james c. franklin office of occupational statistics and employment projections division of industry...

James C. FranklinOffice of Occupational Statistics

and Employment ProjectionsDivision of Industry Employment

Employment Outlook: 2000-Employment Outlook: 2000-20102010


Overview of Methods and Results

The BLS Projections ProgramThe BLS Projections ProgramThe BLS Projections ProgramThe 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


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 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 ProjectionsWho Uses the BLS ProjectionsWho Uses the BLS ProjectionsWho 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 SpecificsBLS Projections SpecificsBLS Projections SpecificsBLS Projections Specifics

Annual estimates

National level of detail

Medium term -- 10 years

Published every other year

Requirements for carrying out this Requirements for carrying out this type of projectionstype of projections

Large-scale economic data base Extensive computer support

– Statistical analysis capabilities– Data base management capabilities

An experienced staff

The BLS Projections Process:The BLS Projections Process:Component ModelsComponent ModelsThe BLS Projections Process:The BLS Projections Process:Component ModelsComponent Models

Labor force Macro economic activity Input-Output model and derivation of

industry output Labor model Occupational staffing pattern model

The BLS projections process: The BLS projections process: Information flowsInformation flowsThe BLS projections process: The BLS projections process: Information flowsInformation flows

Labor ForceTotal and by age, sex, race,

and ethnicity

AggregateEconomy

GDP, total employment, andmajor demand categories

OccupationalDemand

Industry staffing patterns

Industry FinalDemand

sales to consumers, businesses,and government

IndustryEmployment

Labor productivity, averageweekly hours, w&s employment

Industry OutputUse and make relationships,

total requirements tables

Demographic, fiscal policy, foreign

economies, energy prices, monetary

policy

Economic censuses, annual economic

surveys, other data sources

BEA benchmark-year input-output tables, BLS time-series estimates

Population, labor force participation rate trends, category

restraints

Industry output, sector wage rates,

technological change

Staffing pattern ratio analysis, industry-

specific studies, staff expertise

The Labor Force--What Is ItThe Labor Force--What Is ItThe Labor Force--What Is ItThe 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 ProjectedThe Labor Force--How it is ProjectedThe Labor Force--How it is ProjectedThe 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 ProjectedThe Labor Force--What is ProjectedThe Labor Force--What is ProjectedThe 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 Aggregate Economy--How We ProjectProjectAggregate Economy--How We Aggregate Economy--How We ProjectProject

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 Aggregate Economy--Key AssumptionsAssumptionsAggregate Economy--Key Aggregate Economy--Key AssumptionsAssumptions

Demographic Fiscal policy Foreign economic activity and inflation Energy Monetary policy

Aggregate Economy--Key ResultsAggregate Economy--Key ResultsAggregate Economy--Key ResultsAggregate Economy--Key Results

Real GDP, level & rate of growth

Aggregate employment, by household & establishment

Aggregate Economy--Key ResultsAggregate Economy--Key ResultsAggregate Economy--Key ResultsAggregate 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 Aggregate Economy--Evaluation FactorsFactorsAggregate Economy--Evaluation Aggregate Economy--Evaluation FactorsFactors

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 Why BLS no longer produces High and Low alternatives to the projectionsLow alternatives to the projectionsWhy BLS no longer produces High and Why BLS no longer produces High and Low alternatives to the projectionsLow 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 Industry Demand--What is ProjectedProjectedIndustry Demand--What is Industry Demand--What is ProjectedProjected

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 RelationshipsInterindustry RelationshipsInterindustry RelationshipsInterindustry Relationships

Y

X

q = Xe g = Ye

where: e = final demand vectorq = commodity outputg = industry output

UseTable

DirectRequirements

Total Requirements

Industry

Commodity

MakeTable

MarketShares

Total Requirements


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


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 EmploymentProjecting Industry EmploymentProjecting Industry EmploymentProjecting 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--WhatOccupational Demand--WhatOccupational Demand--WhatOccupational 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--WhatOccupational Demand--WhatOccupational Demand--WhatOccupational 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--HowOccupational Demand--HowOccupational Demand--HowOccupational 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 DemandReplacement DemandReplacement DemandReplacement 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 ProjectionsReviewing the ProjectionsReviewing the ProjectionsReviewing the Projections

Initial estimates are reviewed internally by the entire staff of OEP, resulting in bottom-up feedback to each stage of the process. This process has proven to be:– Analytical rather than mechanical

– Cost-effective

– Pragmatic


Secondary review involves other program offices within the BLS:– Employment & Unemployment

Statistics

– Productivity & Technology

– Commissioner of BLS


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



Labor force Economic growth Industry employment Occupational employment

Population and labor force will Population and labor force will continue to growcontinue to growPopulation and labor force will Population and labor force will continue to growcontinue to growMillions

189210

234

126141

158

1990 2000 2010, 1990 2000 2010,

Population Labor force

Source: Bureau of Labor Statistics

projected projected

10.9 11.411.9 12.0

1990-2000 2000-2010, 1990-2000 2000-2010,

Labor force growth will remain Labor force growth will remain steadysteadyLabor force growth will remain Labor force growth will remain steadysteady

Population Labor force

Percent change


projected projected

A healthy economy is projected A healthy economy is projected through 2010through 2010A healthy economy is projected A healthy economy is projected through 2010through 2010

3.2 3.23.4

1.52.0

2.8


Selected economic variables, annual growth rates

GDP Productivity

1980-1990 1990-2000 2000-2010, Projected

1980-1990 1990-2000 2000-2010, Projected

The 2000-2010 projections assume The 2000-2010 projections assume a 4 percent unemployment ratea 4 percent unemployment rateThe 2000-2010 projections assume The 2000-2010 projections assume a 4 percent unemployment ratea 4 percent unemployment rate

5.6

4.0 4.0


Percent

Unemployment

1990 2000 2010, assumed

Personal consumption Personal consumption expenditures (PCE) account for expenditures (PCE) account for most of GDPmost of GDP

Personal consumption Personal consumption expenditures (PCE) account for expenditures (PCE) account for most of GDPmost of GDP

PCE

Imports

Exports Investment Government


Percent

67 68 69

-9-17

-26

9 1219 14

19 23 21 17 15

1990 2000 2010

Service-producing industries Service-producing industries continue to lead employment continue to lead employment growthgrowth

Service-producing industries Service-producing industries continue to lead employment continue to lead employment growthgrowth


Millions of nonfarm wage and salary jobs

25 26 27

84

105

125

1990 2000 2010 1990 2000 2010

Goods-producing Service-producing

-55

577

825

687

776

1,255

1,757

3,093

12,893

Mining

Manufacturing

Construction

Finance

Wholesale trade

Transportation and utilities

Government

Retail trade

Services

Services and retail trade account Services and retail trade account for most job growthfor most job growthServices and retail trade account Services and retail trade account for most job growthfor most job growth


Thousands of nonfarm wage and salary jobs, projected 2000-2010

Service Producing

Goods Producing

Projected 2000-2010 employment Projected 2000-2010 employment growth in services is concentratedgrowth in services is concentratedProjected 2000-2010 employment Projected 2000-2010 employment growth in services is concentratedgrowth in services is concentrated


Thousands of nonfarm wage and salary jobs

Engineering and management

services

Total: 12,893

Social services

All other services

Health services

Business services

5,064

1,2601,225

2,505

2,838

The 10 fastest growing industries The 10 fastest growing industries are service-producingare service-producingThe 10 fastest growing industries The 10 fastest growing industries are service-producingare service-producing

44

44

45

45

45

49

51

57

64

86Computer and data processing

Residential care

Health services, nec.

Cable and pay television

Personnel supply

Warehousing and storage

Water and sanitation

Veterinary

Landscaping and horticulture

Miscellaneous business


Percent change, projected 2000-2010

Eight industries account for half of Eight industries account for half of projected 2000-2010 job growthprojected 2000-2010 job growthEight industries account for half of Eight industries account for half of projected 2000-2010 job growthprojected 2000-2010 job growth


Thousands of wage and salary jobs

825

1,004

1,076

1,245

1,486

1,606

1,805

1,913Personnel supply services

Retail trade, except eating and drinking places

Offices of health practitioners

Miscellaneous business services

Construction

Eating and drinking places

Computer and data processing services

State and local government education

Professional and related Professional and related occupations had the most jobs in occupations had the most jobs in 20002000

Professional and related Professional and related occupations had the most jobs in occupations had the most jobs in 20002000


Millions of jobs

1

6

7

10

13

16

16

24

26

27

Farming, fishing, and forestry

Installation, maintenance, and repair

Construction and extraction

Transportation and material moving

Production

Sales and related

Management, business, and financial

Office and administrative support

Service

Professional and related

All major occupational groups are All major occupational groups are projected to increaseprojected to increaseAll major occupational groups are All major occupational groups are projected to increaseprojected to increase

15

4

6

9

11

12

13

14

15

20

26

Total, all occupations


Production



Sales and related




Service


Percent change, projected 2000-2010


Professional occupations account Professional occupations account for more than 3 out of 10 new jobsfor more than 3 out of 10 new jobsProfessional occupations account Professional occupations account for more than 3 out of 10 new jobsfor more than 3 out of 10 new jobs


Thousands of jobs, projected 2000-2010

51

662

750

989

1,530

1,852

2,115

2,171

5,088

6,952



Production



Sales and related



Service


Total: 22,160

.7 1.2

1.0 1.5

.8 3.1

1.6 2.4

2.1 3.0

1.9 4.8

2.2 5.5

7.0 5.2

5.1 8.4




Production



Sales and related



Service

Change in employment

Net replacement needs

Job openings from replacement needs Job openings from replacement needs exceed those from employment growthexceed those from employment growthJob openings from replacement needs Job openings from replacement needs exceed those from employment growthexceed those from employment growth


Millions of jobs, projected 2000-2010

13.5

12.2

7.7

6.7

5.1

4.0

2.5

3.9

0.5

1.9

james c. franklin office of occupational statistics and employment projections division of industry...

Documents

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bls projections program

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