The new unemployment numbers in both the U.S. and Canada are legitimate cause for concern. But as BusinessWeek’s Michael Mandel notes, those job losses are concentrated in the routine-oriented, tangible economy. The intangible or creative economy continues to fare much better:
This morning’s employment report was absolutely horrible, with the unemployment rate rising to 7.6% and almost six hundred thousand jobs lost, in just one month.
But in the midst of the gloom, it’s essential to point out that the damage is still concentrated in the ‘tangible sector’—that is, those industries which either produce,move, or distribute physical goods. In January the percentage of job losses coming from the tangible sector fall somewhere in the range of 75%-85%. (The exact number depends on how many of the temporary help layoffs are in manufacturing, construction, and retail—there’s no way to tell).
Meanwhile, the jobs losses in the intangible sector are much more moderate. Education and healthcare are still growing, and other intangible-producing industries have relatively small losses.
The housing bubble essentially propped up the tangible sector, badly distorting the “real economy” and biasing investment toward it and away from the more rapidly growing and more stable intangible sector. We’ll only begin to get toward recovery when we stop unnecessarily propping up the tangible sector and allow housing prices to fall to more realistic levels, essentially freeing up demand for the goods and services of the still growing intangible sector.
February 6th, 2009 at 5:12 pm
I don’t think we’re going to get off easy, it will trickle down to us too. I don’t remember the ’80’s or ’70’s recessions really affecting me or people I knew nearly as much. My daughter in California just got laid off. Her husband was laid off, then rehired to do two jobs. Another son in law’s high tech company closed his department — he was one of the lucky dozen out of a hundred to be kept and transferred, but suspects the next round isn’t too far off. These are highly educated, creative class, middle-class people — an executive in an employee benefits company, a PhD who can’t find teaching jobs and works in media, a high-tech engineer. I’m self employed, so even though my boss can be an ass he won’t fire me. But I know my business, and my wife’s, will be affected.
February 6th, 2009 at 6:01 pm
I agree with Michael. The advertising, marketing and branding fields are absolutely decimated. Non-profit arts groups are losing charitable dollars and tightening their belts. Fortunately, I’m also self-employed, and a trial attorney; people are still fighting and I am doing fine. But some of my other ventures are struggling and the creative and tangible economies are feeling the pain.
That said, I remain an optimist, and one result of this unemployment wave will be a surge in entrepreneurship. We need to get our SBA programs super-funded and seed the future as many talented people, having lost all employment security, will strike out on their own by force of necessity.
But it seems we’ve bottomed and the upswing could be equally crazed. Let’s hope we don’t inflate the next bubble too fast.
February 6th, 2009 at 6:04 pm
My business area is in intangibles. My perception is that no one in my area is in financial trouble, but everyone is being careful about cash-flow. The result is that our general economic activity is lower now than three months ago. Ultimately this hits the tangible market-place because we are postponing buying things.
February 7th, 2009 at 11:31 am
I think this back and forth captures it. Yes there will be downturns and layoffs in the intangible or creative sector. But jobs have been fluid there for years, and people who work there have both the education and skill, as well as the flexibility, to adjust. There is often two incomes to draw on, frequently one tied to a sector like education or health which are even more stable. In manufacturing and the tangible or routine sector, many livelihoods are literally tied to jobs. And the financial resources or margin to deal with an economic blow much narrower. Those in the tangible/routine sector will be hurt badly, and that is why we must once and for all upgrade this sector and lower end services to look and pay more like intangible/ creative jobs.