Financial Employment is Holding Up Surprisingly Well – Comparitively Speaking

Many investment bankers and the economists that advise them are well aware of some version of the following graphic which captures the percentage of the population with a job. As shown, since the 1960s, employment as a percentage of the total population has been on an upward trajectory.

The long-term trend towards more individuals working met a strikingly massive drop from May 2008 to December 2009, declining from about 62.7% of the population to about 58.7% of the population. The American population’s desire to work stayed around 58% for more than four years, only recently experiencing some strengthening.

Employment to Population Ratio, U.S.

The Financial Employment Picture

Given that picture of the economy as a whole, we now ponder what the picture looks like for the financial sector.  Here’s that look.

Interestingly, as with the previous employment to population picture on the whole, financial employment as a percentage of the total population has been on a long-term upward trajectory and has been this way since the 1950s.  And yet even though the financial industry experienced some terrible effects from the global financial crisis of 2008, employment in the industry held up relatively well.

Employment in the financial industry as a percentage of the total population is about 3.5%, only 0.1% below the all-time high of 3.6% in April 2010. If the trend continues, we may soon again see a new all-time high for financial employment as a percentage of the total U.S. population.

Financial Employment as a Percentage of the Population

What’s Behind the Stronger Picture for Finance?

With this background in mind, why is employment in the financial industry holding up so well? Among the many possible explanations, three come to mind.

First, the world is becoming increasingly financialized. With American financial firms still operating as the leaders in the globalized financial world, this increases demand for American workers.

Second, the American population is aging, and with that aging population comes a demand for financial services.

Third, entrepreneurship is high among Americans, at least when compared to other western countries.  This entrepreneurship needs financial resources and advice.  Many businesses across the globe turn to U.S.-based financial companies to fill this need.


Overall, in looking at the employment to population picture, there’s been a long-term trend towards more and more individuals taking part in the labor force. This trend stopped from 2008 to 2009, and has only marginally started to increase again, with the employment to population ratio still about 4% below where it was before the onset of the global financial crisis.

In looking at the financial picture, financial industry employment as a percentage of the total population is surprisingly strong, only about 0.1% below its all-time high of 3.6% reached in April 2010. If the current trends continue, we may soon see financial industry employment as a percentage of the total population reach a new all-time high by the end of 2015.

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