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An overview of the year 2000.

An Overview of the Year 2000 by Ronald E. Kutscher

In the year 2000, the United States will have 21 million more workers and an economy 40 percent larger than today's, according to projections prepared by the Bureau of Labor Statistics. The Bureau develops projections every two years. The latest ones are for 2000. This article indicates the sources of data and methods used to develop the projections; summarizes the projections of the labor force, economic growth industrial employment; and discusses some important implications of the projections.

Developing the Projections

The BLS projections are developed by making a series of general assumptions, specifying ranges for certain critical factors, and analyzing historical trends expected to influence the labor market. Detailed projections are then made for the labor force, gross national product (GNP), industry employment, and occupational employment.

First, assumptions are made concerning general economic or social conditions. These include the following for the 1986-2000 period: (1) work patterns will not change significantly over the projection period; for example, the average workweek will not change markedly; (2) broad social and educational trends will continue; (3) there will be no major war; (4) there will be no significant change in the size of the Armed Forces; and (5) fluctuations in economic activity due to the business cycle will occur. These assumptions have both an overall and a particular impact. For example, the assumption that social trends will continue implies that our society will continue to provide for the education of the young, which influences the projected level of local government demand and the demand for teachers.

Second, particular ranges in the target year (2000) are set for certain factors, such as unemployment -- a factor that obviously affects the figure for total employment and thus the employment in each industry and occupation. The projections are particularly sensitive to such target ranges as real GNP, real disposable income, civilian labor force, civilian employment, real output per person, and the unemployment rate. By specifying alternatives for each of these factors, BLS can generate different scenarios, or projected levels of economic activity, for the target year. For the 1986-2000 period, the Bureau developed three alternative sets of projections, based on a range of assumptions that result in high, moderate, and low rates of economic growth. Only the moderate projections are discussed here.

Third, historical data are analyzed and judgements made as to whether past rates of change will accelerate or decelerate in the future. During the 1970's and early 1980's, for example, employment of cashiers in retail stores grew at the expense of other sales occupations as these stores centralized their cashier services. However, this factor will no longer cause changes in the kinds of workers retail stores hire, in the judgment of BLS analysts, because most such stores now have centralized cashier operations.

The Labor Force

Projections of the labor force depend upon an analysis of the current population, projections of its future size and composition, and data on labor force participation for different segments of the population. Projections for the 1986-2000 period were made for more than 110 separate demographic groups because both the level and trends of participation vary considerably by age, sex, race, and Hispanic origin.

The projections. According to the moderate growth projections, the labor force is expected to expand by nearly 21 million, or 18 percent, during the 1986-2000 period. This represents a slowing down in both the number to be added to the labor force and in the rate of growth achieved in the previous 14-year period, 1972-86 (when the labor force increased by almost 31 million, or 35 percent). The rapid increase in the past was the result of the entrance into the labor force of the very large generation born between 1946 and 1964 (the baby boom) and the rapid increase in women's labor force participation rate. The projected rate of growth is slower than past rates because the number of young people old enough to enter the labor force will decline and the participation rate of women is projected to rise more slowly than in the past.

The labor force in the year 2000 will have relatively more minority and female workers and fewer young workers than it does today. Although the number of white men in the labor force will grow by 5 million, this is an increase of only 8.8 percent. Other groups will grow at much faster rates. Blacks, for example, are expected to increase 23 percent, adding 3.6 million members to the labor force. The number of women in the labor force is projected to rise 25 percent, up more than 13 million. The Asian and other races group (which includes American Indians, Alaskan Natives, Asians, and Pacific Islanders) is projected to grow 70 percent, adding nearly 2.4 million workers. The fastest growing segment of the labor force is the Hispanic group; it is projected to increase by 6 million, or more than 74 percent. Altogether, blacks, women, Asians and other races, and Hispanics are projected to account for more than 90 percent of all labor force growth. It should also be noted that many of the new workers, 23 percent, will be immigrants.

Today's labor force has fewer 16- to 24-year-olds than the labor force of 1979 did. This declime is projected to continue. In 2000, this group will number about 31.5 million, compared to 34 million in 1986 and almost 37 million in 1979. The number of the youngest workers (16- to 19-year-olds) will decline until 1992, when it will be about 7.4 million, and then rise to 8.8 million by 2000.

Implications. A slower growing labor force, along with the changes expected in its age, sex, and racial composition, has several important implications. For instance, the projected decline of jobseekers aged 16 to 19 offers an opportunity for lowering the unemployment rate for a group that historically has had a high rate. Employers have already turned to other sources of workers, such as immigrants or the recently retired, and this trend should continue. The effect of the decline may also be felt by others, for example, colleges and the military services, who have an interest in this age group; they will see the population from which they primarily seek students and recruits shrink throughout most of the 1986-2000 period. Also, producers of goods and services primarily targeted at 16- to 24-year-olds, from specialized magazines, cassette tapes, and clothing to motorcycles and compact discs, can expect their market to continue to decline.

The growing share of blacks and Hispanics in the projected labor force poses two important considerations. First, both groups have historically had higher unemployment rates than whites. Second, there is a disparity between their current occupations and the projectedd changes in occupational employment. Policymakers will need to focus on ensuring that all youth, particularly minorities, are given sufficient education or training to ease their entry into the job market and to equip them with the skills needed to advance to better jobs. While education alone is not the solution to all labor market problems, it is clearly an important ingredient in the solution.

The increasingly larger role that women are projected to play in the future labor force also has implications for the occupations they will enter. The occupational distribution of jobs still shows some disparities by sex, even though the differences have narrowed over the last decade. An opportunity exists, therefore, for future improvements.

The entrance of immigrants into the labor force also has important implications. To the extent that they do not speak English, do not have the skills needed for the fastest growing occupations, or remain concentrated geographically, they will have difficulty finding suitable employment at the same time that employers may have difficulty finding suitable workers.

Economic Growth

In order to project the size and composition of the Nation's GNP, economists build a model of the economy that correlates numerous economic factors. The 1986-2000 projections were based on a model made up of approximately 2,400 equations, driven by a set of 900 exogenous variables -- arithmetic values that can be manipulated by the equations.

The exogenous variables can be divided into three groups, according to the degree of certainty to which each can be determined. Reliable, generally accepted values are available for some variables, such as the future size of the population; Census population projections have proven to be highly accurate. Other variables involve policy decisions that, while subject to change, have remained fairly constant for many years; these include the amount of Federal transfer payments, the reponse of the monetary authority to economic growth, and the size of the Armed Forces. Finally, some exogenous variables do not follow predicatable relationships; these include the inflation rates in the economies of the major trading partners of the United States, the exchange value of the U.S. dollar, the energy prices.

The projections. The economy, as measured by real GNP, is expected to increase 40 percent during the 1986-2000 period. The annual growth rate, 2.4 percent, is only slightly less than the 2.5-percent annual rate during the 1972-86 period. This growth, which is so much greater than that of the labor force, will be due to increased productivity. Many factors account for the faster productivity growth incorporated in these projections: A more mature, educated, and experienced labor force; more stable enerrgy prices; and more favorable growth in the projectedd capital-labor ratio.

As it grows, GNP will change in composition. Among the most important changes are the following:

Stabilization of the share of consumer durable goods.

A modest increase in the share of GNP allocated to producers' durable equipment.

An increase in the export share of GNP, a reversal of the trend of the 1979-86 period.

A decline in the share of GNP devoted to defense expenditures, reversing the 1976-86 trend.

A continuation of the decline in the share of GNP devoted to State and local government spending, even though this spending, even though this spending will increase faster than it did in the 1979-86 period.

Implications. That much of the increase in GNP will be due to rising productivity rather than a growing labor force is favorable for the economy because increased productivity is the primary factor leading to gains in living standards. It should be noted, however, that projections of productivity are less certain than projections of the labor force.

The projected shifts in the structure of demand will change several other important relationships. The lack of growth of the younger age groups in the population and the resulting modest slowdown in houshold and family formation will affect expenditure patterns. This will be most noticeable in consumer durable goods, particularly in automobile purchases and new housing construction. Demographic changes will also have an impact on health care expenditures. The expected very rapid growth in the population over age 85, which is projected to increase more than four times as fast as the rest of the population, will be particularly important. Not only is this older group expected to keep health care expenditures among the most rapidly growing demand categories, but the distribution of health care purchases is expected to shift toward nursing homes and home health care expenditures. Another important change is the expected slowing of defense expenditures, which will affect industries such as aircraft, missiles, ships, and electronics that sell a high proportionl of their output to the U.S. Department of Defense.

Employment by Industry

The projections of the labor force and GNP enable economists to project employment for more than 200 industries. Before these projections can be made, however, considerable analysis is required. GNP must be broken into components of demand for goods and services, the output of each industry must be determined data on the productivity and employment of all industries must be compiled, and countless other analyses performed. Judgments and assumptions consistent with those made for the labor force and GNP must also be made. Some of these assumptions can be made with reasonable certainty; for example, the demand for education, a significant factor in State and local government demand, reflects the projected age structure of the population. Others, however, must be made concerning factors for which data are less reliable, such as the effect of technological developments on productivity and employment.

The projections. Employment is projected to rise by 21 million in the 1986-2000 period, as stated above. The increase -- more than 19 percent between 1986 and 2000, or 1.3 percent a year -- represents a slowing of employment growth compared to 1972-86, when it was 2.2 percent a year, reflecting, in large part, slower labor force growth. The projected slowdown in employment growth is not quite so dramatic when compared to the more recent 1979-86 period, during which nonagricultural wage and salary jobs grew 1.5 percent a year.

Service-producing industries will account for nearly all of the projected growth. A large increase in jobs is projected for both wholesale and retail trade, a continuation of past trends. Almost 4.9 million new wage and salary jobs are expected in retail trade and more than 1.5 million in wholesale trade. The finance, insurance, and real estate industry is projected to add more than 1.6 million jobs. However, this represents a considerable slowing in this sector when compared with the nearly 2.4 million jobs added over the previous 14 years. The service industries themselves will expand by more than 10 million jobs; health care services and business services will be important contributors as they continue to produce new services that greatly add to their overall demand and employment growth. Federal Government employment is expectedd to remain stable, but State and local governments are expected to expand by 1.5 million.

Among major groups in the goods-producing industries, the projections show increasing employment only in construction, in which employment will rise 890,000. Because of improved productivity manufacturing employment is projected to decline by more than 800,000 jobs during the 1986-2000 period even though output is expected to increase 2.3 percent a year. However, many manufacturing industries are projected to grow, some quite rapidly, despite the overall decline. It is important to note that manufacturing as a whole will still provide more than 15 percent of all wage and salary employment in the year 2000, accordidng to the projections. Employment gains are expected in the printing and publishing, drugs and pharmaceutical products, computers, plastics products, and instruments industries. Generally, the manufacturing industries expected to decline in employment have been declining for years; these include basic steel, leather goods, shoes, tobacco, some of the textile and most of the basic metal processing industries, and many of the food processing industries.

Implications. Because declines are projected for many industries -- including agriculture, mining, a significant number of manufacturing industries, and a few service industries -- the displacement of workers is expected to continue. Further, becuase of the geographic concentration of many of the declining industries, some localities will be hard hit.

The problem of jobs for displaced workers is one for which no easy solution has been found. Although much occupational mobility exists in our economy, it is concentrated among the young. Some displaced workers will obtain related jobs near their homes and maintain their standard of living, but others will require further training or education or need to relocate. Some of those displaced may not find similar employment anywhere, given the occupational shifts that are projected to occur between now and 2000, particularly if they lack the education and training required for the emerging jobs.

The expected continuation of employment changes in service-producing industries has several important implications. Firms in some of these industries are likely to be small. Because small firms have a higher turnover rate than large ones, they may be less likely to provide a lifetime employment opportunity for workers. Consequently, workers will need to be prepared through education and training for more frequent changes of employers and occupations. Also, many smaller firms are less able to provide benefits, such as health care, that large firms often provide. A favorable result of the increasing share of employment in the service-producing sector is that the effect of any future business cycle downturn is likely to be moderated because the variability of employment is lower in services than in goods-producing industries.

Another trend is developing that will, in all likelihood, require adjustments in the future. As the work force declines among the younger age groups and as women increasingly seek full-time work, a conflict emerges between industries that traditionally demand a large number of part-time workers and the economy's ability to supply those workers. This conflict could be resolved by those industries providing a larger share of full-time jobs, expanding self-service stores, or drawing older workers into the work force. If these changes do not occur, some seekers of full-time work might be able to find only part-time work employment. Another likely implication is a slowing, or possibly even a reversal, is the decline of average hours of work, because the share of part-time employment was the primary factor behind past declines in average hours.

Employment by Occupation

Projections of employment are made for more than 500 occupations; 225 are analyzed further and discussed in the Occupational Outlook Handbook. In order to project occupational employment, data are needed on the employment and staffing patterns of wage and salary workers by industry, slef-employment, and the employment of unpaid family workers. Changes in staffing patterns must, of course, be allowed for in the projections. Factors underlying change are numerous, inclduing technological developments affecting production and products, innovations in the ways business is conducted, modifications of organizational patterns, responses to government policies, and decisions to add new products and services or stop offering old ones.

The projections. The average growth projected for occupations, like that for industries, is 19 percent. Five occupational groups are projected ot grow faster than average during the 1986-2000 period: Technicians, service workers, professional workers, sales workers, and executive and managerial employees. Only two groups -- agriculture, forestry, and fishing workers and private household workers -- are projected to decline. Three groups are expected to grow more slowly than average: Precision production, craft, and repair workers; administrative support workers, including clerical; and operators, fabricators, and laborers.

Information is available for 1986 on the level of education attained by workers in the major occupational groups. A comparison of this information with projected employment indicates that the share of jobs in which most workers have at least 1 year of college will increase. The share of jobs in which most workers had completed high school will decline slightly; and the share of jobs which most workers had less than a high school education will decline more sharply.

Many people are primarily interested in the projected change in employment in particular occupations. Such information appears in "The 1988-89 Job Outlook in Brief," the next article in this issue of the Occupational Outlook Quarterly. People also have great interest in knowing which occupations are growing most rapidly, are adding the most jobs, or are declining the most. The accompanying talbes give this information. The occupations are drawn from the total of more than 500 occupations for which projections are made and therefore differ from lists that would be drawn from the 225 occupations in "The 1988-89 Job Outlook in Brief."

Implications. The occupational projections have important implications with regard to education. Generally, occupations in which current participants have the most education are proejcted to have the most rapid growth rates. Jobs are expected to continue to be available for those with only a high school education. However, persons with less than a high school education will find it more difficult to find a job -- particularly a job with good pay and chances for advancement -- than those with more education. The fact that large numbers of young people continue to drop out of high school clearly signals that an important problem remains. As pointed out earlier, blacks and Hispanics are disproportionately represented among those with less education and are projected to account for an increasing share of workers. Given this trend, the declining college enrollment of blacks, as indicated by recent data, is unfortunate.

Despite the faster than average employment growth for occupations requiring at least a bachelor's degree, the surplus of college graduates that began in the early 1970's is expected to continue through the end of the century. However, the balance between supply and demand for new college graduates is expected to improve considerably as we enter the 1990's, partly because of the decline of college graduates stemming from the shrinkage of the college-age population. The summer 1988 issue of the Occupational Outlook Quarterly will include an article updating the outlook for college graduates.

Occupations that are generally filled by young workers, such as food service, retail sales, and construction labor, are projected to continue to generate many jobs, and the declining number of young workers could offer an opportunity to improve the labor market for young people and other groups.

The occupational projections also carry with them the implication of change in the patters of occupational employment. Women and blacks have traditionally been highly concentrated in certain occupations. Although some improvements have occurred in the past decade, the future offers a chance for furhter improvement because employment growth is projected to be most rapid in occupations not traditionally filled by Hispanics, blacks, or, to some extent, women -- the groups that will provide most of the labor force growth.

These projections replace those for 1995 that were published in 1985 and 1986. The fall 1987 issue of the Occupational Outlook Quarterly presents as series of charts on the projections. Articles in the September 1987 issue of the Monthly Labor Review contain even greater detail on these subjects.

TABLE: Occupations With the Largest Job Growth, 1986-2000
 TABLE: Percent of
 TABLE: Change in projected
 TABLE: (Numbers in thousands) Employment employment, job
 TABLE: Occupation Projected, 1986-2000 growth,
 TABLE: 1986 2000 Number Percent 1986-2000

TABLE: Fastest Growing Occupations, 1986-2000
 TABLE: Change in Percent of
 TABLE: (Numbers in thousands) Employment employment, projected
 TABLE: 1986-2000 job
 TABLE: Occupation Projected, growth,
 TABLE: 1986 2000 Number Percent 1986-2000

TABLE: Fastest Declining Occupations, 1986-2000
 TABLE: (Numbers in thousands) Change in
 TABLE: Employment employment,
 TABLE: Occupation Projected, 1986-2000
 TABLE: 1986 2000 Number Percent

PHOTO: The effect of future downturns in the business cycle may be moderated because employment in the growing service-producing industries varies less than does employment in the goods-producing industries.

PHOTO: In the future, persons with less than a high school education will have more difficulty finding a job -- particularly a job with good pay and chances for advancement -- than those with more education.
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Title Annotation:Bureau of Labor Statistics forecast
Author:Kutscher, Ronald E.
Publication:Occupational Outlook Quarterly
Date:Mar 22, 1988
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