Employment Outlook Through 2012 What Industries will need workers & which won‘t? Will retiring baby boomers create a worker shortage? What effect will immigration & outsourcing have on the job market? Find out what the Government predicts for the next few years. From the Bureau of Labor Statistics This article presents the BLS employment outlook for the period from 2002 to 2012. The Bureau of Labor Statistics (BLS) projections are based on a long-term view of the U.S. economy that assumes a long-run full-employment economy in which labor markets clear. As a result, BLS projections address the question, "How would employment in industries and occupations grow if the economy were to operate at its full potential a decade from now?" Overall U.S. economy is expected to grow from $9.4 trillion in 2002 to $12.6 trillion in 2012 (measured in 1996 dollars). This increase represents a growth rate of 3.0 percent per year in the real gross domestic product (GDP) of the economy. The unemployment rate in 2012 is projected to be 5.2 percent and the annual rate of growth of productivity is expected to be 2.1 percent. Another major factor to consider in projecting the path of the U.S. economy is the available labor supply over the next decade. Overall, the Bureau of Labor Statistics expects the labor force to grow from 144.9 million in 2002 to 162.3 million in 2012, an annual growth rate of approximately 1.1 percent. Output and employment by industry. Employment Over the 2002-12 decade, total employment is projected to increase by 21.3 million jobs, or 15 percent. Over the previous decade (1992-2002), total employment grew by 20.7 million jobs but at a slightly faster rate, 17 percent. Industry employment Employment growth will be concentrated in the service-providing sector of the economy. Education and health services and professional and business services represent the industry divisions with the strongest projected employment growth: projected to grow twice as fast as the overall economy. Information, leisure and hospitality, and transportation and warehousing are other service-providing industries that are projected to grow faster than average. Construction is the only goods-producing sector in which employment is projected to grow. Manufacturing, however, is expected to decline by 1 percent, a much smaller decline than what occurred in the previous decade. Nonetheless, employment in goods-producing industries is expected to decrease from 16 percent to 14 percent of total employment. Apparel manufacturing, textile mills, and computer and electronic product manufacturing are the goods-producing industries with the largest projected employment declines. The 10 fastest growing detailed industries, led by software publishers, are in the service-providing sector. Do these figures mean that there will be very few job opportunities in goods-producing industries? Not at all. The reason is that the BLS projections are based on net employment change and do not reflect the underlying dynamic flows of hirings and separations that occur within industries. For example, In the private sector, 4.2 million individuals were hired during September 2003, representing 3.8 percent of private nonfarm payroll employment that month. Also, 4 million workers were separated from their jobs during September, accounting for 3.7 percent of employment. The Bureau projects an overall level of job openings of 56.3 million jobs over the next 6 years, representing a net employment growth of 21.3 million and an additional 35 million job openings due to replacement needs. A popular use of BLS projections is to offer guidance on which occupations are projected to grow the fastest or add the most jobs. For example, 49 percent of registered nurses work in hospitals, and another 17 percent work in offices of physicians and in ambulatory health-care centers, including home health-care centers. The projected increases of 27 percent and 57 percent in the real output of hospitals and ambulatory health-care services, respectively, translates into 71 percent of the 623,000 total projected increase in the employment of registered nurses. Another important influence on hiring results from changes in the technology of production -which can have significant impacts on the types of workers employed as new production technologies are adopted. In 1983, for example, the production of computer and office equipment required the services of nearly 100,000 precision production, craft, and repair workers and 7,000 computer engineers, scientists, and systems analysts. By 1998, as innovations in the production of computer and office equipment were introduced into this industry, the number of production workers had dropped to 68,000, and employment in computer related occupations had grown to more than 51,000. Where the Jobs will be Internet services, data processing, and other information services are projected to have the highest annual rate of change of real output over the projection period: 10.3 percent per year. This industry is expected to add 244,000 jobs, an increase of 46.2 percent, by 2012. Twenty-one industries are projected to have real output growth rates that equal or exceed the overall annual average of 4.0 percent. These industries together accounted for 14 percent of nonfarm wage and salary employment in 2002 and are projected to account for 32 percent of overall net employment growth over the projection period. If the list of industries with fast employment growth is extended to include those with average annual output growth of 3 percent or more per year, 35 industries qualify. These industries account for 24 percent of nonfarm wage and salary employment in 2002 and 48 percent of their net employment growth over the 2002-12 period. Note that not all 35 industries are in the service providing sector of the economy. Although goods-producing industries generally have greater output than employment gains, the list of 35 industries includes metalworking machinery manufacturing industries; forging and stamping industries; plastics product manufacturing industries; and architectural and structural metals manufacturing industries. The 50 industries with employment growth exceeding 14.8 percent account for 65 percent of nonfarm wage and salary growth over the projection period. Further, a total of 84 percent of employment growth is accounted for by the industries with projected employment growth exceeding 14.8 percent. These 58 industries accounted for 55 percent of employment in 2002, and each has a projected annual average growth rate of real output of at least 1 percent between 2002 and 2012. Baby Boomers Effect on Employment One of the most significant influences on the labor force in the last 50 years has been the aging of the baby-boom generation. They're has been a huge influence of the baby-boom generation on everything from consumer expenditures to housing, medical care, and retirement, to name just a few factors. The baby boomers were born between 1946 and 1964, were aged 38 through 56 in 2002, and will be aged 48 through 66 in 2012. One way to see the impact of this group is to compare various age groups before the arrival of the baby boomers. For example, in 1970, the baby boomers were aged 6 to 24 years, and in that year, there were 48 million individuals aged 25 to 44. (a prime working age group) Twenty years later, with the baby boomers aged 26 to 44, the number of individuals in the 25-44 age group stood at 80.8 million, an increase of 68.3 percent. The aspect of baby boomers that is generating the most interest is their potential impact on the remaining size of the labor supply as the boomers enter older age groups and begin to retire. According to Census Bureau population projections, by 2010, when baby boomers will be 46 to 64 years, the number of 55- to 64-year olds will grow by more than 11 million compared with the number in 2000, an increase of 46 percent. One question that arises is whether the baby boomers have had a discernible impact on labor force participation rates. That is to say, as the baby boomers have aged, have their labor force participation rates differed significantly from the groups that came before them or the groups that followed them. For men, the dominant feature is the declining participation rates among those aged 55 and older since 1950, a group that does not yet include the baby boomers. From an examination of the younger age groups listed in the table, it does not appear that the labor force participation rates of baby boomers differed significantly from those of similarly aged cohorts that came before or after. There has also been a remarkable rise in the labor force participation rates for women since 1950, especially among the prime working-age groups from 25 to 54 years. Labor shortages Because of the potential impact of the upcoming retirement of baby boomers - what effect will that have on the labor supply. Will there be a shortage of workers? Growth Rate Change: between 1950 and 2000, the civilian labor force grew by 79 million, from 62.2 million to 140.9 million, an increase of 1.6 percent per year. The Bureau projects that, between 2000 and 2010, labor force growth will slow to 1.1 percent per year, and after the retirement of the baby boomers, between 2010 and 2020, labor force growth will slow to 0.4 percent per year. Overall, the civilian labor force is expected to grow by 51 million between 2000 and 2050, a slowdown to a 0.6-percent increase per year. So the growth of the work force will decrease by almost 66%. Will these smaller increases in the size of the labor force be too small to meet the needs of the U.S. economy? Will there be a general shortage of workers, so that many of the jobs needed to produce the level of output demanded by the economy. The BLS projections, assume a labor market that remains stable. Despite this assumption, numerous analyses have been produced by researchers measuring what is believed to be evidence of a future shortage of workers in the U.S. economy. For example, the Bureau projects a labor force of 162.3 million individuals in 2012. At the same time, the Bureau expects that the 2012 economy will require that 165.3 million jobs be filled. Does this difference imply a shortage of 3.0 million workers by 2012? Absolutely not-but if not, then what accounts for the difference? First, BLS projections of occupational employment are based on the number of jobs that the economy is expected to require. However, because individuals can and do hold more than one job, the count of workers will most certainly be less than the number of jobs. The potential role of immigration in increasing the available supply of labor. Rising trends in immigration levels to the United States, especially over the last decade, are one source of labor for occupations in which it may be increasingly difficult to find qualified workers. The following tabulation shows the levels and rates of immigration to the Nation, by decade, since 1901, as compiled by the U.S. Census Bureau: The population projections from the Census Bureau that are used as the basis for BLS labor force projections include an estimate of the level of legal immigration to the United States over the next decade. In its most recent population projections, the Census Bureau estimates annual immigration levels of 1.1 million from 2000 to 2005, a decline to 900,000 per year from 2006 to 2010, and an increase to 1.3 million annually from 2011 to 2012. To the extent that past serves as prologue, the preceding tabulation does suggest that there will be substantial levels of immigration into the United States over the next decade. What kinds of occupations do recent immigrants enter? Individuals who have immigrated within the last 5 years have a greater likelihood than the overall population of U.S. workers of being in food preparation and serving related occupations, production occupations, and construction trades. They also have a greater likelihood of being in computer and mathematical occupations. As the number of years since immigration increases, the occupational distribution of immigrants begins to broadly resemble the overall occupational distribution, although immigrants still have a greater likelihood of being in production and food-related occupations, compared with all U.S. employees. The potential role of hiring offshore employees. One of the areas of increasing interest in U.S. labor markets is the use of offshore employees as part of the production process for U.S. firms. Outsourcing work to foreign countries-that is, purchasing services formerly produced in the United States from establishments in other countries-has been widely cited in as having a growing impact on U.S. employment. The magnitude of outsourcing is not known, owing to the lack of specific, data on the use of foreign employment to produce outsourced goods and services. Outsourcing is a trend that has been going on for quite some time. The current interest in it appears to reflect a transition from the importation of goods to the direct purchase of foreign-produced services, a phenomenon that has expanded with the development of the Internet & expedited shipping services. What is the potential impact of this transition? Domestic industries have already outsourced such functions as accounting, marketing, and advertising to other domestic industries that both specialize in these services & produce them more cheaply. With outsourcing, a purchase of a service from another industry replaces all the material and labor inputs that the purchasing industry previously used internally in order to create that service. The total output of the industry now buying the service from an outside source is somewhat lower. The jobs outsourced, however, are no longer counted in U.S. employment totals. Labor shortages by occupation. The fact that BLS projections are based on a labor market in balance does not mean that employers will not experience significant difficulties in finding workers in labor markets for individual occupations. One indicator of the relative difficulties that arise in hiring sufficient supplies of workers in any occupation is whether any trends show a consistent pattern of rising wages and rising employment, suggesting that the demand for workers in the occupation in question is increasing faster than the supply. Depending on the degree of mismatch between demand and supply, especially by geographic area, there may be significant difficulties in finding workers in particular occupations. The general problem with addressing the question whether the U.S. labor market will have a shortage of workers in specific occupations over the next 10 years is the difficulty of projecting, for each detailed occupation, the dynamic labor market responses to shortage conditions. Employers adapt to difficult hiring markets in a variety of ways: modifying the duties of a job, hiring contract employees, immigrants, or offshore labor in foreign countries, among other approaches. High-paying, fast-growing occupations What guidance can we provide to what many refer to as "hot jobs" in the U.S. economy? Fast growing occupations are defined as occupations that are projected to grow faster than 14.8 percent (again, the national average for all occupations). A number of interesting aspects of the occupations listed readily present themselves. For one, the list is not the exclusive domain of the fast-growing health- or computer-related occupations-although there are obviously a great many such occupations on the list. For example, a number of management, education, sales, art, architecture, design and accounting related occupations are listed. Nor does the list exclude occupations in which a significant percentage of employees are not college graduates. For example, electricians; plumbers, pipe fitters, and steamfitters; structural iron and steel workers; reinforcing iron and rebar workers; tapers; tile and marble setters; sheet metal workers; and heating, air-conditioning, and refrigerator mechanics and installers appear on the list. Overall, the occupations accounted for 31.2 percent of employment in 2002 and are projected to account for 51 percent of the expected net gain in employment over the 2002-12 period. The impact of education and training. There are a number of relatively high-paying, high-growth occupations in which the most significant source of education or training usually is not associated with the job holder's having obtained a 4-year college degree. There is often a variety of educational or training pathways that enable a worker to become skilled in an occupation. In the last two decades, several important trends in educational attainment have arisen that can have a significant impact on occupational career choices. One of these trends is that, since the late 1970s, average pay to those with higher levels of education have increased. Certainly, there are a number of important factors besides earnings that help to determine the career choices made by individuals. However, it is the growing distance, on average, between those with more education, compared with those with less, that speaks to a preference on the part of employers to hire those with skills associated with higher levels of education. On average, full-time wage and salary workers with a bachelor's degree or higher had earnings that were nearly twice those of high school graduates. This finding holds for both men and women. Between 1994 and 2000, the supply of male college graduates increased by more than 20 percent and their real earnings rose by nearly 5 percent. This willingness of the market to absorb and reward such a substantial increase in the labor supply of men who have graduated from college is an indicator of the continued relative increase in the demand for workers with more education. Earnings of men with some college (including those with associate's degrees) increased by 2.4 percent, and the employment of the group grew by 13 percent. Real earnings of female college graduates rose by 4 percent, and their employment increased by nearly 30 percent. Women with some college saw their real earnings remain steady, while their employment increased by 16 percent. BLS projections are carried out against a background of expert assumptions and model-based findings that connect the past to the future; the projections form the basis for providing information on entering the job market, changing careers, and choosing appropriate educational and training paths to job success

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