Staffers in the industry at the heart of the nation's economic woes have been hurt less in the downturn than the rest of the country has. Jobs in the banking and insurance industries have fallen just 5% since the start of the recession. That's half a percentage point less than the 5.4% overall drop in nongovernment employment over the same time period, according to the Bureau of Labor Statistics (BLS). And it is far less than the pain experienced by workers in other sectors of the economy.
Hotel-industry employment, for instance, has dropped 7% in the past year. Jobs in the apparel business are down 16%. Work in the temporary-staffing industry has been slashed 26%. Automobile-manufacturing, which lost 30,000 jobs in May alone, is off 29%. (See 25 people to blame for the financial crisis.)
"You would think because of what went on in the financial-services sector making this recession a million times worse than it had to be that we might have seen more of an employment shift," says Heidi Shierholz, an economist at the Economic Policy Institute. "Yet the job loss in manufacturing dwarfs what is going on in financial services."
To be sure, the financial-services business is not immune to the downturn. Many bankers have lost their jobs as their firms have faced steep losses from bad loans or just gone out of business. There are 296,500 fewer people working in banking and insurance than there were at the start of the recession, according to the BLS. And financial-services workers have been hit far harder in this recession than in past ones. In the 2001 downturn, employment in the banking and insurance sectors actually rose 1%. Finance-industry jobs did fall in the early-'90s recession, but just 0.3%, far less than the 1.3% drop in total employment in the same period.
Still, many expected things to be different this time. The bursting of the housing bubble so soon after the tech-stock wreck was supposed to show the excess and folly of the financial-services industry. Many predicted a massive shift in workers away from dollar-crunching into the more real parts of the economy. The best and the brightest would no longer head straight to Wall Street. (See 10 perfect jobs for the recession.)
So far, that shift hasn't happened. At the end of May, just over 7% of the nation's workforce was employed in the financial-services business, unchanged from December 2007, when the downturn started. In all, the government said the economy lost 345,000 jobs in May a significant improvement from April, when employment fell by just over 500,000. The banking and insurance businesses, though, accounted for only about 5% of May's losses, or 19,500 jobs.
What's more, for those who have kept their jobs in the financial-services industry, the recession hasn't dented their paychecks either. While it appears that top salaries on Wall Street have dropped, on average, wages in the industry have continued to rise, even in the past year and a half. Weekly wages for those who perform financial activities, according to the BLS, have risen 1.7% since the end of 2007, compared with a jump of just 0.7% for all workers in the same time.
What's going on here? Economists say that even in this downturn, financial services has proven to be more recession-proof than other lines of work. Consumers can put off buying a new car or going on vacation. But most people will still continue to pay their mortgage, write checks and deposit money at the bank. "The fact that the financial-services industry is declining this much is startling," says Joel Prakken of research firm Macroeconomic Advisers, which puts together ADP's employment report.
Also, despite the messes in the mortgage market and elsewhere, many remain optimistic that the financial industry in the U.S., unlike, say, auto-manufacturing, will rebound. As troubled large banks have shed employees, a number of smaller firms and international competitors have moved in to snap up workers. And Keith Leggett, chief economist of the American Bankers Association, says new banks are continuing to be formed, even as other fail.
So Lehman Brothers didn't just collapse and go away. Much of its U.S. operations were bought by British bank Barclays, which retained 80% of Lehman's U.S. investment bankers. Japanese bank Nomura has also been hiring here. Alan Schwartz, who was formerly the head of the failed investment bank Bear Stearns, recent landed a job at one of Wall Street's so-called boutiques, Guggenheim Partners. He's not alone. Recruiters say not only was the job downturn in the financial industry shallower than the rest of the economy but it appears to be turning earlier as well.
"Our business is stronger than it has been in over a year," says Stephen Newton, the co-head of financial-service recruiting at executive search firm Russell Reynolds Associates. In the end, there's just deserts, and then there's just dessert. It looks like financials are going for the latter.