Aging Population Means Decreasing Labor Force, More Replacement Jobs than New Jobs
There was good news and bad news for
commercial real estate in the employment numbers that came out this past week.
While the 243,000 jobs added in January was certianly good news, the projections of slower population growth and a decreasing overall labor force are expected to lead to slower civilian labor force growth through 2020, according to the U.S. Bureau of Labor Statistics (BLS). Slower job growth means slower real estate space demand.
Industries and occupations related to health care, personal care and social assistance, and construction are projected to have the fastest job growth between 2010 and 2020, the BLS reported. Again, all good news for the real estate industry. However, despite rapid projected growth, construction is not expected to regain all of the jobs lost during the Great Recession.
Through 2020, 54.8 million total job openings are expected. The downside is that more than half -- 61.6% -- will come from the need to replace workers who retire or otherwise permanently leave an occupation. In four out of five occupations, openings due to replacement needs exceed the number new jobs due to growth. Replacement needs are expected in every occupation, even in those that are declining.
Latest Job Numbers
Job growth was widespread in the private sector in January, with large employment gains in professional and business services, leisure and hospitality, and manufacturing. Government employment changed little over the month.
Professional and business services continued to add jobs in January (70,000). About half of the increase occurred in employment services (33,000). Job gains also occurred in accounting and bookkeeping (13,000) and in architectural and engineering services (7,000).
Over the month, employment in leisure and hospitality increased by 44,000, primarily in food services and drinking places (33,000). Since a recent low in February 2010, food services has added 487,000 jobs.
In January, health care employment continued to grow (31,000). Within the industry, hospitals and ambulatory care services each added 13,000 jobs.
Wholesale trade employment increased by 14,000 over the month. Since a recent employment low in May 2010, wholesale trade has added 144,000 jobs.
Employment in retail trade continued to trend up in January. Job gains in department stores (19,000), health and personal care stores (7,000), and automobile dealers (7,000) were partially offset by losses in clothing and clothing accessory stores (-14,000). Since an employment trough in December 2009, retail trade has added 390,000 jobs.
In January, employment in information declined by 13,000, including a loss of 8,000 jobs in the motion picture and sound recording industry.
In the goods-producing sector, manufacturing added 50,000 jobs. Nearly all of the increase occurred in durable goods manufacturing, with job growth in fabricated metal products (11,000), machinery (11,000), and motor vehicles and parts (8,000). Durable goods manufacturing has added 418,000 jobs over the past 2 years.
Employment in construction increased by 21,000 in January, following a gain of 31,000 in the previous month. Over the past two months, nonresidential specialty trade contractors added 30,000 jobs.
Government employment changed little in January. Over the past 12 months, the sector has lost 276,000 jobs, with declines in local government; state government, excluding education; and the U.S. Postal Service.
The January CBIZ Small Business Employment Index, a barometer for hiring trends among companies with 300 or fewer employees, decreased by 2.75% during the past month, following an increase of 1.75% in December.
Volatility in the Jobs Markets
Last month, employers announced plans to cut 53,486 jobs from their payrolls. That was the largest monthly layoff total since 115,730 job cuts were announced last September, according to global outplacement firm Challenger, Gray & Christmas Inc.
The January total was 28% higher than the 41,785 job cuts announced in December. It was 39% higher than January 2011, when employers announced just 38,519 planned cuts.
"Last year's 38,519 January job cuts represent the lowest first-month total on record. Even then, the January 2011 total was higher than the previous month, when 32,004 job cuts were announced. This year marks the sixth consecutive year and the 11th out of the last 13 in which January job cuts surpassed the December total," said John A. Challenger, CEO of Challenger, Gray & Christmas.
Leading the January surge were retailers and financial firms, which announced 12,426 job cuts and 7,611 job cuts, respectively. The retail total was the largest experienced by this sector since January 2010 (16,737). The retail job losses are unrelated to the departure of seasonal workers, which typically are not announced or reported as job cuts. Rather, the cuts are related to restructurings, store closings and other cost-cutting measures.
The 7,611 job cuts in the financial sector mark the largest one-month total since September 2011, when 31,167 job cuts were announced (most of which came from a single announcement by Bank of America).
For the second consecutive month, the government sector saw relatively few job cuts, with these employers announcing just 3,021 layoffs in January.
"Of course, it is far too early to say whether we will continue to see low job-cut figures in government. It is highly unlikely, considering that many cities and states continue to struggle with budget deficits. And, then there is the federal level of government, which remains under intense pressure to cut costs. As a result, we expect government layoffs to be heavy again this year," noted Challenger.
Employment Projections 2010-'20
Going forward through 2020, the health care and social assistance sector is projected to gain the most jobs (5.6 million), followed by professional and business services (3.8 million), and construction (1.8 million). Despite rapid growth in the construction sector, employment in 2020 is not expected to reach its pre-recessionary annual average peak of 7.7 million in 2006.
Of the 20 industries detailed by the Bureau of Labor Statistics the ones projected to lose the largest numbers of jobs are primarily in the manufacturing sector (11 industries) and the federal government (3 industries). The largest job losses are projected for the Postal Service (-182,000), federal non-defense government (-122,000), and apparel knitting mills (-92,000).
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