Industries that may never recover in the US

Crap! the field that I received both my BS and MS from, is one of them – Telecom. Thank God! I switched to Internet and social media early 2000 🙂

24/7 Wall St examined the Bureau of Labor Statistics’ “Employment Situation Summary,” and a number of sources that show layoffs by company and sector. The weakness in these sectors will make it harder for the private industry, even aided by the government, to bring down total unemployment from 9.6% and replace the 8.3 million jobs lost during the recession.

Here is the list of the 10 job categories that will not recover:

1. State and Local Government Jobs. The level of unemployment in this sector continues to rise. Budget imbalances in a number of states have already caused mass layoffs as tax receipts have dropped sharply. A recent report by the National Governors Association and the National Association of State Budget Officers found that 22 states furloughed employees and 25 laid off workers during fiscal year 2009-10. As an example, California slashed its workforce by tens of thousands — some were laid off permanently and some are out of work and may be recalled. Former eBay CEO Meg Whitman, who is running for governor of California, said she will cut the state workforce by another 40,000 and sharply cut pensions for new workers. Forty-six states face budget shortfalls that will total $112 billion for the fiscal year ending next June, according to the Center on Budget and Policy Priorities. Municipalities face similar difficulties as property taxes plummet.

2. Construction. Nationwide construction unemployment was 17% in August, up from 16.5% in the same month last year. Over the course of the summer, government statistics have shown sharp drops in the construction of new homes and apartments. Building permits are also down. Most large housing markets have more than 12 months of unsold inventory on hand. There is also a “shadow inventory” of unsold homes — those that have gone into foreclosure but have not been put on the market by banks. Foreclosures and defaults are expected to rise another 3 million to 3.5 million this year.

3. Installation, Maintenance and Repair. A set of industries related to housing and commercial construction and maintenance will also not generate new jobs. This is the employment sector the government calls “installation, maintenance and repair.” Jobs in this sector are dependent on real estate. While many of the workers in these industries, such as plumbers and electricians, are relatively well paid and many work on homes and commercial buildings, some are mechanics who work on industrial equipment, aircraft and plants. These industries will be more crowded as people with training in related work leave the armed forces with the drawdown in troops in Iraq, which will put downward pressure on wages.

4. Automotive Manufacturing. General Motors has cut over 100,000 people since the beginning of the recession in December 2007. Ford has cut over 20,000 and Chrysler 15,000. This does not include foreign car companies with workers in the U.S. By some estimates, every car company worker layoff leads to three more layoffs in related industries that supply the car and light truck manufacturing business. That includes hundreds of car dealerships that have been closed in the last two years.

5. Pharmaceuticals. This industry has bled workers for three years, and that trend is likely to continue. The largest companies in the sector, such as Pfizer and Merck, have a number of blockbuster drugs that have lost their patent protection in the last decade. They have other pharmaceuticals that will lose that protection in the next decade. Sales of most of these drugs will move to generic companies that will sell them for far less, and erode critical revenue sources for the huge pharma firms. Most companies in the industry admit that they cannot replace the drugs that go off patent fast enough to keep their revenue high. The other reason employment in the sector will stay down and may drop further is that big drug companies are merging to save costs, and most of those costs are people. Pfizer has cut 30,000 people since the start of the recession. Merck has cut 25,000, and these companies and their peers expect that they will have to bring down costs even more.

6. Big Telecom. AT&T, Sprint-Nextel and Verizon have passed their peak employment levels. Employment in the sector will not recover and could shrink for two reasons: (1) The landline business is falling rapidly as home phone users move to VoIP, and (2) Increased adoption of cell phones. The cellular subscription business has been damaged by price wars meant to gain market share in the wireless industry — one that has stagnated due to a 90% market penetration in the U.S. Sprint made substantial cuts as it posted three years of losses. The most recent was 2,500 people in November last year. In 2008, AT&T said it would lay off 12,000 people. Verizon recently said it would fire 13,000 employees from its land line business.

7. Newspapers. The layoffs in newspapers began in the 1980s as presses became more automated and tens of thousands of pressmen lost jobs. More recently, the changing habits of news consumption have increased Internet readers and hurt print, which has caused more job losses in press rooms. Reporters and editors have lost work as print subscribers have stopped paying for what they can get online for free. One recent study claims that the newspaper industry employee base fell from 767,000 jobs in 1998 to 619,000 jobs in 2008. The U.S. Department of Labor has forecast another 120,000 newspaper layoffs over the next 10 years.

8. Airlines. The number of pilots, flight attendants and ground crew workers is shrinking as consolidation and the recession have hurt the industry badly. Mergers in the last two years, between Delta and Northwest and United’s merger with Continental, have decreased the number of large carriers in the U.S. by half. The Bureau of Transportation Statistics reported that the number of airline employees in the U.S. has fallen by 25% since 2001. And the latest merger firings have not yet been announced. Jobs for pilots and flight engineers fell by 30.4% in the third quarter of 2009 to 96,000 from 138,000 jobs in 2008, according to the BLS.

9. Realtors. The National Association of Realtors reports that there were 1,370,758 realtors in October 2006 — the peak of the market. By the end of 2007, the figure was below 1.2 million. The number is below 1.1 million today and has continued on a downward trend. Home prices have dropped so far and so few homes are sold, that the ability to make money in the business disappears by the day.

10. Bank Tellers. Long before the recession, personal banking had begun to become automated. Over the last decade, banks have provided increasing access to banking accounts online, through call centers and at ATM kiosks. This technologically driven shift has been and will continue to be the chief cause of bank teller layoffs. According to the FDIC, since 2008, at the beginning of the recession, there have been 283 banks closed. Compared to the period 2000 to 2007, when only 27 banks closed, that’s nearly 10 times as many bank closings in less than half the time. And as of Aug. 20, state and federal regulators had closed118 banks this year, making it on pace to exceed the 140 banks closed in 2009. Although nearly all of these banks have been acquired by other financial institutions, bank branch closings still occur — employees and locations are consolidated. The single largest employee group at bank branches are bank tellers, and they will bear the brunt of the continued cost-cutting.

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5 Responses to Industries that may never recover in the US

  1. I guess there would be tremendous demand for Flight engineers , pilots in China , India and Brazil and also maybe in Russia . so is the case with construction specialties since many countries will invest heavily in infrastructure and alternate energy .US needs a investment policy that can attract investments to areas like solar energy, rail building and that might create employment for specialised construction workers. Overall the world suffers from overpopulation and there will always be problems for those who dont have specialised skills.

  2. This article left out another key component of the flailing Telecom industry: the transition of television services from typical cable providers to the Internet. This will greatly increase digital traffic in the years to come, and more traffic leads to increasing infrastructure demand. Don’t rule out Telecom yet, better to plan on digital television providers failing first due to decreased profits from their main cash cow.

  3. Most of the Telecoms, along with the telecom equipment providers cut their own throats. Many continued to dump large sums of money into supporting legacy equipment and infrastructure, when profits were high. I’m new to posting here but I would assume naming, names is inappropriate, so I won’t. However I have over 30 years in the industry and have worked with a number of Telco’s, and lived through the changes with great dismay. While some companies decided to invest in wholesale upgrades to the subscriber infrastructure with FTTH / FTTN others felt continuing with a older then dirt copper facility was good enough. Not recognizing the technological leaps in transport technology, then insisted that the old PSTN was good enough, as was the degradation of QoS. As demand for bandwidth grew, rather then making the investments needed to support true useable broadband demands at the subscriber level, they opted to abandon the subscriber (the old landline home phone customer wanting the latest and greatest in IP services) future needs. The customer demand and knowledge of future services was better informed then that of the Telco CEO’s and CFO’s. The coax Cable companies, followed the same strategies of providing just good enough services, as a TV provider they were great, but then the subscriber demand for broadband internet services, then VoIP created the same issues as the old copper facility guys. Even as the Cable companies provided telephone serves they just took the calls, and dumped them back onto a legacy equipped PSTN. The demand for broadband services by the subscriber in most areas was greater then the capacity of the cable head. Until the infrastructure becomes true broadband, with better Quality of Service all the way to the end user we will soon slip into the 3rd world country status. The next generation of Telecom will be a service provider offering you nothing but the Bandwidth pipe. Data (Internet, IPTV and VoIP) will become more peer to peer based, routing from the edge, skipping many of the current levels of call / data routing. Demand for product (TV programming, internet content, entertainment, gaming, shopping…..) will come straight from the producer, electronic store fronts, gaming, news content providers ….. Just like people are using Apps on today’s Smartphone’s. The service of the telecom will be no more then bandwidth provider, and many refuse to make the investment, or the cost of maintaining the bandwidth pipe. I would not be surprised that sometime in the near future, your bandwidth pipe will be maintained and provided by your local municipality, just like other community services, and of course with the obligatory Tax / Fee added to your property taxes.

  4. Of course we are losing industries by the dozen ….WAKE UP AMERICA !!…While we are wasting time on meaningless issues , like how Lindsey Lohan and Snooki are acting badly , the BRIC countries (Brazil ,Russia, India and China ) are eating our (economic) lunch .We have to start immediately a 5 year emergency plan to grow our middle class exponentially to compete with these 4 world class movers and shakers .HOW in 5 years ? A massive immigration program to get the best and brightest of individuals and families that want to come here from all parts of the globe .We need tens of millions of new individuals ,businesses and families to buy the millions of foreclosed houses and commercial properties we built for families, individuals and businesses that never existed .Our Supply and Demand factors ,demographics and policies are all against our odds to survive as a leading world power.Only bold, imaginative and creative leaders and plans and a united USA can help us .

  5. Perry says:

    Well, interesting article. One thing I’ve learned is never say never. The markets will change and so will the future expectations of jobs. For instance, Real Estate agents will join and leave the industry based on the heat in the housing market. Construction will grow and die as the economy does.

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