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Employment Outlook: 2000-2010 Overview of Methods and Results James C. Franklin Office of Occupational Statistics and Employment Projections Division of Industry Employment The BLS Projections Program Develop long term projections of labor market information – labor force trends by sex, race or Hispanic origin, and age – employment trends by industry and occupation The BLS Projections Program Assess implications for employment opportunities Assess effects of changes in Federal programs and policies Disseminate findings to aid – career planning – education planning – policy formulation The BLS Projections Program The projections are published in a wide variety of formats for varied audiences: – Occupational Outlook Handbook – Monthly Labor Review articles – Occupation Outlook Quarterly articles – Special analysis bulletins Who Uses the BLS Projections Career counselors and students Government agencies Private consulting and research firms Academic economists in U.S. and abroad Politicians and the Media BLS Projections Specifics Annual estimates National level of detail Medium term -- 10 years Published every other year Requirements for carrying out this type of projections Large-scale economic data base Extensive computer support – Statistical analysis capabilities – Data base management capabilities An experienced staff The BLS Projections Process: Component Models Labor force Macro economic activity Input-Output model and derivation of industry output Labor model Occupational staffing pattern model The BLS projections process: Information flows Aggregate Economy Labor Force Total and by age, sex, race, and ethnicity Occupational Demand Industry staffing patterns Industry Employment Labor productivity, average weekly hours, w&s employment GDP, total employment, and major demand categories Population, labor force participation rate trends, category restraints Demographic, fiscal policy, foreign economies, energy prices, monetary policy Staffing pattern ratio analysis, industryspecific studies, staff expertise Economic censuses, annual economic surveys, other data sources Industry output, sector wage rates, technological change BEA benchmarkyear input-output tables, BLS timeseries estimates Industry Final Demand sales to consumers, businesses, and government Industry Output Use and make relationships, total requirements tables The Labor Force--What Is It The labor force is comprised of those age 16 and over who: – are working at full- or part-time jobs, or – are unemployed but are actively seeking work Labor force participation rate: – labor force / noninstitutional population The Labor Force--How it is Projected Use Census forecasts of population by age, sex, race, and ethnicity Calculate historical labor force participation rates Extrapolate these rates to the target year Multiply the projected rates by population to calculate the projected labor force of each category The Labor Force--What is Projected By Age -- sixteen groups By Sex By Race and Ethnicity – – – – – White non-Hispanic White Hispanic Black non-Hispanic Black Hispanic Asian and other Aggregate Economy--How We Project DRI Comprehensive Quarterly Model – 1000+ behavioral & identity relationships – 280+ exogenous assumptions Assumptions are provided to the model Model is solved over the forecast period Aggregate Economy--Key Assumptions Demographic Fiscal policy Foreign economic activity and inflation Energy Monetary policy Aggregate Economy--Key Results Real GDP, level & rate of growth Aggregate employment, by household & establishment Aggregate Economy--Key Results Major demand components of GDP – Personal consumption expenditures – Producers’ durable equipment – Nonresidential construction – Residential construction – Change in business inventories – Exports of goods & services – Imports of goods & services – Government purchases Aggregate Economy--Evaluation Factors GDP rate of growth Civilian unemployment rate Labor productivity growth rate Inflation Federal budget deficit/surplus Foreign trade deficit/surplus Are the results meaningful? Are they consistent with the assumptions? If not, rethink the assumptions and try again Why BLS no longer produces High and Low alternatives to the projections Users were confused: which one was the right one for their use? Wrongly interpreted as being confidence intervals Alternative development implied a sensitivity analysis of macro results So now BLS makes a separate macro sensitivity analysis Industry Demand--What is Projected Commodity final demand – First disaggregate GDP demand components by product class – Then, within each class, determine the commodity content (192 commodities) – Result: detailed final demand bills-of-goods Interindustry Relationships Industry Use Table Make Table Direct Requirements Market Shares Total Requirements Total Requirements Commodity q = Xe where: g = Ye e = final demand vector q = commodity output g = industry output Y X Industry Demand--What is Projected Total requirements coefficients – Scale rows to affect product sales coefficients across all industries – Modify columns to affect changes in material input requirements for specific industries Recalculate industry & commodity total requirements tables Industry Demand--What is Projected Combining the estimates of intermediate and final demand results in the total output by industry and commodity necessary to produce a specific level of GDP Industry output (rather than final demand) is the key determinant of employment needs Projecting Industry Employment Total hours for each industry derived as: Hi = (time, outputi, real wagej) Average annual hours are well-behaved: AAHi = g(time, UR) Industry employment determined by identity: Ei = Hi / AAHi Initially controlled to aggregate employment control from macroeconomic model Occupational Demand--What Industry by occupation staffing pattern matrix: – 260 industries – 513 occupations Distributes wage & salary employment in each industry to all occupations used by that industry Occupational Demand--What A separately determined distribution of self-employed and unpaid family workers by occupation completes the picture of occupational demand in the economy Each occupation then assigned to a growth category Occupational Demand--How Staffing patterns are assembled from historical data then modified based on various factors: – Technological changes – Changing business practices – Changes in industry activity Replacement Demand Total job openings made up of: – new jobs created – replacement needs for those who have • • • died retired moved to another occupation Replacement needs often outweigh new job creation as a source of job growth Reviewing the Projections Initial estimates are reviewed internally by the entire staff of OEP, resulting in bottomup feedback to each stage of the process. This process has proven to be: – Analytical rather than mechanical – Cost-effective – Pragmatic Reviewing the Projections Secondary review involves other program offices within the BLS: – Employment & Unemployment Statistics – Productivity & Technology – Commissioner of BLS Reviewing the Projections Result: a consistent set of projections at all levels of detail that has undergone extensive scrutiny by all analysts in the Office, as well as detailed review by other BLS offices Sensitivity analyses allow the user to evaluate major assumptions Employment Outlook: 2000-2010 Labor force Economic growth Industry employment Occupational employment Population and labor force will continue to grow Millions 234 210 189 158 141 126 Population 1990 2000 Source: Bureau of Labor Statistics 2010, projected Labor force 1990 2000 2010, projected Labor force growth will remain steady Percent change 10.9 11.4 11.9 12.0 Population Labor force 1990-2000 2000-2010, projected 1990-2000 2000-2010, projected Source: Bureau of Labor Statistics Employment Outlook: 2000-2010 Labor force Economic growth Industry employment Occupational employment A healthy economy is projected through 2010 Selected economic variables, annual growth rates 3.2 3.2 3.4 2.8 2.0 1.5 GDP 1980-1990 1990-2000 2000-2010, Projected Source: Bureau of Labor Statistics Productivity 1980-1990 1990-2000 2000-2010, Projected The 2000-2010 projections assume a 4 percent unemployment rate Percent 5.6 4.0 4.0 Unemployment 1990 Source: Bureau of Labor Statistics 2000 2010, assumed Personal consumption expenditures (PCE) account for most of GDP Percent 1990 67 68 69 Imports PCE 2000 9 12 19 Exports -9 -17 -26 Source: Bureau of Labor Statistics 2010 14 19 23 21 17 15 Investment Government Employment Outlook: 2000-2010 Labor force Economic growth Industry employment Occupational employment Service-producing industries continue to lead employment growth Millions of nonfarm wage and salary jobs 125 105 84 25 26 27 Goods-producing 1990 2000 Source: Bureau of Labor Statistics 2010 Service-producing 1990 2000 2010 Services and retail trade account for most job growth Thousands of nonfarm wage and salary jobs, projected 2000-2010 12,893 Services 3,093 Retail trade 1,757 Government Transportation and utilities 1,255 Wholesale trade 776 Finance 687 Construction 825 Manufacturing 577 Service Producing Goods Producing Mining Source: Bureau of Labor Statistics -55 Projected 2000-2010 employment growth in services is concentrated Thousands of nonfarm wage and salary jobs Total: 12,893 Business services Health services 2,838 5,064 2,505 All other services 1,260 1,225 Social services Source: Bureau of Labor Statistics Engineering and management services The 10 fastest growing industries are service-producing Percent change, projected 2000-2010 86 Computer and data processing 64 Residential care 57 Health services, nec. 51 49 Cable and pay television Personnel supply Warehousing and storage 45 Water and sanitation 45 Veterinary 45 Landscaping and horticulture 44 Miscellaneous business 44 Source: Bureau of Labor Statistics Eight industries account for half of projected 2000-2010 job growth Thousands of wage and salary jobs 1,913 Personnel supply services 1,805 Computer and data processing services 1,606 Retail trade, except eating and drinking places 1,486 Eating and drinking places 1,245 Offices of health practitioners State and local government education 1,004 Miscellaneous business services Construction Source: Bureau of Labor Statistics 1,076 825 Employment Outlook: 2000-2010 Labor force Economic growth Industry employment Occupational employment Professional and related occupations had the most jobs in 2000 Millions of jobs 27 Professional and related 26 Service 24 Office and administrative support Management, business, and financial 16 Sales and related 16 13 Production 10 Transportation and material moving 7 Construction and extraction 6 Installation, maintenance, and repair Farming, fishing, and forestry Source: Bureau of Labor Statistics 1 All major occupational groups are projected to increase Percent change, projected 2000-2010 26 Professional and related 20 Service 15 Transportation and material moving 14 13 Management, business, and financial Construction and extraction 12 Sales and related 11 Installation, maintenance, and repair 9 Office and administrative support 6 Production Farming, fishing, and forestry Total, all occupations Source: Bureau of Labor Statistics 4 15 Professional occupations account for more than 3 out of 10 new jobs Thousands of jobs, projected 2000-2010 6,952 Professional and related 5,088 Service Office and administrative support 2,171 Management, business, and financial 2,115 1,852 Sales and related 1,530 Transportation and material moving 989 Construction and extraction Production 750 Installation, maintenance, and repair 662 Farming, fishing, and forestry 51 Total: 22,160 Source: Bureau of Labor Statistics Job openings from replacement needs exceed those from employment growth Millions of jobs, projected 2000-2010 Service 5.1 Professional and related 8.4 7.0 Office and administrative support 2.2 3.0 Transportation and material moving 1.6 2.4 3.1 Construction and extraction 1.0 1.5 2.5 Installation, maintenance, and repair .7 1.2 Farming, fishing, and forestry Source: Bureau of Labor Statistics 6.7 4.8 Management, business, and financial 2.1 0.5 1.9 12.2 7.7 5.5 Sales and related 1.9 Production .8 5.2 13.5 5.1 4.0 3.9 Change in employment Net replacement needs