U.S. Consumers: Which Jobs Are They Creating?
Pfleeger, Janet, Monthly Labor Review
The purchasing decisions consumers make help determine where the jobs are in the economy; as spending choices change over the 1994-2005 period, so will the industries and occupations employing the workers
We are a Nation of spenders. U.S. consumers are spending more than ever on a variety of goods and services ranging from automobiles and VCR'S to hospital care and legal advice. In the process of making these purchases, consumers are creating jobs. In 1993, nearly two-thirds of all jobs in the U.S. economy were dependent, either directly or indirectly, on consumer expenditures, making consumers responsible for more than 79 million jobs that year. The dominant influence of consumers on the job market is not expected to diminish--they are projected to continue generating nearly two-thirds of all U.S. jobs, translating to more than 92 million consumption-related jobs expected for the year 2005.
This article examines domestic employment that is dependent on consumer spending.(1) The consumption-related jobs of the 1977-93 period are compared with those expected for the 1994-2005 period,(2) using the most recent economic and employment projections developed biennially by the Office of Employment Projections.(3) The number and types of jobs dependent on consumption were estimated using an input-output model approach that enables one to trace the purchase of a good or service through the entire production chain. With this approach, the employment required in each industry, including the industries that supply inputs to the production process of a good or service, can be determined. In addition, an industry-occupation matrix was used to determine the occupations affected by consumer spending. (See the appendix for a full description of data and methods.)
Consumption and jobs--an overview
Personal consumption expenditures, or consumer spending, is estimated by the Bureau of Economic Analysis, U.S. Department of Commerce, as part of the national income and product accounts.(4) Consumer spending is defined as the market value of purchases of goods and services by individuals and nonprofit institutions. It includes the value of certain imputed goods and services, such as the rental value of owner-occupied homes, and compensation paid in-kind, such as employer-paid health and life insurance premiums. The sources of income used for consumption purposes include not just wages, salaries, interest, property, and other income, but also transfer payments such as Social Security, unemployment insurance, and welfare payments.
Many factors influence consumer spending. Over the 1977-93 period, these factors included: changing demographic trends, such as a growing elderly population, the aging of the baby boomers and their establishment in the work force, and an increase in birth rates in the early 1970's;(5) an increase in women's labor force participation rates along with an increase in dual-income families and single families with women heads of house hold; growth in personal income as a share of total income and a decline in the personal savings rate;(6) an increase in consumer installment debt growth in residential housing construction and new household formation;(7) and technological advances spurring the development of new and better consumer products. While some of these factors will affect consumer spending in a similar manner through the year 2005, others will not. Specifically, slower population growth is expected for the 1994-2005 period; the aging baby boomers will move toward their retirement years, rather than into the work force as they did during the 1977-93 period; and growth in women's labor force participation rates is expected to slow.
Table 1 shows the significant changes in consumer purchases from 1977 to 1993, and those expected in the future. Over the 1977-93 period, consumer purchases of services and durable goods grew as a share of all consumer spending, while the share of spending on nondurable goods declined--a trend that is expected to continue to 2005. …