July employment shows continuing growth

This morning the BLS announced that employment in July increased by 943,000 – more than expected. And the unemployment rate dropped to 5.4%. Employment growth was across the board. As in previous months there was a continued resumption of economic activity in two areas which have direct public contact. Employment in Accommodation & Food Services was up by 2.6% and Arts, Entertainment & Recreation employment was also up 2.6%. Only Tangible Education and Health Services saw a decline.

As I mentioned last month, the data continue to show the economy settling back into the pre-pandemic pattern of tangible-producing versus intangible-producing industries of the last decade.

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.

So, what happened in 2010? I suspect that the long-awaited Information Society (or Post-Industrial Society if you prefer the older title) finally arrived and with it a change in the tangible producing process. 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).

The pandemic lockdown disrupted the economy. But it did not fundamentally alter this shift.

For more on the categories, see my explanation of the methodology in an earlier posting https://intangibleeconomy.wordpress.com/2020/06/11/which-jobs-got-hit-in-the-covid-crash-tangible-versus-intangible/

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