Employment by governments, nonprofits, and other organizations shows more resiliency than the overall market.
February showed a job loss of 63,000 jobs while national unemployment decreased to 4.8 percent. The loss reflects declines in manufacturing, construction, and retail but growth in healthcare, food services, and the public sector. In fact healthcare is going strong, adding 36,000 new jobs mostly in hospitals and ambulatory services.
As we look at the local market employment situation, however, the national data by contrast is quite binary—it either overstates or understates local market conditions. For example, the Midwest region as a whole has not fared well, but Indiana has one of the lowest unemployment rates in the region, hovering at or below the national average. By contrast, Indiana’s northern neighbor, Michigan, has an unemployment rate around 7.5 percent, one of the highest in the U.S.
Overall, private-sector jobs declined 101,000 while the public sector added 38,000 new jobs. This should be encouraging to those already working in the public sector or seeking government jobs and ambitious service providers looking to sell HR services into this sector.
The public sector, overall, has fared well during the past 12 months, experiencing only one steep drop last summer and then quickly rebounding. To better understand the correlation between public and private sector employment trends requires a clearer understanding of what exactly constitutes the public sector.
According to the International Labor Organization (ILO), this sector is defined as all market and nonmarket activities that at each institutional level are controlled and mainly financed by public authority. Subset of that, the general government sector comprises all government units, social funds, and nonprofit, nonmarket public or private institutions, which are controlled and mainly financed by public authority. The public corporation sector comprises all institutional units controlled and mainly financed by public authority.
If we map industry-specific employment data and employee skill sets represented against private- and public-sector operating entities, the picture becomes clearer; certain employee skill sets are less abundant in the public sector than in the private sector, and vice versa. Using this observation to forecast job growth or deterioration in this current economic environment, it appears that public-sector employment trends could outperform the private sector until there is absolute employment growth.
When looking at the public sector and its upcoming talent shortages associated with the soon-to-retire Baby Boomer generation, it appears that the public sector might become more of a safe haven for workers who have been displaced by the recent down trend in private-sector employment. The public sector tends to be a more paternal employer, provides training and retraining, and therefore could potentially absorb some displaced employee skill sets.
Time will tell how the U.S. employment picture will continue to evolve. However, data suggest that the overall trend will probably not be favorable, local employment data will not be indicative of national employment data, and the public sector will need talent.