Job growth in the 1990s: a retrospect(EXCERPT), Monthly Labor Review Online, December 2000

Job growth in the 1990s: a retrospect

Julie Hatch and Angela Clinton

The U.S. economy sank into recession early in the 1990s and then rebounded with the longest running expansion in the Nation’s history.¹ Real gross domestic product (GDP) growth slowed in 1990 as the country slipped into recession. By 1992, however, recovery began and GDP grew throughout the remainder of the decade. Nonfarm payroll employment increased by nearly 21 million workers during the decade.²

Employment in export-sensitive industries followed a cyclical pattern, turning down for the 1990–91 recession and the later Asian economic crisis. Reduced defense spending resulted in job losses in defense-related industries, especially early in the decade. While the number of workers declined in these goods-producing industries, construction and related industries began to slowly recover in 1992, and strong employment growth resumed by mid-decade. Technology and demand for more services drove employment up in the service-producing sector.

Productivity improved as new and cheaper computer technology was applied in all sectors of the economy. Businesses transformed their systems to meet Y2K deadlines and to compete with lower priced foreign goods resulting from economic crisis in Asia. Inflation remained largely in check throughout the decade, with moderate gains in consumer prices. Even after adjusting average hourly earnings for inflation, U.S. workers saw their real wages increase. Low interest rates spurred new construction and refinance activity. Technology stocks helped create record profits in the stock market and boost the wealth of many households. Consumer confidence rose to new heights and remained strong through the end of the decade.

The private service-producing industries accounted for nearly 90 percent of the job growth in the 1990s and increased their share of total nonfarm employment by more than 4 percentage points. (See chart 1.) All major industry divisions within the service-producing sector added workers and growth was especially strong in the services division. (See chart 2.) Employment in the goods-producing industries edged up slightly, as losses in manufacturing and mining nearly offset gains in construction.

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Footnotes
1 National Bureau of Economic Research, Inc., US Business Cycle Expansions and Contractions, on the Internet at: http://www.nber.org/cycles.html (visited November 2000).

2 Data on employment, hours and earnings used in this article are from the Current Employment Statistics (CES) program, which surveys nearly 380,000 nonfarm employers monthly. For more information on the CES program’s concepts and methodology, see BLS Handbook of Methods, Bulletin 2490 (Bureau of Labor Statistics, April 1997), chapter 2, pp. 15–31. These data are available on the Internet at /ces/.

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