Nowhere to hide

July 9, 2009
By: Eric Lundin

Over the past 10 years or so, the big and growing fear among manufacturers has been the steady, unrelenting intrusion of globalization. One pundit described it as economic Darwinism, a nowhere-to-hide environment in which firms that are flexible, adaptable, and aggressive overtake those that aren't. Right-wing economists would probably say this is a normal and beneficial process, one that results in stronger, healthier industries.

The major concern, one that even the most right-wing economist likely would concede, is a smattering (or deluge) of government policies that subsidize exports, tax imports, manipulate exchange rates, and generally discourage competition.

That threat is still out there, but right now a much more pressing issue is the recession and the credit crunch. My colleague and fellow blogger Tim Heston used the phrase A recession takes no prisoners to describe it, reminding me of that nowhere-to-hide description of today"s manufacturing environment and triggering interest in finding out if any industry is benefiting from this recession.

Heston detailed the travails of a couple of fabricating firms. How about a broader view? Let"s look at a few entire industries to see if any are doing well these days.

Employment, tallied by the Bureau of Labor Statistics, is probably the easiest measure. This is how various U.S. industries are faring these days: Mining and logging, construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, financial activities, professional and business services, and leisure and hospitality all have shown employment losses during the past 12 months. The employment rolls for utilities, education and health services, and government have increased during the past 12 months. Taking a longer view revealed that employment in two categories, government and health care, has been rising steadily since 1990. Education has been increasing steadily since 1993. Employment at utilities has been on a downward slide since 1990; the recent uptick is probably just temporary.

Curiosity got the best of me and I dug a little deeper. Considering the credit crisis and the unemployment rate, which is the highest it has been in 25 years, I figured one more subindustry out there is hiring: collection agencies. With more people out of work and therefore having trouble making ends meet, doesn't it make sense that collection agencies would hire more people to chase delinquent accounts?

It turns out that employment at collections agencies hasn"t spiked recently, In fact, it has slowed. Going back three years to May 2006—before all this trouble started, when the Dow Jones Industrial Average was still climbing toward 14,000, when the unemployment rate was 4.7 percent, and the terms "credit crunch" and "subprime mortgage"weren't in the national lexicon, collection agencies employed 1.566 million people. In May 2009 they employed 1.603 million people. That's a 2.4 percent increase. At the same time, the U.S. unemployment rate doubled.

You might find this hard to believe—I know I did—but employment at collection agencies increased steadily from September 1994 to September 2007, despite the U.S. unemployment rate zigging and zagging. Unemployment varied from 3.8 percent to 6.3 percent while collection agencies' payrolls increased 92 percent. In other words, the employment level at collection agencies doesn't seem to follow any sort of a pattern.

Career advice for youngsters? Manufacturing, construction, mining, and other get-your-hands-dirty-and-do-a-hard-day's-work vocations are rewarding, but they're not recessionproof. Education, health care, and government seem to have better growth prospects and provide more stability.

Oh, and stay away from the collection business.
Eric Lundin

Eric Lundin

FMA Communications Inc.
2135 Point Blvd
Elgin, IL 60123
Phone: 815-227-8262