Is the Finance Sector Shrinking?

A Bull Market That Creates Few Jobs in Finance
The big difference this time is technology and automation.
Bloomberg, June 23, 2017



Today, we are going off the beaten path with an interesting look at an aspect of employment data. Stick with me, because what we found was a bit surprising.

The subject of Wall Street employment came up via my colleague Josh Brown, who mused that this may be the first bull market when Wall Street jobs didn’t grow. Finance, of course, is more than just Wall Street: it is a large and diverse industry, encompassing many different occupations.

Thus, we begin our search at the U.S. Bureau of Labor Statistics. 1  The BLS has 26,709 employment-related data series; I refined and eliminated all but 27 subsectors, keeping only those job categories that are finance related. I removed all of the obvious subsectors as well as real estate, auto leasing/rental and other such segments. I left out some insurance occupations, but I did include insurance jobs that appeared to be related to investing.2

The list is admittedly imperfect, but it gives a pretty good sense of finance-industry employment back to the start of the Great Recession in December 2007.3   The big takeaway is that since then, this finance-related group has dramatically lagged the overall economy in job creation, growing just 0.7 percent. Compare that to total private-sector employment gains during that period of 6.6 percent.

Not surprisingly, the job gains and losses tracked broader changes in the economy, from automation to the responses to the credit crisis. However, the devil is in the details, and in the data. It reveals quite a few surprises.

Let’s start with the outliers: the largest job declines were among “savings institutions,” with a drop of 43 percent; the biggest gainer was “investment advice,” with a 42 percent gain. . .


Continues at A Bull Market That Creates Few Jobs in Finance