What is a Structurally Impaired Job?
Credit Suisse defines structurally impaired sectors to “include real estate related industries, finance, manufacturing, and the state and local government sector.” These are the sectors that at least in part rode the “bubble” economy wave. Many of these jobs were credit dependent, with growth beyond what the economy could sustain naturally.
The chart tells the story. Tyler Cowen found it. I wish somebody could find the original Credit Suisse piece.
When I try to tell a PSST story for the current recession, one of the facts that gets thrown in my face is that there was a broad-based decline in employment. That fact runs counter to the view that a lot of unemployment is structural. Without reading the actual Credit Suisse analysis, I cannot tell you how far it goes toward making a good case that a lot of the job losses were structural.
I am skeptical that aggregate industry data can be used to distinguish unsustainable jobs from sustainable ones. I offer the suggestion that a sustainable job is one that a worker can come back to after the recession is over. By that definition, I think that very few of the lost jobs were sustainable.
To me, a sustainable job is one where the business makes a profit that is not based on artificial factors (e.g., a housing bubble). State and local workers are doing important things, but you cannot use profitability to measure sustainability there, so I would leave that sector out of the calculation and just focus on the private sector. I think that some manufacturing jobs were not sustainable–those that supported housing and household durables and those being made uneconomical because productivity rises faster than demand. However, if the Credit Suisse analysis were to take all of manufacturing and call those jobs structurally impaired, then I am not ready to buy it.