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November 4, 2011

U.S. Job Losses Vary By Metro And Industry

November 4, 2011

The Great Recession has led to uneven job losses, and these losses vary by industry and metro.  Because some metros are now left with a new and different industrial mix and nobody knows whether the pre-recession distribution of job opportunities will return, it’s important to consider what might happen if the change is permanent.

Why might an area’s industrial mix matter?  One reason is a potential “skills mismatch”— some sectors might require skills that workers don’t have. Another is that certain sectors, such as construction and manufacturing, tend to offer “good jobs”—those that pay relatively high wages even for middle and low-skilled workers.  Not surprisingly, local policymakers want to attract and maintain industries that bring abundant good jobs with them.

Just how has the Great Recession impacted such efforts? The four maps here hold key answers. Each map highlights the changing importance of a major sector—construction, education & health services, manufacturing, and government. The dot size represents the sector’s share of total metro area employment prior to the Great Recession (during calendar year 2007). The dot color reflects how much the sector’s employment share has grown or shrunk since then (the change from 2007 to 2010/2011). Dark blue indicates a high percentage change in employment share, light blue a moderate percentage change, and red a low percentage change.

We see substantial variation by metro in the importance of construction going into the recession and in its subsequent relative decline. Let’s look at the Phoenix and Houston metro areas as an example. Phoenix’s construction share plunged from 9.1% to 5.1%, ( 43.5% decline) while Houston’s fell only slightly, from 11.2% to 10.1% (a 9.7% decline).  Clearly, other sectors’ employment shares must grow to offset declines in construction in metros like Phoenix.

In the middle-way education and health services sector, employment rates have been somewhat less sensitive to the recession but still vary by metro. These services were equally prominent in Phoenix and Houston before the recession.  But, not surprisingly, they now comprise a much larger share of Phoenix metro employment, rising from 10.9% to 14.4% (a 31.7% increase) and only a slightly larger share in Houston’s, rising from 11.0% to 12.2% ( a 10.9% increase).

Together, the maps show that metros that have experienced sharp declines in major sectors during recession will emerge from it with a different industrial mix. The question is whether there will be a new normal after the recession, one forcing workers to find good jobs in different industries that may require new skills.

(Thomas Callan and Graham MacDonald provided research assistance.)

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