What Happened in Vegas? Its Not Better Off Than Four Years Ago

The question “are you better off than four years ago?”, first asked by Ronald Reagan in his campaign against Jimmy Carter in 1980, has a different answer for households in different parts of the country, and for workers who differ with respect to their occupation, age, education, race, gender and work experience.  The average answer to this question belies substantial inequality in changes in economic fortunes over the past four years.  There have been economic success stories even during the depths of the deepest recession since the Great Depression.  Some small businesses and start-ups have flourished.  The stock market and corporate profits have rebounded well in the past four years.  Many individuals have found work, moved from part-time to full-time work, received a promotion, or a substantial increase in their rate of pay.

At the other end of the spectrum, there is unlikely to be a group of workers more adversely affected by the recession and weak recovery than construction workers in areas where the real estate bubble burst.  Consider building construction workers in Las Vegas, Nevada.  Four years ago there were 17,500 workers employed in building construction.  Today there are only 5,100 meaning that employment has fallen by 71% over four years.

The Case-Shiller price index for residential housing in Las Vegas has fallen by 41% over the past four years.  This means that many of the unemployed and underemployed construction workers are underwater in their homes.  Moreover, given the glut of housing, the employment prospects for construction workers in Las Vegas is likely to remain weak for years to come.

What happened in Vegas, unfortunately, isn’t confined to Vegas.  There are a number of other cities and areas, from Riverside County, California to south Florida, that are casualties of the crash in real estate markets.  Many residents of these areas lost equity in their homes.  Others lost their jobs and have been underemployed for years.  Many small businesses, especially those dependent on real estate and construction, have failed.  So whenever pundits and journalists attempt to determine whether the typical American is better off than they were four years ago, remember that there are 300 million different answers to that question.  In some parts of the country the answer is clearly no, for far too many Americans.

Durable Goods Manufacturers Struggle to Find Qualified Applicants

The typical job vacancy in durable goods manufacturing remains unfilled longer, on average, than at any time in the past decade.  This suggests that durable goods manufacturers struggle to find qualified applicants for their job openings as the economy slowly recovers from the deep recession of 2008 and 2009.  In contrast the average construction job vacancy remains unfilled half as long as it did during the construction boom because there are many qualified jobless workers for each job opening.  Construction employment fell by almost 30% between 2007 and 2010, and has not grown since January 2010.

The BLS JOLTS data report job openings at the end of each month and the number of persons hired per month, by major sector of the economy.  For example, there have been an average of 194,000 job openings in durable goods manufacturing at the end of each month, and 157,000 workers hired per month over the past three months.  This implies that the average job vacancy remains unfilled for about 38 days.  In contrast, at the depth of the recession in the fall of 2009 the average durable goods job vacancy remained unfilled for less than two weeks.  The following figure shows the average number of days a job vacancy remained unfilled over the past decade in three sectors impacted by the recession: construction, financial services and durable goods manufacturing.

 

The average job vacancy in financial services now remains unfilled for about 40 days compared to 25 days in the fall of 2009.  The financial services labor market had the least slack in the summer of 2006, when the typical job vacancy remained unfilled for about 7 weeks.

It was most difficult to hire a construction worker in the summer of 2007 when the average job vacancy remained unfilled for about 15 days.  In contrast, in the early fall of 2009, the average construction job opening remained unfilled for less than 5 days.

The average job vacancy in financial services now remains unfilled for about 40 days compared to 25 days in the fall of 2009.  The financial services labor market had the least slack in the summer of 2006, when the typical job vacancy remained unfilled for about 7 weeks.

It was most difficult to hire a construction worker in the summer of 2007 when the average job vacancy remained unfilled for about 15 days.  In contrast, in the early fall of 2009, the average construction job opening remained unfilled for less than 5 days.