The Great Recession fundamentally changed the labor market mix between tangible and intangible-producing jobs. The COVID crash may shift that realignment again as tangible and intangible-producing jobs react differently to the downturn. Both declined significantly but only tangible-producing employment rebounded in May.
First, a little background. Intangibles are increasingly important as both inputs and outputs of economic activities. Intangibles are both major inputs to the production process of most other industries (such as research and development) and an important part of direct personal consumption (for example, of financial services). To understand the importance of intangibles in the U.S. labor market we need to go beyond the traditional (and outmoded) division between goods and services.
To better capture the structure of the labor market, I have divided it into tangible and intangible as well as goods and services, as described in my earlier analysis. Tangible activities are primarily physical activities (involving atoms); intangibles are primarily information/analytical activities (involving bits). Production of goods is almost exclusively a tangible activity. Services can be divided into tangible and intangible activities. Tangible services involve physical activities such as cutting hair, ringing up a sale at a cash register, cooking and serving a meal, and transporting someone or something. Designing a poster, negotiating a deal, writing an article, and approving a loan are examples of intangible services. (See below for more on the methodology.)