JAMES ALEY
RESEARCH ASSOCIATE LIXANDRA URRESTA
Show biz probably wouldn't come to mind if you tried to list the juggernauts of job creation. But it should: The motion picture industry has created more jobs since 1990 than all of America's motor vehicles and parts manufacturers, pharmaceutical companies, and the hotel industry combined. And happily there's plenty of business like show business, at least in terms of employment. From January 1990 to June 1995, the American economy has grown richer by 7.5 million net new jobs, no small feat given the recurring spasms of downsizing throughout the economy.
What the macro numbers don't tell you is what's most interesting: where employment growth has been strong and weak, and where it's most likely to be in the future. To figure this out you need to dig deeper. One such miner, Nuala Beck, an economic consultant and author of Shifting Gears: Thriving in the New Economy, has created her own gauge of the nation's employment performance. Looking at 290 industries, she measured the net employment gain or loss for each between the beginning of 1990 and mid-year 1995.
The results of this exercise make for interesting reading, as the charts on this page and the next show. Along with the surprises, like the movie biz, they offer hard proof that the trends you've read about in the Nineties really are affecting the job market. The top job creator of this downsizing, rightsizing decade--naturally--is the temporary personnel business, and jobs in the health care field are also booming.
To gain more of an understanding of what's driving job creation and to get a handle on where jobs will be coming from in the future, Beck further refined the data, calculating each industry's "knowledge ratio"--the percentage of employees in an industry who are professionals, technicians, or other "knowledge workers." In the overall U.S. economy, 39% of the work force is made up of knowledge workers. Beck classifies any industry where 40% or more of workers fall into this category as "high-knowledge." Industries with a reading of 20% to 40% count as moderate-knowledge, and anything below 20% is low-knowledge. Some industries are obviously high-knowledge, like health care and computer software. The temp business--No. 1 on the list--ranks as a moderate-knowledge industry. The second-place employer category on the list--restaurants and bars--is low-knowledge.
The main message from the numbers Beck turned up is that the more skilled, educated workers an industry has, the greater the chance that it is creating quality jobs. "These are industries that haven't just seen the future, they are the future," she says. She calculates that high-knowledge industries accounted for 43% of net employment growth in the past five years, even though only 28% of overall employment is in high-knowledge industries. That's a good sign for the economy, since these jobs tend to be higher paying and more stable than those created in low- and moderate-knowledge businesses.
Five of the the top 20 job-creating industries are health care related. Together, private hospitals, home health care, nursing facilities, and doctors' offices of all types produced roughly 1.5 million jobs over the past five years. The fastest of these fast-growing services by a long shot is home health care, which more than doubled its employment since 1990. As the health care industry at large shifts toward cost containment and managed care, the demand for home health services, generally cheaper than hospital care, is exploding. Interim Services, a $1.2-billion-a-year company based in Fort Lauderdale, has been increasing the head count of its already enormous home health care division (50% of sales) by 8% a year. Kathleen Gilmartin, Interim's vice president for health care operations, says the rate of expansion will only accelerate as the market grows. While many of Interim's job openings are in lower-wage occupations like personal-care aides, Gilmartin says 60% of her home health employees are more highly skilled--and more highly paid--professionals such as nurses and physical therapists. Then there's the motion picture industry, perennial whipping boy of moralizing politicos, where employment has been expanding like a B-movie blob to keep pace with the proliferation of new distribution channels and the insatiability of foreign demand. As of June 1995, the total number of motion picture jobs hit 262,000, nearly double the head count of January 1990.
Much of this growth is coming from small, independent operations, says Jack Kyser of the Economic Development Corp. of Los Angeles County. Along with the big studios, there's a vast collection of smaller music-video and commercial producers, animators--name your niche. 5 Guys Named Moe, a tiny but growing film- and video-editing outfit based in Burbank, California, earns its beans by snipping excessive nudity, swear words, and violence from movies and cable shows so that they can be broadcast over the networks. Another Burbank operation, called Spanish Production Group, specializes in dubbing American movies and TV shows into several foreign languages. Helgar Pedrini, the company president, currently has a staff of 12 but plans to hire six to eight more full-timers by the end of the year. It's not just California that's enjoying the fruit of the motion picture boom. About 85% of the film production jobs created in the past five years sprang up outside California.
An industry generating more jobs than movies, but from a much higher starting point, is computer software and services, which has increased employment by 255,000 since 1990. Much of the growth has been in the so-called "packaged software" segment of the business, which includes Microsoft, Maxis, Intuit, and all the other producers of shrink-wrapped software on sale at your local computer store. Perhaps the best way to get a feel for the unquenchable thirst for talent in the software industry is to log on to the World Wide Web, the graphical subnetwork of the Internet, do a search using the word "jobs," and watch your computer monitor fill up with listing after listing of electronic HELP WANTED signs posted by software companies. One company trolling the Web for talent is a startup called Lycos, which came into being this past June. A former nonprofit service run out of Carnegie Mellon University, Lycos has created an extensive indexing service that lets users hunt down information from the millions of scattered files on the World Wide Web. The company has only ten employees now, but CEO Bob Davis is spending much of his time trying to hire another 15 people in marketing and development. He has reason to anticipate more business: His software is featured on Microsoft Network, the brand-new online service. Another Internet specialist, eight-year-old UUNET Technologies, has hired half its current 250 employees since the beginning of the year.
Meanwhile, high up on Beck's list of job-losing industries, above such musty businesses as knitting mills, coal mining, and shipbuilding, sits--of all things--computer equipment. It has shed 116,000 jobs since 1990, but nevertheless Beck classifies it as a high-knowledge industry. What's going on? Much of the carnage happened because computer manufacturers responded to price competition by moving more and more production offshore, according to Beck. Essentially the industry is purging itself of low-knowledge factory work.
The employment outlook in computer manufacturing is actually sunny--as long as you have the right credentials. Skilled professionals, engineers--anyone who carries around a lot of technical knowledge and expertise--can probably choose among multiple job offers these days. In fact, sprinkled among those many Web help-wanted ads from software houses are a significant number of entries from hardware manufacturers like Silicon Graphics, which makes 3-D graphics workstations and file servers. Staffing director Eric Lane says SGI is looking to hire 3,000 engineers, developers, and other technologically adept people over the next year, most of them in the U.S., thereby increasing corporate head count by nearly 50%. Tim Outman, president of CTR, a high-tech recruiting and outplacement firm based in Santa Clara, California, gets corporate job lists from all over Silicon Valley. He says that the number of positions has expanded four-fold in two years, the hottest categories being engineers, salespeople, and marketers. There are exceptions to the rule of more knowledge, more jobs. Some industries are in such a state of decline that no employees have job security--whether they're knowledge workers or not. The most severe example of this is defense-related industries, which tend to cluster near the top of the most-jobs-destroyed list. Many of the people jettisoned by military contractors are technicians and engineers. The outlook for the business isn't getting any better: the Bureau of Labor Statistics projects that defense employment will fall below the post-Vietnam low, set in 1977, by the turn of the century.
But the defense industry's loss can be a gain for the rest of the economy. CTR's Outman says he does a good business helping ex-defense workers with arcane specialties make the transition to commercial work. It's not easy, he says, but it's always possible. (Step One: Quit using Defense Department-type acronyms on resumes.) After all, the legions of military-industrial downsizees include an awful lot of highly skilled knowledge workers--precisely what the industries of the future will need.