Bloomberg is reporting that the global banking industry could lose 350,000 jobs by the middle of next year. That would be about 20% of the employees in the sector.
That level of unemployment represents an almost unimaginable human tragedy and one that might have been avoided in part if management at large financial house had not bet the bank on mortgage derivatives. But, that is water under the bridge.
The question which gets begged is where all of those people will go. Many bankers are not qualified for other high-paying jobs, which means they will stay unemployed for long periods or will face having to take significant cuts in their incomes. Either way, the shift will take a large toll on government services such as unemployment benefits. Let's not forget the lost taxes.
The destruction of the banking industry is a microcosm of what many happen across sector after sector if the recession bites hard. Autos may be the next domino to fall, but retail and hospitality won't be far behind it. Suddenly hundreds of thousands of jobs become millions, and, if things get especially bad, tens of millions.
Financial services is the canary in the coal mine. If the industry cannot fine some employment equilibrium it is bad for everyone.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
11-21-2008 @ 11:17AM
Ken said...
This all sounds familiar...
http://weareofmichigan.blogspot.com/2008/11/what-someone-said-about-something-else.html
11-21-2008 @ 11:22AM
Chuck said...
The canary is actually residential construction. This segment is the most volatile leading indicator.
When the secondary market spit the bit in September of 07, that should have been an early warning. It came back and then wavered starting in April of 08. It totally collapsed in August of 08. The hiccup in 07 should have sounded every alarm bell in every macroeconomic think tank in the country.
11-21-2008 @ 12:58PM
David said...
The loss of 350,000 banking jobs is really a net loss of 100 jobs. The rest of them were blood-sucking stock brokers and insurance salesmen.