Felix Salmon

A granular look at finance job losses

By Felix Salmon
May 19, 2010

Many thanks to Mark Beauchamp of EMSI, who has provided a very granular breakdown (Excel file) of exactly where the job losses are in the finance and insurance industries. The numbers cover 2007, 2008, and 2009: so far the data for 2010 are too inaccurate to be useful. And interestingly the peak of the finance-and-insurance jobs market was 2008, with 8.88 million jobs, which then fell to 8.56 million in 2009: a fall of 3.6%.

If Mike Mandel’s theory is right, we ought to be seeing an uptick in the credit-related jobs. But “credit intermediation and related activities” saw job losses of 8% between 2007 and 2009. The gains were in things like commodity contracts dealing, which saw 7% more jobs; “trusts, estates, and agency accounts”, which saw 11% more jobs; and of course “miscellaneous financial investment activities”.

The insurance industry in general was flat from 2007 to 2009, while investment banking generally (“securities, commodity contracts, investments”) saw its total employment rise by 1% over that time.

In fact, the biggest job losses of all are exactly where Mandel expected to see gains. ” Nondepository credit intermediation” saw total jobs fall by 18%, while “Real estate credit” fell by 31%. “International trade financing” was exactly flat.

Beauchamp also broke out New York jobs — the investment banking world has been harder hit here, down 7% between 2007 and 2009, and even “Monetary authorities – central bank”, which I take to mean the New York Fed, saw its headcount fall by 8%.

In any case, enjoy playing with the spreadsheet yourself. But one part of Mandel’s theory does seem to have held up: Finance in general does seem to have lost many fewer jobs than manufacturing.

Update: Beauchamp adds, via email:

I just remembered a story that ties with this subject from New Jersey during the crash – I was working with their Department of Labor, and they told me that the unemployment offices in the north part of the state were reporting lots of financial products sales guys showing up in their offices, but because the sales guys were 1099′ers (on full commission as opposed to salary- W2′s) they were caught off guard with how many had been working in their area.

This is because the Quarterly Census of Employment and Wages derives its employment estimates off of unemployment insurance data.  Therefore, if you were on the sales side of the financial industry, you aren’t covered by unemp. data, and don’t show up in the employment estimates.

Numbers on this coming tomorrow!

Update 2: Here they are!

3 comments so far | RSS Comments RSS

as to be expected in a service based economy that ours is evolving to, away from an industrial/labor oriented one.
==bob D

Posted by REDruin | Report as abusive

So I read what you say as the rest of us, not in finance, can’t even take some satisfaction in knowing there was significant bloodletting at the companies that caused all of this. In fact, overall, employment in finance has grown, while employment in just about all of the rest of the US has shrunk.

The game is definitely rigged.

Posted by Curmudgeon | Report as abusive

This is just the beginning, shrinking the financial service industry wil take reform and a reduction of the types of things that created out sized profits for undersized efforts.

Manufacturing took a hit because the banks received huge bail outs and out side of the auto industry the rest of us were left to build rafts from the wreckage.

Growth in manufacturing, less financial “innovation” and more investment in areas of science (real science not economics) that improve everyones life instead of just raising Manhattan Real Estate Prices.

Posted by jstaf | Report as abusive

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