The services part of the economy is growing much faster than the part that makes things
The services part of the economy is growing much faster than the part that makes things
We got a peek at the health of the U.S. job market from the folks at ADP on Wednesday — they process payrolls for 25 million U.S. workers. By ADP’s estimates, the economy added 183,000 nonfarm private-sector jobs in January. Overall, that’s strong, but it underscores a decades-old pattern: This country’s economy is less about producing goods than it is about providing services.
Part of this economy makes things — for instance, manufacturing, mining, building. And part of the economy does things — health care, lawyering, internet-ing. In January, according to ADP, the making things part lost 6,000 jobs. The service part gained 190,000.
“That’s been the story of the U.S. labor market and occupational employment since the mid-2000s,” said Christophe Combemale, an assistant research professor of engineering and public policy at Carnegie Mellon University. “The overall share of U.S. manufacturing has been declining pretty consistently for decades.”
Yet one part of the making economy could be, should be, much stronger than it is: construction.
“There’s ample construction demand,” said Jim Corridore, a senior industrials analyst at PitchBook. “You know, economic indicators are not all that strong right now, but projects are long-lived. So there’s stuff that’s been planned years ago that’s ongoing.”
So then why, in a country that’s recovering from hurricanes and fires, were just 4,000 construction jobs added in January?
“The industry has been experiencing a long-run skilled-labor shortage,” said Robert Dietz, chief economist at the National Association of Home Builders.
To be fair, construction is facing a lot of problems, from zoning to supply chains. But labor is one of the big ones. “In any given month, the construction industry is short 3,000 to 4,000 workers. The output of the sector could be larger if the workforce was larger,” he said.
Construction lost a million and a half workers, Dietz said, in the housing bust after the Great Recession. It’s still clawing its way back.
“You’ve got more people going to college today, there’s been kind of a move away from careers in the trades. For example, not offering shop class in high schools,” he said.
Or emphasizing four-year college over trade schools and community colleges that prepare people for careers that are actually very much in demand.
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