends in the Number of Job Vacancies in
Massachusetts and the Greater Boston Region,
Fourth Quarter 2005 to Fourth Quarter 2008 (Job
Vacancy Rate in Parenthesis)
60
Trends in the Number of Job Vacancies in
Massachusetts by Industry, 2007-IV to 2008-IV
61
Trends in the Number of Job Vacancies in the
Greater Boston Area by Industry, 2007-IV to
2008-IV
62
The Number of Job Vacancies and the Job Vacancy
Rate of Major Industry Sectors in Massachusetts,
Fourth Quarter 2008
63
The Number of Job Vacancies and the Job Vacancy
Rate of Major Industry Sectors in the Greater
Boston Region, Fourth Quarter 2008
64
The Number of Job Vacancies and the Job Vacancy
Rate of Major Occupations in Massachusetts,
Fourth Quarter 2008
65
The Number of Job Vacancies and the Job Vacancy
Rate of Major Occupations in the Greater Boston
Region, Fourth Quarter 2008
66
Structure of Employment in the Metro North Area
67
The Industrial Structure of Employment in the
Metro North County Region, First Quarter 2009,
Two Digit NAICS Codes
68
Distribution of Metro North Regional Wage and
Salary Employment for the Manufacturing Sector,
First Quarter 2009
69
Distribution of Metro North Regional Wage and
Salary Employment for the Retail Trade Sector,
First Quarter 2009
70
Distribution of Metro North Regional Wage and
Salary Employment for the Professional,
Technical, Administrative and Waste Sectors,
First Quarter 2009
71
Distribution of Metro North Regional Wage and
Salary Employment for Educational, Health Care
and Social Assistance, Accommodation and Food
Services Sectors, First Quarter 2009
72
Occupational Staffing Patterns of Industries and
Educational Attainment of Workers by Industries
and Occupations in the Metro North Workforce Area
73
Occupational Staffing Patterns of Construction
and Manufacturing Industries in the Metro North
Area 2006-07
74
Comparison of the Occupational Staffing Patterns
of the Manufacturing Industry in Metro North
Area and Massachusetts, 2006-07
75
Occupational Staffing Patterns of Retail Trade,
Information, Finance, Insurance, and Real Estate
Industries in the Metro North Area 2006-07
76
Occupational Staffing Patterns of Prof.,
Scientific and Tech. Services, Educational
Services Healthcare and Social Services and
Other Services Industries in the Metro North Area
2006-07
77
Percentage Distribution by Educational Attainment
of Employed Individuals Who Worked in the Metro
North Area by Major Occupational Group, 2006-07
78
Percentage Distribution by Educational Attainment
of Employed Individuals Who Worked in the Metro
North Area by Major Industry, 2006-07
79
The Characteristics of the Residents and the
Workforce of the Metro North Area
80
Percentage Distribution of the Civilian Labor
Force by Gender, Nativity Status, and
Race-Ethnicity, 2006-07
81
Percentage Distribution of the Working-Age
Foreign-Born and Native-Born Residents of the
Metro North Area by Educational Attainment,
2006-07
82
Percentage Distribution of the Civilian Labor
Force byEducational Attainment, 2006-07
83
Labor Force Participation Rates of the
Working-Age Population, by Educational
Attainment, 2006-07
84
Labor Force Participation Rates of the
Working-Age Population, 2006-07
85
Labor Force Participation Rates of the
Working-Age Population, By Age, 2006-07
86
Trends in the Payoffs to Education
87
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89
Trends in the Lifetime Earnings in the U.S. by
Educational Attainment, 1979 and 2006-07
90
Trends in the Lifetime Earnings Premiums in the
U.S. by Educational Attainment, 1979 and 2006-07
91
Trends in the Lifetime Earnings in Massachusetts
by Educational Attainment, 1979 and 2006-07
92
Trends in the Lifetime Earnings Premiums in
Massachusetts by Educational Attainment, 1979 and
2006-07