June was a good month for jobs: the BLS announced that employment increased by 850,000. And there was a continued resumption of economic activity in two areas which have direct public contact that had been curtailed due to the pandemic. Employment in Accommodation & Food Services was up by 269,400 (2.2%), Arts, Entertainment & Recreation employment was up 73,600 (3.7%), and Personal & Laundry Services was up 28,200 (2.1%). Three sectors were down slightly: Telecommunications, Tangible business services, and Financial Activities.
More interesting to me is what the data says about employment in tangible-producing versus intangible-producing industries. As the chart below shows, from 2000 to around 2010, employment in tangible-producing industries slowly declined while employment in intangible-producing industries rose. And as a result, the share of total employment in intangible-producing industries passed that of tangible-producing industries some time in 2009. This was the continuation of a long trend in the growth of the intangible economy.
But around 2010 something happened. Employment in tangible-producing industries started growing at about the same rate as employment in intangible-producing industries. And the split between the two in terms of percentage of total employment stabilized. The pandemic reversed that trend with employment in tangible-producing industries dropping much faster than in intangible-producing industries. We now have enough post-crash data to clearly see that the 2010-2020 trend of equal employment growth is reasserting itself.
Thus, the question remains: what happened in 2010? Did the Great Recession somehow fundamentally change the structure of the economy? I suspect that part of the answer can be found in the changing nature of the tangible producing process. The long-awaited Information Society (or Post-Industrial Society if you prefer the older title) has finally arrived. The nature of the output between tangible and intangible may be different, but all production processes are becoming intangible-heavy. For example, manufacturing is now a knowledge-based activity. Another explanation may be the fusion of tangible and intangible output (often referred to as “servitization”). Companies no longer sell just tangible products but combine the physical with an intangible service (such as home alarms).
Likely both explanations are true. Both process and products throughout the economy have become more intangible-based. This is true even as we consume more tangible-based (physical) services. More on this later.
For more on the categories, see my explanation of the methodology in an earlier posting.