BLS 1 The challenge of the decade ahead Presentation to the National Association of State Workforce...
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Transcript of BLS 1 The challenge of the decade ahead Presentation to the National Association of State Workforce...
1
BLS
The challenge of the decade ahead
Presentation to the National Association of
State Workforce Board Chairs
February 25, 2006
Michael W. HorriganAssistant Commissioner
Bureau of Labor Statistics
2
BLS
The Challenge of the Decade Ahead
Changing demographics
The difficulty of measuring labor market shortages
A simple alternative – High wage, high growth occupations.
3
BLS
The Challenge That Lies Ahead
• The U.S. economy is entering a period of dramatic demographic change.
• Projected slowdown of labor force growth.
• Retirement of the baby boom generation.
• Increasing diversity of the U.S. workforce.
• Significantly higher levels of immigration in the last twenty years.
4
BLS
The Challenge That Lies Ahead
• The impending (and current) retirement of the baby boom generation, our slower but more diverse labor force growth, and trends in immigration leads to two critical questions facing the workforce system:
• Will the U.S. economy face an overall shortage of workers in the next decade and beyond?
• And even if there is not an overall shortage, will there be a shortage of skilled workers in the U.S. economy?
5
BLS
Population, projected 2010
MillionsMen Women
12 121010 868 6 44 22 0 0
85+80-8475-7970-7465-6960-6455-5950-5445-5940-4435-3930-3425-2920-2415-1910-14
5-90-4
Age
Source: Bureau of the Census
6
BLS
3,366
2,553
-3,849
6,316
7,230
1,24265 and over
55 to 64
45 to 54
35 to 44
25 to 34
16 to 24
Growth in the labor force aged 45-64 between 2000 and 2010
Projected, in thousands
Source: Bureau of Labor Statistics
7
BLS
The rate of growth of the civilian labor force has slowed considerably over the last twenty years.
1.1
1.7
2.6
1.6
1.11.2
1.0
1950-60 1960-70 1970-80 1980-90 1990-00 1994-04 2004-14
Annual rates of change
projected
8
BLS
The rate of growth of the civilian labor force is projected to slow considerably over the next 50 years
1.1
0.4 0.30.6 0.6
1.1
0.6
2000-10 2010-20 2020-30 2030-40 2040-50 1950-00 2000-50
Annual rates of change
projected
9
BLS
Meeting The Challenge
• Increases in labor force participation rates of older workers.
• Continued increases in labor productivity.
• Upgrading the skills of the U.S. workforce (native and foreign born) through education and training.
10
BLS
Meeting The Challenge
• Domestic outsourcing
• Offshoring
• Satisfying product demand through trade (imports)
11
BLS
Labor force participation rate by sex
Source: Bureau of Labor Statistics
Percent, 1952-2004 and projected 2004-2014
86.4
71.8
33.9
59.7
0
20
40
60
80
100
1952 1962 1972 1982 1992 2004 2014
Total
Men
Women
projected
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BLS
77.069.0
96.0 93.098.0
93.0 9689 87
67
46
18
16-24 25-34 35-44 45-54 55-64 65+
1950 2000
The labor force participation rate of older men declined sharply over the last 50 years
Percent
Source: Bureau of Labor Statistics
13
BLS
Civilian labor force participation rate of men, ages 55-64
60
70
80
90
100
14
BLS
Civilian labor force participation rate, men ages 65-69
20
25
30
35
40
15
BLS
44.0
63.0
34.0
76.0
39.0
77.0
38
77
27
52
10 9
16-24 25-34 35-44 45-54 55-64 65+
1950 2000
The labor force participation rate of women increased sharply for all nearly all age groups over the last 50 years
Percent
Source: Bureau of Labor Statistics
16
BLS
Labor force growth rates of minorities outpaces whites
3234
17
710
Asian Hispanic Black White Total
Percent change, 2004-14
Source: Bureau of Labor Statistics
17
BLS
Whites remain the largest group of workers
82.1 80.2
13.1 15.911.3 12.0
4.3 5.1
White Hispanic Black Asian
2004 2014
Source: Bureau of Labor Statistics
Percent of labor force
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BLS
The number of immigrants into the U.S. has increased dramatically over the last twenty years.
8,795
5,736
4,107
5281,035
2,5153,322
4,493
7,338 7,605
1901-10 1911-20 1921-30 1931-40 1941-50 1951-60 1961-70 1971-80 1981-90 1991-2000
Source: Bureau of Labor Statistics
19
BLS
Population by Nativity and Educational Attainment: 2002
21.9
10.9
40.7
26.5
4.4
8.7
60.1
26.8
0 10 20 30 40 50 60 70
Less than 9th grade
9-12th grade, no diploma
High school graduate or somecollege
Bachelor's degree or more
Foreign born NativeSource: Census Bureau
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BLS
Population with High School Education or More by Nativity and World Region of Birth: 2002
37.3
68.4
80.9
84
86.8
67.2
86.9
0 20 40 60 80 100
Central America
Caribbean
South America
Europe
Asia
Foreign born
Native
Source: Census Bureau
21
BLS
Average annual rate of change
2.7
1.9
1.51.9
1.5
2.32.7
60Q2-69Q4
69Q4-80Q1
80Q1-90Q3
90Q3-01Q1
90Q3-95Q1
95Q1-01Q1
'04-14
Annual rate of growth of output per hour, nonfarm business, comparison of selected business cycle expansionary periods
projected
22
BLS
Annualized growth rates of labor productivity during recessions
Average annual rate of change
0.5
2.7
0.1
-1.2
-0.1-1.0
4.4
60Q2-61Q1
69Q4-70Q4
73Q4-75Q1
80Q1-80Q3
81Q3-82Q4
90Q3-91Q1
01Q1-01Q4
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BLS
Business investment and exports show relatively fast growth
Source: Bureau of Labor Statistics
Average annual rate of change
3.2 3.7 2.8
-5.9
-8.1
-3.9
8.3
4.76.7
2.5
5.1 4.7
2.3 2.41.3
1984-94 1994-04 2004-14
PCE InvestmentExports
Imports
Government
24
BLS
The Challenge of the Decade Ahead
Changing demographics
The difficulty of measuring labor market shortages
A simple alternative – High wage, high growth occupations.
25
BLS
Labor market shortages
The label of ‘shortage’ is also highly problematic in terms of the strict measurement requirements for a shortage to truly exist.
The classic theoretical definition of a shortage is the presence of persistent vacancies in the face of rising wages.
The is currently no survey vehicle that measures both job vacancies and the movement of wages over time associated with those vacancies.
26
BLS
Labor market shortages
In addition, there are numerous other margins of adjustment that can take place in lieu of / or in addition to / rising wages in the face of increased hiring difficulties.
These adjustments are often the most interesting aspects of labor market activity.
27
BLS
Labor market shortages
Examples of these adjustments include:
– Increases in the hours of work.
– The use of mandatory overtime or mandatory scheduling requirements such as coverage of the graveyard or weekend shifts.
– Increased reliance of contract employees, immigration or offshore employment
28
BLS
Labor market shortages
Examples of these adjustments include:
– Changes in the educational attainment requirements of jobs.
– Increased use of contractors, including the use of ‘retired’ self-employed contractors.
– Increased use of part-time workers, flexiplace arrangements, hiring bonuses, payment of relocation expenses.
– Changes in the use of capital in the production environment.
29
BLS
Labor market shortages
Measuring all of these possible responses by firms to increased difficulties in finding workers is extremely difficult.
In many cases, the data do not exist.
From a labor market information and training point of view, many of these possible adjustments are not as highly valued as others.
30
BLS
Labor market shortages
For example, assume that we could project that an occupation will be in shortage – and that a firm will react in one of the following ways:
– Significantly increase real wages and employment over the next 10 years
– Significantly increase real wages for core employees, maintain current employment levels and hire (and fire) contractors in response to changing demand conditions
– Maintain or lower current real wages, introduce new automation techniques, and increase the use of both immigrant and contract labor
31
BLS
Labor market shortages
These examples represent a spectrum of possible responses. From a labor market information point of view, however, the difficulty of measuring shortages suggests a different strategy:
– No matter what other labor market adjustments may be made (increased automation, use of contract labor, etc), can we identify the ‘shortage’ occupations that will experience high real wage and high employment growth?
32
BLS
If demand rises by more than supply then employment and earnings increase
A
B
C
earnings
Employment
D1
D2
S2
S1
33
BLS
Employment and wage growth
Unfortunately, BLS does not project ‘wage growth (nominal or real)’. We only project employment growth by occupation.
One easy to identify alternative is to identify occupations in the base year of the projections that are high wage and are projected to grow faster than average.
34
BLS
The Challenge of the Decade Ahead
Changing demographics
The difficulty of measuring labor market shortages
A simple alternative – High wage, high growth occupations by different skill groupings
35
BLS
Measuring skills
We also identified 6 educational clusters that are based on the percentages of employees ages 25-44 in each occupation with high school or less, some college, and a Bachelor’s degree or higher.
36
BLS
New BLS Data on the educational attainment of occupations
% high school
% some college
% college
High school jobs
> 60% < 20% < 20%
High school / Some college jobs
> 20% > 20% < 20%
Some college jobs
<20% > 60% < 20%
High school / some college / college jobs
> 20% > 20% > 20%
Some college / college jobs
< 20% > 20% > 20%
College jobs < 20% < 20% > 60%
37
BLS
Educational attainment of the number and percent of projected employment change, 2004-2014
EducationLevel
Level (thousands)
Percent
High school or less
6,922 36.6
Some College 5,246 27.7
Bachelor’s or higher
6,759 35.7
Total 18,928 100.0
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BLS
High-wage, high-demand occupations, 2004-2014
Occupations with median annual earnings in the top half of the 2004 OES earnings distribution
Occupations that are projected to grow faster than the overall average of 13.0 percent over the 2004-2014 period.
39
BLS
Educational attainment of high-wage, high-demand occupations, 2004-2014.
EducationLevel
Level (thousands)
Percent
High school or less
1,137 13.0
Some College 2,104 24.1
Bachelor’s or higher
5,479 62.8
Total 8,721 100.0