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Recent employment trends in the
lumber and wood products industry
Mary Beth W. Scaggs
Persistently high interest rates throughout the 1980 and 1981-82 recessions, along with the relatively brief and weak recovery between the downturns, contributed to one of the worst postwar declines in the construction industry. Much attention, both public and private, has been focused on this industry as the recession worsened. Although receiving less attention, the industries closely tied to the construction sector have also suffered. In particular, the lumber and wood products industry was severely hurt because approximately 40 percent of the lumber consumed in the United States is used in residential construction.
The National Bureau of Economic Research (NBER) has identified two distinct recessions for the U.S. economy during the 1980s. The first began in January 1980 and lasted until July 1980; the second began in July 1981 and ended in November 1982.1 Some analysts have asserted the existence of only one prolonged economic downturn.2 The data for the lumber and wood products industry appear to indicate the existence of one prolonged recession lasting from March 1979 until July 1982 as employment never fully recovered to its pre-1980 recession level before plunging deeper during the 1981-82 downturn.
Losing more than one-fifth of its total employment between March 1979 and July 1982 when the more than 3-year decline ended, the job loss for the lumber and wood products industry was about the same as that suffered during the 1973-75 recession.3 Since July 1982, the situation in the industry has improved. Employment has increased by more than 13 percent, with most of the gain occurring in 1983. Employment losses for the lumber industry were not evenly distributed on a regional basis. The Pacific Coast and the major lumber-employing States of the South each account for about one-quarter of U.S. employment in the industry. However, the Pacific Coast was clearly more hard hit, losing more than two and a half times as many jobs as the South between 1979 and 1982. This was mainly because of a great decline in housing starts in the West.
This article focuses on the relationship between the lumber industry and the housing industry. After a brief overview of the lumber industry, the two recessions are examined with regard to changes in mortgage interest rates and housing starts and their effect on employment and hours in the industry. Employment trends in the 10 largest lumber-employing States during the past two business contractions are also discussed.
This excerpt is from an article published in the August 1983 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 Subsequent to this analysis, the National Bureau of Economic Research designated November 1982 as the trough of the 1981-82 recession.
2 See Stephen H. Wildstrom, "One Recession or Two?" Data Resources U.S. Review, October 1982, pp. 1.12-1.14.
3 Statistics on employment and hours are from the Current Employment Statistics Program of the Bureau of Labor Statistics which are collected by cooperating State agencies from employer reports of payroll records. A description of the program can be found in the Bureau of Labor Statistics publication, Employment and Earnings. Monthly employment and hours statistics are seasonally adjusted.
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