Tuesday, April 25, 2017

Imperfect Comparisons

Looking at (some of the very real) disruption in the retail sector has cause some in punditia to try to draw parallels between the evolution of the retail sector and changes in manufacturing over the past thirty years.  This New York Times story on the decline of malls exemplifies that trend.  This trend has caused some on the left to wonder whether identity politics explains why so much press attention has been given to manufacturing while the supposed decline of retail has been more ignored.  However, there might be a more quotidian reason why retail employment has gotten less attention than manufacturing: retail employment has grown over the past 15 years while manufacturing has shrunk. 

The New York Times piece on the decline of retail referenced the job losses in the "general merchandise" subsector.  However, looking at specific subsectors obscures the fact that retail jobs have been overall growing.  According to the Bureau of Labor Statistics, more people work in retail jobs than ever before in American history.  Nearly 14.5 million worked in retail in 2010, but almost 16 million work in retail now. About 400,000 more Americans work in retail now than worked in it in 2008, the last peak of employment in that sector.   Department stores might be declining, but employment in "health and personal care" stores is booming, as is employment at "nonstore retailers," which have added over 100,000 jobs since 2010.  While there has been a slight correction in retail employment after the holiday season (not exactly unusual), there is little evidence of a sustained decline in retail employment.  The retail market may be restructuring, and that restructuring may lead to dislocations and economic difficulties (things policy-makers should take seriously).  The phenomenon of zombie malls could exact social costs as well as provide opportunities for innovation.  And it is certainly possible that, in the future, ecommerce will destroy the retail sector.  (I'm not making any projections about the future here.)  But over the past fifteen years, retail employment has done relatively well in terms of job numbers.

Manufacturing tells a very different story.  There are over 5 million fewer manufacturing jobs now than there were in 2000.  While manufacturing employment has grown somewhat since the Great Recession, there are close to 2 million fewer manufacturing jobs than in 2007.  Inflation-adjusted manufacturing production in 2016 was only a little above the production level of 2008.

Whether one believes that decline in manufacturing employment to be a positive or negative development, it seems clear that there has been a decline--unlike in the retail sector.  If manufacturers had added jobs over the past 15 years, I doubt that the loss of manufacturing jobs would be getting that many headlines.  Retail may indeed be headed for difficulties in the years to come, and changes in the field could cause some dislocations.  But, over the past 15 years, the employment patterns of manufacturing and retail have diverged.

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