In a transition, small changes add up

This week, the Federal Reserve holds its annual conference in Jackson Hole, Wyoming, where some 120 central bankers, finance leaders, and academics gather to discuss important global issues. Federal Reserve Chairman Jerome Powell caps the meeting with a much-anticipated speech on Friday. 

For Main Street, there’s more to this gathering than Powell’s 20-minutes address that, by design, isn’t likely to articulate what’s next for interest rates. That’s a topic for another day. 

More important will be the theme of this year’s gathering, Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy.  Attendees will review, assess, and debate a series of scholarly papers on the economic structures that shape the macroeconomy.   

This theme is particularly timely. As we’ve written, demographic changes are reshaping the job market. The pandemic bent the curve of employment, and new technologies are affecting productivity. These shapers of the macroeconomy are happening all over the world.  

Stable goods and services employment 

The share of employees working in the goods and services sectors has been consistent over the last 15 years, according to data from the ADP National Employment Report. In 2025, goods-producing establishments accounted for 17 percent of U.S. employment, compared to the service sector’s 83 percent. There’s been very little variation on this division of U.S. labor since 2010.   

That stable employment pattern contrasts wildly with consumption patterns during the same time period, when the pandemic shifted consumer spending from services to goods and back again. 

The lesson is that while consumption patterns can shift quickly in response to macroeconomic shocks, people—workers—aren’t fungible. Shifting human capital takes a long time and change often is imperceptible at the national level.  

But a close look at employment by industry and establishment size reveals that change is occurring. 

The rise of big employers 

In 2010, establishments with more than 500 people on payroll employed 16 percent of the U.S. workforce, ADP National Employment Report data shows. Companies with fewer than 20 workers employed 27 percent of the U.S. workforce.  

Fifteen years later, those small employers lost a percentage point of their national share, falling to a 26 percent share of the workforce. In the bigger picture, establishments with fewer than 250 employees lost ground in their share of headcount. Large employers were the beneficiaries, rising from a 16 percent share of the workforce in 2010 to a 19 percent share in 2025.   

A few percentage points might not seem like a big change, but given the size of the U.S. labor market, they reflect a shift of millions of jobs. 

More health care, less manufacturing 

Looking more closely at two broad categories of the economy, manufacturing and education and healthcare, even more changes are under way.  

In 2010, education and health care accounted for 18 percent of employment; now it’s 19 percent.   

During the same time period, manufacturing’s share of employment has fallen, from 11 percent in 2010 to 10 percent in 2025. 

As the U.S. population ages, demographics will continue to tip the scales of employment, which will affect where people work. Health care is likely to continue growing its slice of the employment pie.  

My take  

In many ways, the labor market is the Main Street economy.  It underpins consumer spending, drives the production of goods and services, and maintains growth by accelerating productivity. Long-in-the-making demographic change and rapidly evolving technology now are driving employment shifts at an unprecedented structural scale, a transformation that’s difficult to see in real time.  

With a civilian labor force of more than 170 million people, small shifts in the composition of employment matter—a lot. At this week’s Jackson Hole, buried within the footnotes and the charts and the economic jargon of scholarly research, will be a lively discussion of the future of Main Street.  

The week ahead 

Monday: It’s a housing-heavy week for data releases. The week kicked off with the Housing Market Index, a measure of homebuilder confidence from the National Association of Home Builders and Wells Fargo. The index has been in negative territory for 16 straight months.  

Tuesday: Housing starts are a signal of buyer demand but also could be read as a signal of economic growth more broadly. June starts were flat compared to last year, and I’ll be looking for July numbers that tip the scales from ho-hum to an increase or decrease in new residential construction.   

Thursday: The Fed’s Jackson Hole Symposium kicks off. I’ll be there taking notes. Also on Thursday, the National Association of Realtors will report on existing home sales for July. In June, median existing sale prices hit a record high for the second straight month. High prices and low inventory have put a damper on sales. 

Friday: Powell’s speech at Jackson Hole will be closely watched by everyone (OK, not literally everyone) hoping to learn something—anything!—on the future of interest rates.