In a recession that has concentrated its fury on the lower class, three posh white-collar industries actually shrank in 2011
You might have heard there is no recession among college-educated workers, whose unemployment rate is a mere 4.1 percent. It's true that the jobs crisis is concentrated in the lower middle class. But even the rich have their own problems. Lawyers and Wall Street financiers are members of an exclusive club: The shrinking white-collar industry.
In 2011, finance, insurance, and law were the three primarily white-collar professions that managed to shed workers, even as the rest of the economy trudged forward through a slow recovery. Topsy-turvy financial markets were part of the problem for banks, insurance companies, and the law firms that work with multinational companies. But the job losses might also speak to fundamental changes in job sectors that traditionally absorb highly educated Americans.
Who are we talking about when we say "white-collar" professionals? It obviously isn't a term of art. But the Bureau of Labor Statistics' monthly employment figures include two broad categories that encompass the kind of college-educated office workers that we generally associate with the term. The first is "business and professional services," a 17.4 million person category which includes accountants, lawyers, architects, and engineers, among other job types. The second is "financial activities," which covers the securities industry, commercial banking, insurance, and real estate.
The two graphs below look at the shifts in each white collar sector using percent change and total jobs added or lost. I've included the high-skill job types from both major categories while excluding a few other jobs that don't necessarily fit the mold. Think temp agencies, which are included in business and professional services.
A few notes for the detail oriented: Commercial banking is a subsection of credit intermediation, a larger category that includes essentially any industry to touches credit, from a community bank, to a mortgage broker to check cashing. I spun off commercial banking in the chart readers could compare it to the high end financial industries, represented by "Securities, commodity contracts, investments."
There are clear splits in the graphs. White-collar industries that require specific, education-intensive skills, such as accounting and computer system design, did best. Commercial banking and real estate healed more slowly, but still enjoyed a small bounce back as consumers got back their footing. Meanwhile, anything connected to Wall Street got socked. For that, we can thank bumpy markets and a harsher regulatory landscape. The insurance industry, which makes its money by investing customers' premiums, was felled by the same forces. Law firms, which count insurance companies and banks as some of their most important clients, suffered the aftershocks.
But this was no bloodbath. Aside from the funds and trusts category, which at 85,000 employees is fairly tiny to begin with, neither law, finance, or insurance lost a full percentage point of its workforce. Still, the job losses could be a milestone of sorts. After years of profiting off inflated assets, finance is in the process of a corrective, and it's too soon to know what the industry will look like when it settles. Law and insurance will settle with it.
The fact that the world might not need as many investment bankers and insurance brokers isn't a problem per se. But the fact that it could need fewer lawyers is. Outside of a few elite MBA programs, not many people get a degree specifically to become the next Will Emerson. But roughly 45,000 students do graduate from law school each spring. Most of them have taken on significant debt. And despite the old saw about being able to "do anything" with a law degree, they don't have the specific technical or quantitative skills to go into faster growing fields. While the overall unemployment rate for lawyers is a microscopic 2.1%, that doesn't take into account the trouble recent graduates are facing to find work that will soon pay off their debt. The industry is entering a period where it will be well oversupplied with talent. Unless a whole lot of old lawyers start retiring ASAP, that situation probably won't change.
So to all those potential JD's out there: it may be worth considering a different degree. I hear accounting is pretty hot right now.
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