It has been a busy week for labor market data. We talked about the October Job Openings and Labor Turnover Survey on Tuesday. We got ADP’s private-sector jobs data Wednesday. And the federal government will release the official employment tally for November on Friday.
Whatever the Labor Department reports Friday, it’s important to pay attention to the types of jobs being created. Those created last month may or may not reflect what’s been going on in the broader economy.
One way to think about the labor market is to break it up into two categories: Jobs in sectors that ebb and flow with the cycles of the economy — call them cyclical jobs — and jobs in sectors that do their own thing.
Kathy Bostjancic, chief economist at Nationwide, calls those jobs secular.
“There is some sensitivity, but they are less sensitive to changes in the economy, short-term changes in the economy, than the very cyclical sectors would be,” Bostjancic said.
Bostjancic said a good example of jobs in a secular sector are health care jobs. Those tend to reflect how much demand there is for health care, as opposed to how fast the economy’s growing.
“People are aging,” Bostjancic said. “So, whether we’re in a booming economy or a recession, there’s still going to be a certain level of demand people require when they’re older for health care.”
Jobs in secular sectors, including health care, education and government, have accounted for a big share of the gains over the last year.
Daniel Zhao, lead economist at Glassdoor, said that’s not necessarily bad.
“To some extent, jobs growth is jobs growth,” Zhao said. “And more Americans being able to find jobs and earn an income at work is fundamentally a good thing.”
But one concern, Zhao said, is what can happen if those secular trends change. For instance, he said education jobs are still catching up from a big downturn during the pandemic.
“That also suggests that that growth can’t just keep going on forever, right?” Zhao said. “What happens when we do finally catch up? Or, what happens when funding for school systems or local governments dries up?”
Meanwhile, cyclical jobs have basically been stagnant this year, said Guy Berger, director of economic research at the Burning Glass Institute. Those are more connected to the broader economy, based in industries that include manufacturing, construction and retail.
“Right now, with monetary policy squeezing the economy at least a little, these sectors, in general, aren’t generating the bulk of job gains,” Berger said.
Jobs in those cyclical sectors, he added, could take a hit if the economy were to turn south.
