Calculating Labor

To celebrate Labor Day, I’m highlighting the results of two studies done by 24/7 Wall Street on the best and worst occupations in terms of job growth over the next ten years.  There are surprises (at least to me) on both lists.

The number of jobs related to operating the equipment that makes oil refineries work is supposed to drop by 14% over the next ten years.  Demand is on the upswing for petroleum engineers who can work on complex extraction methods for oil and gas.

Work related to printing snagged two of the top ten job declining spots.  Needless to say postal workers were also high on the list.  What did surprise me were people who work building semiconductors also got a top job losing spot.  In that case robots are better and getting more cost effective than people in these jobs.  Factory workers being replaced by technology also made the losers list for industries that assemble products with electrical parts and telecommunications. 

While there’s no trend I’ve heard of regarding people giving up wearing clothes, jobs related to clothing are disappearing.  Textile and sewing machine operators along with people who work with leather are all listed as declining in numbers in the mid 20% area or higher.

Generally the highest growth outlook job types were not what I expected.  What did meet expectations is that math and science capabilities help you find work.  People who have the skills to monitor and investigate sources of pollution have no trouble finding a job now and shouldn’t be worried about the future.    Being good at math will get you into 3 of the occupations on the high growth list:  actuary, statistician and market research analyst. 

I didn’t see this one coming –demand for Optometrists is supposed to grow more than 68% in the next ten years.  (Pun intended.)  Demand is driven by a combination of the aging population needing more services, and many people now in the profession looking to take their glasses off and retire.

While many claim technology can do this better, interpreters and translators still get jobs and should continue to do so.  Interestingly the forecast of a 69% increase in job openings over the next ten years includes an assumption that one of your fluent languages is English. 

Here are the growth jobs that really surprise me:  Insulation workers, Glaziers and Pest Control workers. Who thought I’d want to talk with my son about being an exterminator when he grows up? 

Small Business Credit Crunch 2010

The conflicting stories about the availability of credit for small businesses continue.  A new survey released by the Federal Reserve asking small business owners about their access to credit, showed a continuing mismatch between businesses that want to expand and banks that want to assist them in funding growth.  The survey was done in New York, but the sample was designed to match the structure of the US small business market, including that 70% of the respondents had 5 or fewer employees. 

It takes no time at all to find data points indicating the decline in lending is demand driven (that is small businesses aren’t looking for loans these days), but the Fed survey team says that’s not the case. 

The survey found 59% of respondents had applied for credit during the first half of 2010.  That compares to an average of 40% pre-recession.  More than 75% of the applicants received only “some" or “none” of the credit they wanted.  Some of the problem is arguably related to the credit worthiness of the borrowers.   66% of respondents reported they had sales / revenue declines over the last two years.  It is worth noting that the only area where financing was granted more than half of the time was equipment finance.  Clearly "collateral rules" these days. 

In general, there were three factors that were statistically significant in terms of the population ultimately ruled as credit worthy by receipt of a loan.

Firms with a track record did better, and being part of the one-third of applicants who grew revenue through this recessionary period was a big help.  Finally owners who salt away some savings in retained earnings make a better impression on their bankers.  Perhaps most interesting, was the factor that wasn’t a predictor of receiving credit – having had a loan.  70% of the applicants in the sample had been granted credit from the same financial institution  2008.  Of that group only half were approved—the same percentage approval rate as in the overall sample.  One other noteworthy twist is that although construction and retail firms were disproportionately represented among the industries looking for credit, they were granted loans at the same rate as firms in other sectors. 

The authors of the Fed study hypothesize that more banks consistently providing a “second-look program” could yield significant gains in access to credit.  They acknowledge though that this is only in theory.  It may be worth investigating.  The authors of the study also point out that these small firms typically account for about 60% of gross job creation.  The link between capital access and adding jobs is well proven.



Looking at the Jobs Numbers

While jobs data is relentlessly bad these days, for those of us still required to make a living, finding nuggets of information that can improve decision making is worth the effort of checking these numbers in detail.  I read the jobs data pretty religiously with a focus on geographic,  industry sector and size information.  There are two reasons I do this.  Honestly, sometimes seeing another area or target market that's worse off than mine makes me feel better.  It's not necessarily a productive use of time, but it does dispel some gloom.  The flip side is seeing where there might be opportunity driven by either

-  the biggest  new problem areas, or

-  specific areas of economic pick-up.

 The most recent Department of Labor jobs reports shows a decline in the number of jobs, primarily due to less employment in government.  Total public sector jobs are down by 159,000, while the private sector added 64,000 jobs in September.   For context, economists estimate it will take additions of 150,000 jobs a month to keep the unemployment rate flat.

   The data from Small Businesses is mixed.  According to the National Federation of Independent Business in September only 8% of small business owners said they plan to increase staff this year.  Contrast that with the Business Roundtable Economic Outlook Survey update that shows 31% of large firms are looking to hire.  The latest ADP / Macroeconomic Advisers data shows firms with less than 500 employees cut 28,000 jobs last month.  (Companies with more than 500 employees laid off 11,000 US workers in the same time period.)  Interestingly, really small companies (less than 20 employees) did add jobs.  According to Intuit’s Small Business Employment Index  the less than 20 employees segment grew by 27,000 jobs in September.  That still puts small business job growth at a run rate of only 1.6%. 

What stands out about this addition to the really-small business workforce is that access to credit for small business remains a big problem. The SBA loan guarantee enhancements that expired in May were renewed in the new Small Business Jobs Act, but only until the end of 2010.  While it may be hard to borrow money now, it sounds like it’s only going to get more difficult.  (Note to self, ask local bank rep about this and pass on intel to clients.) That said, somehow it's the least likely to be credit worthy that are hiring (albeit at an anemic rate).  Presumably this is a mix of the SBA program having an impact or some business improvement that produced enough working capital to finance new workers.  Hopefully this little hiring increase can be interpreted as a green shoot from the people who by necessity run the leanest businesses around.