analysis & evaluation office communication, analysis & research division mn department of...

Analysis & Evaluation Office Communication, Analysis & Research Division MN Department of Employment & Economic Development

The Changing Labor Market: Current Conditions and Future

Predictions

Rachel HillmanRegional Labor Market Analyst

MN Dept. of Employment & Economic Development

St. Paul WorkForce Center


About DEED’s regional analysts

Collaborate with regional stakeholders on new research

Extend access to DEED reports and statistics

Conduct presentations and training onregional economy and labor market

Original research and analysis intended to answer “the tough questions”

Five regional analystsstationed across the state


What is labor market information?

Labor market information is any information about people, work and the job market:

Geographic area – where people work

Industry or business – who people work for

Occupation – what people do

Wages – how much they earn


Firsthand knowledge versus LMI

Labor market information adds contextcontext to what we know from talking with people and what we read in the news…

Economy is all about jobsSt. Paul Pioneer Press – February 19, 2008

Job losses pile up St. Paul Pioneer Press – January 16, 2008

Consumers’ winter blues put a chill on economyStar Tribune – January 11, 2008

More manufacturers going greenStar Tribune – December 28, 2007


Trends at a regional scale beyond employment and the labor force

Gaining 1 million people in 30 yearsRapid population growth on the developing edgeContinued spread of suburban and exurban developmentPopulation churn brings diversity and diversification of the region

Traffic congestion not getting betterGas prices not getting better

Finite supply of land = rising land pricesRedevelopment and intensification of land use in the core


Twin Cities area labor shed (or where workers in the Twin Cities area live)


Minnesota’s year end review

Over the year Minnesota gained 6,200 jobs in December 2007. REVISEDThis was below the nation’s growth rate of 0.9%. In terms of over-the-year job gains by sector, Minnesota is ahead of nationwide job growth in the education & health services and financial activities.

Manufacturing makes up a lower percent of employment than 6 years ago. The health care and financial services sectors are growing.

Minnesota’s unemployment rate was 4.0% in 2006 with 117,000 unemployed, but that doesn’t count “discouraged” or “marginally attached” workers. In 2007, monthly unemployment rates have been on the rise, reaching 4.7% in December.

Labor force participation rate is around 72.6%.

Number of job opportunities has remained consistent, but some occupations are in demand.

Source: MN Dept of Employment & Economic Development


Annual unemployment rates: Twin Cities, Minnesota, and U.S.

*Monthly rate not seasonally adjusted



Alternative national unemployment rate calculations, January 2008

U-3 – Total unemployment, as a percent of the civilian labor force: 4.9%% *This is the official unemployment rate.*

U-4 – Total unemployed + discouraged workers, as a % of the civilian labor force + discouraged workers: 5.2%%

U-5 – Total unemployed + discouraged workers + all other marginally attached workers, as a % of the civilian labor force + all marginally attached workers: 6.0%%

U-6 – Total unemployed + all marginally attached workers + total employed part time for economic reasons, as a % of the civilian labor force + all marginally attached workers: 9.0%%

Source: Bureau of Labor Statistics, Current Population Survey


Twin Cities statistics in unemployment insurance applicants, 2007

Age 22 to 29 -22%

Age 50 to 59 -19%

Age 40 to 49 -27%

Age 30 to 39 -23%

Age 60 to 64 -4%

65 Years of Age and

Over -1%

Under 22 Years of

Age -4%

Less than 12 years -

9%

Over 15 years -

17%

13 to 15 years -

34%

12 years -40%

Age of Unemployment Insurance Applicants, 2007

Educational Attainment of Unemployment Insurance Applicants, 2007



Recent employment trends in the Twin Cities

Employment Change December 2005 to December 2007

Manufacturing -4,050 (-1.9%)Medical equipment and supplies mfg. +1,410 (3.7%)

Specialty Trade Construction -7,140 (-12.7%)

Professional and Business Services +8,290 (3.2%)(includes legal services, architectural and engineering services, computer systems designs, management of companies, administrative and support)

Health Care and Social Assistance +20,410 (10.3%)

All industries = +13,710 (0.8%)


Employment changes since 2000

Manufacturing -36,500 (-15.4%)Machinery mfg. -8,860 (-28.9%)Navigational, measuring, electromedical and control instrument mfg. +2,100 (9.9%)Medical equipment and supplies mfg. +4,151 (37.4%)

Professional and Business Services -50 (0.0%)

Health Care and Social Assistance +53,930 (32.8%)

Leisure and Hospitality +19,000 (13.4%)(includes arts, entertainment, accommodation and food services)

Finance and Insurance +4,110 (3.9%)

All industries = +32,362 (1.8%)


Minnesota job vacancy survey

In 2000, Minnesota’s Labor Market Information (LMI) Office began tracking the number of job vacancies currently open for hire.

Job vacancy statistics are produced twice a year for the second quarter (April to June) and fourth quarter (October to December).

Describe job vacancies in terms of:Education and experienceWagesPart-time/full-timeTemporary/seasonal or permanent


Vacancies are down but the “nature” of vacancies has changed as well.

0

20,000

40,000

60,000

80,000

100,000

120,000

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20,000

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60,000

70,000

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Number of Job Vacancies

Number of Unemployed



Where are the jobs now?

35,150 job openings in the Twin Cities job market during 2nd Quarter 2007

2.2% job vacancy rate5.4 job vacancies for every 10 unemployed people

Hiring demand is highest in some high-skill occupations:Health care practitioners and technicalManagement Health care supportComputer and mathematicalBusiness and financial operations


Job vacancies by industry sector

Prof., Scientific, & Technical Services

8%Educational

Services8%

Finance & Insurance

7%

Accommodation7%

Information6%

Other Services5% Retail Trade

8%

Manufacturing10%

11 Other Industries

25%

Health Care16%



Occupations with the most openings in the Twin Cities

Job Opening

Median Wage Offer

Registered Nurses 1,277 $23.30 Retail Salespersons 1,064 $8.00 Home Health Aides 1,021 $11.50 Office Clerks, General 987 $11.00 Computer Software Engineers, Applications 826 $23.08 Sales Representatives, Wholesale and Mfg. 784 $19.23 Cashiers 703 $8.00 Laborers and Freight, Stock, and Material Movers 670 $10.00 Waiters and Waitresses 638 $6.15 Network and Computer Systems Administrators 624 $28.85 Nursing Aides, Orderlies, and Attendants 604 $11.00 Hairdressers, Hairstylists, and Cosmetologists 558 NATruck Drivers, Heavy and Tractor-Trailer 540 $16.83 Management Analysts 487 $24.04 Sales Representatives, Services, All Other 459 $14.42 Customer Service Representatives 458 $12.79 Network Systems and Data Communications Analysts 455 $12.00



Median starting wage rates of job vacancies


1%

13%

11%

17%

12%

8%

6%5%

27%

0%

5%

10%

15%

20%

25%

30%

Under$6.15

$6.15 to$7.99

$8.00 to$9.99

$10.00 to$11.99

$12.00 to$13.99

$14.00 to$15.99

$16.00 to$17.99

$18.00 to$19.99

$20.00and over

Median Wage of all openings =

$13.00


Skill levels required for job openings in the Twin Cities

0%

10%

20%

30%

40%

50%

60%

2001 2002 2003 2004 2005 2006 2007

Per

cen

t o

f T

win

Cit

ies

Job

Vac

anci

es

Post-Secondary

Entry Level

Note: Second quarter data presented.

Source: MN Dept of Employment & Economic Development, Minnesota Job Vacancy Survey


Are these occupations in demand?


Occupations in demand

• Sort jobs by wages, growth rates or education/training

requirements

• Job titles link to educational programs in

Minnesota for these occupations

• Job codes link to I*SEEK career

information for these occupations


Minnesota’s industrial and occupational employment projections

Every states’ Labor Market Information (LMI) Office is charged with producing employment projections on an industry and occupational level.

Projections are estimated over a 10 year period every two years for the nation, state and regions.

Projections are largely based on past trends. We cannot predict:Recessions, depressions, energy crises, etc.WarsTechnology changeNew business processesLegislation


Where will the jobs be?

In the Twin Cities region, we project that 225,000 new jobs will be created between 2004 and 2014 – this is a 13% growth rate.

Another 402,000 new work force entrants will be needed to replace workers who have retired or otherwise left their position.

More than one-fourth of the new jobs will be either an education or health related job.

Post-secondary education will be required for 15 of the top 20 fastest growing jobs in the Twin Cities.

16 of the top 20 occupations have average wages of greater than $20/hour.



Health care will add the most new jobs in the Twin Cities.

-2,463

-250

-180

-47

3,244

4,223

5,199

5,390

5,773

9,048

10,214

10,244

12,723

12,752

17,369

19,761

23,924

24,405

46,672

-10,000 0 10,000 20,000 30,000 40,000 50,000

Manufacturing

Agriculture, Forestry, Fishing & Hunting

Utilities

Mining

Arts, Entertainment, & Recreation

Real Estate & Rental & Leasing

Transportation & Warehousing

Information

Wholesale Trade

Management of Companies &Enterprises

Other Services, Ex. Public Admin

Construction

Finance & Insurance

Educational Services

Retail Trade

Accommodation & Food Services

Professional & Technical Services

Administrative & Waste Services

Health Care & Social Assistance



Projected employment growth by detailed industry

0 5,000 10,000 15,000 20,000 25,000

Miscellaneous Manufacturing

General Merchandise Stores

Financial Investment & Related Activities

Publishing Industries

Real Estate

Personal and Laundry Services

Credit Intermediation and Related Activities

Membership Organizations & Associations

Insurance Carriers and Related Activities

Specialty Trade Contractors

Nursing and Residential Care Facilities

Hospitals

Management of Companies and Enterprises

Social Assistance

Educational Services

Food Services and Drinking Places

Ambulatory Health Care Services

Administrative and Support Services

Professional, Scientific & Technical Services

Number of New Jobs



Fastest growing occupations in the Twin Cities, 2004 to 2014

Network Systems and Data Communication AnalystsHome Health AidesPersonal and Home Care AidesPhysician AssistantsComputer Software Engineers, ApplicationsComputer Software Engineers, Systems SoftwareBiomedical EngineersAthletic TrainersHazardous Materials Removal WorkersMedical Assistants

Dental HygienistsDental AssistantsCommunity and Social Service SpecialistsMedical ScientistsDatabase AdministratorsBiochemists and BiophysicistsEnvironmental EngineersNetwork and Computer Systems AdministratorsVocational Education Teachers, PostsecondarySocial and Human Services Assistants



Occupations adding the most jobs in the Twin Cities, 2004 to 2014

Retail Salespersons

Registered Nurses

Combined Food Preparation and Serving Workers, Fast Food Workers

Personal and Home Care Aides

Computer Software Engineers, Applications

Customer Service Representatives

Home Health Aides

Janitors and Cleaners

Accountants and Auditors

Waiters and Waitresses

Office Clerks, GeneralReceptionists and Information ClerksSales Representatives, Wholesale and ManufacturingExecutive Secretaries and Administrative AssistantsComputer Software Engineers, Systems SoftwareTruck Drivers, Heavy and Tractor-TrailerSocial and Human Services AssistantsComputer Systems AnalystsNetwork Systems and Data Communications AnalystsCarpenters



Skill and knowledge areas for “in demand” jobs

Skills areas projected to be most utilized by future occupations:

Reading ComprehensionActive ListeningSpeakingWritingActive LearningCoordinationMonitoringInstructingCritical Thinking

Knowledge areas projected to be most utilized by future occupations:

Customer ServiceMathematicsClericalEducation/trainingEnglishSales/marketingPsychologyComputers/electronicsAdministration/management


Skills shortage…now!Almost half of respondents said the availability of qualified applicants was a concern, but even more (77%) said they were concerned about the cost of employee benefits.

1 in 12 1 in 12 were concerned about the number of pending employee retirements

Hiring difficulties were more pronounced in healthcare and manufacturing.

Increased hours for current employeesUsed temporary agency employeesShifted work to other company locations

Employers generally saw hiring problems as an issue of quality, not quantity.

About one-third indicated that they have trouble with employee retention and turnover.

Competition from other local firmsCompetition from metropolitan area firmsRetirements

27% are concerned about the skill levels of their current employees.

9 out of 10 employers provide some type of on-the-job training.

73% said they need to offer employee training because it is a business necessity.

Source: MN Dept of Employment & Economic Development, South Central Employer Survey Results, July 2006.


Perceived deficiencies

Perceived Deficiencies of Job Seekers

Unstable work history (64%)

Not enough work experience (56%)

Poor technical skills – as demonstrated in the selection process (35%)

Too little formal education (26%)

Poor language or communication skills in an interview (20%)

Poor reading or comprehension skills – as demonstrated in the selection process (16%)

Poor math skills – as demonstrated in the selection process (4%)

Perceived Deficiencies of Current Workforce by Employers

Concerned with Employee Skills

Inadequate basic employability skills, e.g. attendance, timeliness, work ethic (48%)

Inadequate problem-solving skills (30%)Inadequate reading/writing or communication skills (30%)

Inability to work in a team environment (27%)

Inadequate math skills (15%)

Lack of degree or vocational technical training (13%)

Source: MN Dept of Employment & Economic Development, South Central Employer Survey Results, July 2006.


Return of labor shortage worries

Job growth is projected to be steady overall, but very high in some industries like health care

An increasingly tight labor marketThe existing workforce is agingLabor force growth is slowing and will start shrinking

While renewed economic growth will tighten the labor market, demographics may play an even bigger role.


0%

10%

20%

30%

1950-1960

1960-1970

1970-1980

1980-1990

1990-2000

2000-2010

2010-2020

2020-2030

Twin Cities US

Twin Cities population forecast compared to United States: growth per decade, 1950-2030

Source: U.S. Census Bureau, Metropolitan Council estimates


20 Year projected change in Twin Cities population by age group (2005-2025)

6% 7% 10%

-10%-16%

-2%

22%

80%

125% 121%

68%

4%2%9%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75+

"Future WorkforceEntrants"

The "EchoBoom"

Declining Pool of "Skilled Workers"

The "Baby Boom" & Older Population

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Source: MN State Demographic Center


Immigration is a key growth component

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70,000

1955-1960 1965-1970 1975-1980 1985-1990 1995-2000

White

Racialminority

Twin Cities residents new to the US

Source: U.S. Census Bureau, Metropolitan Council estimates


A more diverse population and workforce

Minnesota’s nonwhite and Latino populations are projected to grow substantially faster than the white population

By 2030, 1 in every 5 Minnesotans will be Hispanic or of colorSource: MN State Demographic Center

“Only 10 percent of baby boomers in the Metro area are from a minority group, but minorities comprise one-quarter of the next generation of workers.”Source: Mind the Gap: Disparities and Competitiveness in the Twin Cities,Brookings Foundation Metropolitan Policy, October 2005.

In 2005, 6.3 percent of Minnesota's total population were foreign born.

In 2005, the foreign born represented 6.8 percent of Minnesota's civilian employed workforce.

The number of foreign-born workers in Minnesota grew by 37.9 percent between 2000 and 2005.

Source: Migration Policy Institute

In 2005, 3.7 percent of employed workers in Minnesota were limited English proficient.Source: Migration Policy Institute


Future labor force growth in the Twin Cities

Source: MN State Demographic Center

34,080

5,830

-20,690

-10,380

15,000

70,030

-30,000

-10,000

10,000

30,000

50,000

70,000

2005 to2010

2010 to2015

2015 to2020

2020 to2025

2025 to2030

2030 to2035


What does this mean?

We expect 225,000 new jobs to be created between 2004 and 2014 in the Twin Cities.

Labor force projections estimate 104,000 new workforce entrants between 2005 and 2015.

Will the education/skills of these workers match employer demand?

AND…this does not even include the openings that will exist as people start to retire.


Labor force participation rates

Minnesota ranks 2nd nationwide for the percent of people age 16 to 64 who are in the labor force – 72.9% in 2006.

The labor force participation rate of women in Minnesota was 68.3% in 2006, the 2nd highest rate in the United States.

Minnesota teens (16 to 19 years of age) have one of the highest labor force participation rates in the country.

Minnesota ranks 7th nationwide in the employment rate of people with disabilities.

Trends show that labor force participation of people 65 years of age and over has been growing in the past 10 years.

Minneapolis-St. Paul MSA ranks 3rd nationwide in the percent of people 65 years of age and over engaged in the labor force - 25% in 2006.

Source: BLS, Geographic Profile of Employment & UnemploymentCornell University, Rehabilitation Research and Training Center of Disability Demographics and Statistics


Connecting workforce supply and demand: some solutions

Education system working to meet demandGetting the word out of youth and displaced workers“Marketing” high demand occupationsEstablishing career ladders in the workforce

development system

Increase productivityNew technologiesMore – and specialized – training

Outsource or offshore

Expand recruitment efforts and increase in-migration

Increase labor force participation (or lower unemployment) for certain groups


Minnesota-produced Labor Market Information is online at:

www.deed.state.mn.us/lmi

Rachel HillmanRegional Labor Market Analyst

Phone: 651.642.0728E-mail: [email protected]

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