|For Release:||September 4, 1997|
|Contact:||June Gates, 216/579-2048|
In a recent Economic Commentary, Federal Reserve Bank of Cleveland Economist Ben Craig says that between 1988 and 1996, the number of workers who moved out of banking each year was huge -- between a fifth and a quarter of the entire industry workforce. Yet almost all of the outflow was offset by new hires.
According to Craig, a large majority of workers who leave banking find employment in other industries, while a smaller number leave the labor force entirely, and a much smaller number become unemployed. However, many of those who do become unemployed are out of work for a long time.
Another major change in banking’s workforce in the last decade has been a near doubling in the share of banking jobs that are professional, and a dramatic increase in the educational level of bankers. These compositional changes, necessitated by expanded use of technology and changes in the mix of banking products and customers, were also accommodated by America’s competitive labor market.
While net banking employment has fallen gradually, about 1 percent per year since 1988, some analysts predict an additional 20 percent decline by the end of the next decade. Since some of the bankers who lose their jobs experience extended periods of unemployment, policymakers might seek ways to avoid those hardships. But Craig concludes by cautioning against actions that might erode the extraordinary flexibility of America’s labor market.
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