When the housing bubble burst in the Autumn of 2007, the effects were
widespread, and continue to be felt, across a broad swath of industry. For
obvious reason, the most affected were finance and construction.
Layoffs in construction began immediately. After years of unhinged
growth, with suburban housing developments popping up, and huge new shopping
centers following right behind, the construction the need for construction
workers seemed insatiable. When housing crashed, new home building dried up
quickly, leaving a huge number of construction workers with little job
security, or completely out of work.
Blame for the foreclosures that brought about the crash in construction
employment and housing prices can be laid at the feet of two groups: buyers
and lenders. Buyers jumped at loans that were simply too far out of their
price range, intoxicated on the idea that housing prices would rise, ad
infinitum, and their debts would become windfalls.
This brazen attitude was stoked by an out-of-control lending industry,
which saw the exponential growth in housing as an opportunity to turn a quick
dollar. And turn them they did, securing outlandish loans for customers, who
at times were not even required to prove their income. Lenders seemed immune
to any negative outcomes and the immunity seemed to quickly spread to buyers. With
visible end to the rise in house prices loans were quickly bundled and sold off
to third party investors, the massive failure of bad loans has resulted in bank
failures and economic belt tightening not seen since the 1980’s Savings
and Loan debacle.
As the United States economy moves forward, attempting to recover from
this unbridled lending spree, it is going to take the financial industry a good
deal of time to recover. Job Security in these sectors therefore continues to
drop. Despite a slight jump in JSI between May and June 2008, the general
outlook for the financial sector remains grim.
In a sea of negative financial forecasts and reports, one positive
measurement is the JSI for Construction. As shown in the first chart, above, the
drop in Construction JSI was swift and striking, dropping over 100 points in
just six months.
But job security in the construction industry may be improving.
Construction JSI over the past four months is cause for some optimism. The JSI
for construction, a measure of likely improvement in the construction industry
over the next 8 to 12 months, has regained ground and may be picking up
momentum. The biggest limit to this projected improvement is likely mirrored
in the JSI for the Financial and Insurance industries. While dropping much
less precipitously than JSI for construction, Finance and Insurance job
security is predicted to continue in a significant decline. Layoffs and
closings are likely to continue, according to JSI projections as banks struggle
to maintain solvency
Still, when comparing the two charts, as shown below, construction job
security took a much larger hit than job security in Finance and Insurance. But
as the construction workforce begins to grow again it will have to contend with
a tighter and, in terms of number of jobs, smaller financial and insurance
workforce.
Scorelogix experts predict Job Security for individuals, specific industries and regions across the United States. Scorelogix helps people properly gauge their financial outlook and make measured, intelligent decisions about their financial future.
Want more information about ScoreLogix , our patent-pending algorithm, our Job Security Score & Job Security Index? Email Director of Business Development, David Watral, Ph.D. at david.watral@scorelogix.com or visit our website at http://www.scorelogix.com
