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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
The BLS Projections Program

    Assess implications for employment
    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
      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
         Labor Force
    Total and by age, sex, race,                                                         Economy
            and ethnicity                                                           GDP, total employment, and
                                                                                     major demand categories

                                                             Demographic, fiscal
                                   Population, labor force
                                                                policy, foreign
                                     participation rate
                                                             economies, energy
                                     trends, category
                                                              prices, monetary

  Occupational                                                                              Industry Final
                                   Staffing pattern ratio    Economic censuses,
    Demand                          analysis, industry-        annual economic
 Industry staffing patterns        specific studies, staff    surveys, other data      sales to consumers, businesses,
                                         expertise                 sources                      and government

                                   Industry output, sector    BEA benchmark-
                                        wage rates,           year input-output
                                    technological change      tables, BLS time-
                                                               series estimates

                                                                                      Industry Output
        Employment                                                                  Use and make relationships,
   Labor productivity, average                                                       total requirements tables
  weekly hours, w&s employment
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

      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
      Extrapolate these rates to the target year
      Multiply the projected rates by population to
       calculate the projected labor force of each
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

     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
        Use            Direct              Total
       Table       Requirements       Requirements   Y

       Make                                Total
       Table          Shares          Requirements   X

       q = Xe         g = Ye

       where:       e = final demand vector
                    q = commodity output
                    g = industry output
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

     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
      – 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
Reviewing 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
Reviewing the Projections

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

       – 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

                    Population                            Labor force

           1990          2000           2010,      1990     2000    2010,
                                       projected                   projected
  Source: Bureau of Labor Statistics
Labor force growth will remain steady
Percent change
                                                 11.9      12.0

                        Population                Labor force

               1990-2000 2000-2010,           1990-2000 2000-2010,
                         projected                      projected
  Source: Bureau of Labor Statistics
Employment Outlook: 2000-2010
  Labor force
  Economic growth
  Industry employment
  Occupational employment
A healthy economy is projected through
Selected economic variables, annual growth rates

          3.2             3.2


                         GDP                          Productivity

     1980-1990 1990-2000 2000-2010,          1980-1990 1990-2000   2000-2010,
                         Projected                                 Projected

  Source: Bureau of Labor Statistics
The 2000-2010 projections assume a 4
percent unemployment rate


                                               4.0     4.0


                                       1990   2000    2010,
  Source: Bureau of Labor Statistics
Personal consumption expenditures
(PCE) account for most of GDP

                                          1990   2000     2010
         67 68 69

                                                     19        19 23   21 17
                                                          14                 15
                                              9 12

            PCE                               Exports     Investment Government
  Source: Bureau of Labor Statistics
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




                  25           26        27

                      Goods-producing          Service-producing

                 1990       2000       2010   1990   2000    2010
  Source: Bureau of Labor Statistics
Services and retail trade account for
most job growth
Thousands of nonfarm wage and salary jobs, projected 2000-2010

                                Services                      12,893

                            Retail trade            3,093

                           Government            1,757

         Transportation and utilities       1,255

                       Wholesale trade     776

                                 Finance   687

                                           825              Service Producing
                                                            Goods Producing
                         Manufacturing     577

                                  Mining   -55

  Source: Bureau of Labor Statistics
Projected 2000-2010 employment
growth in services is concentrated
Thousands of nonfarm wage and salary jobs

                                        Total: 12,893

                    Health                                      Business
                   services                                     services
                                   2,838                5,064

                      All other                               Engineering
                      services                              and management
  Source: Bureau of Labor Statistics
The 10 fastest growing industries are
Percent change, projected 2000-2010

    Computer and data processing                            86
    Residential care                                   64
    Health services, nec.                         57
    Cable and pay television                 51
    Personnel supply                        49
    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

    Personnel supply services                                                  1,913
    Computer and data processing services                                    1,805
    Retail trade, except eating and drinking places                  1,606
    Eating and drinking places                                    1,486

    Offices of health practitioners                       1,245
    State and local government education              1,076
    Miscellaneous business services             1,004
    Construction                        825

  Source: Bureau of Labor Statistics
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

                   Professional and related                                          27

                                          Service                                   26
     Office and administrative support                                         24
 Management, business, and financial                                      16
                              Sales and related                           16
                                       Production                    13
  Transportation and material moving                            10
              Construction and extraction                   7
  Installation, maintenance, and repair                 6
            Farming, fishing, and forestry          1

  Source: Bureau of Labor Statistics
All major occupational groups are
projected to increase
Percent change, projected 2000-2010

                  Professional and related                                       26
                                          Service                           20
  Transportation and material moving                                   15
 Management, business, and financial                                  14
             Construction and extraction                             13
                             Sales and related                   12
  Installation, maintenance, and repair                         11
     Office and administrative support                      9
                                       Production       6
           Farming, fishing, and forestry           4
                       Total, all occupations                         15

  Source: Bureau of Labor Statistics
Professional occupations account for
more than 3 out of 10 new jobs
Thousands of jobs, projected 2000-2010

                      Professional and related                                  6,952
                                          Service                       5,088
            Office and administrative support                   2,171
       Management, business, and financial                      2,115
                               Sales and related               1,852
         Transportation and material moving               1,530
                  Construction and extraction            989
                                       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                           8.4     13.5
                   Professional and related                    7.0                     5.2   12.2
     Office and administrative support 2.2                           5.5           7.7
                              Sales and related 1.9                4.8           6.7
 Management, business, and financial 2.1                       3.0         5.1
  Transportation and material moving 1.6                     2.4     4.0
                                       Production .8     3.1         3.9
              Construction and extraction 1.0 1.5 2.5
                                                                             Change in employment
  Installation, maintenance, and repair .7 1.2               1.9
                                                                             Net replacement needs
           Farming, fishing, and forestry              0.5

  Source: Bureau of Labor Statistics