NEW YORK (MainStreet) —Wall Street and Silicon Valley have become nearly synonymous in recent decades with strong hiring and luring employment prospects for the ambitious. But a series of structural – not cyclical – changes in the U.S. economy are making it less likely that tomorrow’s go-getters will be flocking to either of these meccas.
Why GDP Isn’t Telling The Full Story
Why employment hasn’t grown as robustly as expected during this recovery remains something of a mystery to many. GDP numbers – though not stellar – seem to reflect a moderate expansion which should result in greater job growth.
A large part of the reason may be the very size and efficiency of our financial and technology sectors. Relative to their overall GDP contributions, they employ fewer people than other industries, and that process is accelerating with every new technological advance and online platform. John Challenger, CEO of employment giant Challenger, Gray, and Christmas, agrees, citing this as a major force affecting our unemployment levels.“It’s an important reason that doesn’t get cited often…as to why unemployment has remained so high four years after the recession ended,” he said.
Wall Street’s Malaise
Of course, there are also the reasons most of us are already familiar with – such as Wall Street’s consolidation post-financial crisis and Dodd-Frank. The separation of riskier proprietary trading from commercial banking operations may have significant systemic benefits, but with lower risk also comes lower growth. Challenger says the industry’s employment prospects will suffer.
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“There has been a definitive decision to make banking more like a utility – well-regulated and a stable, fundamental underpinning element of the economy," he said. "With Dodd-Frank, you take out risk, but you also reduce job growth and probably compensation in coming years.”