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Outlook 1990-2005: major trends and issues.

During the next 15 years, the American labor force--and therefore the American economy--will grow more slowly than it has in the recent past, according to the latest projections from the Bureau of Labor Statistics. Even allowing for slower growth, however, the labor force will reach 150 million and the gross national product (GNP) will exceed $5.8 trillion in 2005.

These projections are from the moderate alternative of the three scenarios developed by the Bureau, which prepares projections such as these every 2 years. These projections for the 1990-2005 period replace those for 1988-2000 that were published in 1989 and 1990. This article gives a few highlights from these projections for the economy, labor force, industrial employment, and occupational employment and discusses some of their more important implications.

Greater detail on these subjects is available in several articles in the November 1991 issue of the Monthly Labor Review. The fall 1991 issue of the Occupational Outlook Quarterly includes numerous charts and tables related to these new projections and a forthcoming article, "The 1990-2005 Job Outlook for College Graduates," in the summer 1992 Quarterly will also be based on this set of projections.

Economic Trends

The projected annual growth in real GNP from 1990 to 2005 is 2.3 percent. This compares with an annual growth of 2.9 percent in the 1975-90 period. Thus, the projections show a pronounced slowing in the rate of growth. Almost all of this slowdown, however, results from the slower labor force growth projected. It is only 1.3 percent per year, compared to the 1.9-percent rate of the 1975-90 period.

Naturally, several components of GNP are projected to grow at about the same rate as GNP as a whole, including personal consumption expenditures, investment, and State and local government. Federal non-defense expenditures are projected to grow even more slowly than the average rate. Expenditures for National defense are projected to decline 1.2 percent per year, a significant change from this component's performance during the 1975-90 period, when it grew slightly faster than the GNP as a whole. In contrast, both imports and exports are projected to grow more rapidly than GNP as a whole, as they did from 1975 to 1990. However, exports are projected to grow at a rate of 4.5 percent per year, while imports are projected to grow 3.7 percent per year; in the earlier period, imports grew somewhat more rapidly than exports.

Labor Force

The slow-down in growth of real GNP is a function of the expected slow-down in growth of the labor force during the next decade and a half, as noted earlier. But, while the labor force as a whole is projected to grow more slowly than in the recent past, the decline of one significant group--young people--is expected to end. In the 1975-90 period, the number of 16- to-24-year olds fell 6.0 percent; this group is projected to grow 13.2 percent in the 1990-2005 period. While the number of youth in the labor force will continue to decline for a few years, it will gradually increase after 1996. By 2005, the group is projected to be 2.8 million larger than it was in 1990. Consequently, the worry about a lack of entry level workers in the late 1980's and early 1990's should ease considerably, if not disappear entirely.

Women, blacks, Hispanics, and Asian and other races will all increase their share of the labor force between 1990 and 2005, although non-Hispanic white men will still be the largest single group, constituting 38.2 percent of the labor force in 2005. One group is growing even more rapidly than it did in the 1975-90 period: Workers 55 years and older. This group will grow larger mainly because the youngest members of the baby-boom generation will start to enter it after 2000.

The growth of minority groups will continue to be a notable feature of the changing labor force in this period. Blacks, who represented 10.7 percent of the labor force in 1990, are projected to account for 13.0 percent of entrants. Hispanics, who constituted 7.7 percent of the labor force in 1990, are projected to account for 15.7 percent of entrants. And Asians and other races, who were 3.1 percent of the labor force in 1990, are nearly 6.0 percent of the expected entrants. Offsetting these trends is the projection for white non-Hispanics, who are expected to represent nearly 82 percent of those who leave the labor force and only 65.3 percent of those who enter it during this period.

Employment by Industry

The Bureau projects employment in 2005 to be 147.2 million, 24 million higher than it was in 1990. This reflects an average growth rate of 1.2 percent a year during the projection period. Almost all of the projected growth is expected to occur in the service-producing industries.

The projected rate of growth is just over half that of the previous 15 years; in other words, the average industry is expected to grow about half as fast as it did between 1975 and 1990. But several industry sectors are expected to grow less than half as fast as they did in the 1980's and late 1970's.

Construction, for example, is expected to have less than one-half the rate of growth in employment it did in the previous 15 years, a period when it grew about as fast as average. This sharp slowdown reflects the availability of some kinds of structures--office buildings, for example--that were overbuilt during the 1980's and the expectation that building of such structures will grow slowly in the future as past overbuilding is absorbed. Manufacturing, despite some bright spots--such as printing and publishing, medical instruments, plastic products, and furniture--is projected to continue to decline in employment, although output will rise. Finance, insurance, and real estate is expected to grow as fast as average, but this is less than half as fast as it grew in the previous 15 years. Adjustments in financial institutions will affect their growth and office automation will slow employment growth in insurance companies.

Government, on the other hand, is projected to increase it's rate of employment growth compared to the recent past. It grew much less than average during the 1975-90 period and is projected to grow only slightly less than average in the 1990-2005 period. This reflects heavy demands on State and local governments to provide for the education of a growing population of young people. The need to repair or replace bridges, roads, and other components of the transportation infrastructure will also spur the growth of employment in State and local governments.

In analyzing expected industrial job growth from 1990 to 2005, it is difficult not to concentrate on the service-producing sector and, within that, some of the components of the services industry division. This division is expected to contribute 11.5 million of the 23.2 million wage and salary jobs--or very nearly 50 percent. By comparison, it contributed 42.6 percent of nonfarm wage and salary job growth over the 1975-90 period. Health services, which was 5.2 percent of nonfarm wage and salary jobs in 1975 and had increased to 7.0 percent of employment by 1990, is projected to account for 8.5 percent of total employment in 2005. Business services is another rapidly expanding industry. It accounted for 2.1 percent of employment in 1975 and 4.7 percent in 1990. In 2005, it is expected to have 5.6 percent of the nonfarm wage and salary jobs.

Employment by Occupation

At the overall employment level, the change in employment by occupation is identical to employment change by industry. Naturally, most occupations will grow faster or slower than that. Detailed information on the rates of change for individual occupations and for major groups appears in the article, "The 1990-2005 Job Outlook in Brief." It should be noted here, however, that occupations in the fastest growing group now tend to have workers with higher educational attainment. On the other hand, the occupational groups projected to decline or to be among the slowest growing currently have relatively more workers who do not have education beyond high school.

Because women, blacks, and Hispanics will all increase their share of the labor force, it is interesting to look at the extent to which they are now represented in the occupations projected to grow the fastest or slowest. The data show a somewhat mixed picture for women: They are well represented in several of the fastest growing occupational groups (health assessing and treating occupations, health technologists, health service occupations, and personal services), but they are also overrepresented in some slow growing or declining occupations (financial records processing occupations; secretaries, stenographers and typists; and computer equipment operators). For blacks and Hispanics, the data are less favorable: Hispanics are not well represented in any of the occupational groups projected to grow rapidly; and blacks and Hispanics are overrepresented in several of the slow growing and declining groups.

Issues Raised by the Projections

The projections have important implications in several areas. We have already looked at the relative distribution of women, blacks, and Hispanics among different occupational groups, but other subjects to consider are the range of the three alternatives; the changing sex and age mix of the labor force; and the educational preparation needed for the jobs expected during 1990-2005--especially with regard to positions for high school dropouts, the educational attainment of minority groups, and the extent to which schools are preparing young people for the jobs of tomorrow.

The range of the three alternatives.

The three alternative sets of projections developed by BLS depict a range of possibilities that would lead to significantly different economic situations in 2005. The BLS projections are not designed to explore how to achieve the better of these alternatives. They illustrate how seemingly slight changes lead to dramatically different outcomes. The GNP growth rate, for example, ranges from 1.7 percent annually in the low-growth scenario to 2.9 in the high-growth scenario. This compounds to a difference of 22 percent in 2005, which is more than a trillion dollars of GNP.

The differences among the alternative scenarios are particularly significant with regard to employment. Different ranges for unemployment, immigration, and labor force participation rates in the high- and low-growth scenarios yield a difference of 17 million in employment in 2005. As only one illustration of how such a difference affects a single industry, consider manufacturing. In the high-growth alternative, it is projected to increase it's employment, although only a modest 78,000. But under the low-growth alternative, it is projected to decline by nearly 2.4 million.

Labor force diversity.

While the alternatives developed in these projections show vastly differing U.S. economies in 2005, some issues transcend the alternatives. One of these, which has already been touched on, is the increasing diversity of the U.S. labor force. The composition of the labor force over the 1990-2005 period is expected to continue to shift toward a somewhat higher percent for women because many more men than women will leave the labor force and almost equal numbers of men and women will enter it.

With regard to the age distribution of the labor force, one concern of recent years--the number of young people entering the labor force--should become moot. In the late 1980's, there were widespread discussions about the consequences of a possible shortage of entry level workers. Certainly, the number of entrants age 16 to 19 was lower than it had been in 1980 by almost 2 million. These numbers will soon start rising again, however, and should return to a level nearer that of the early 1980's, reaching 8.4 million in 2000 and 8.8 million in 2005.

Educational preparation and employment.

For several decades, occupations that require more education have been growing faster than occupations requiring less education. Looking over these projections, the occupations growing the fastest have, on balance, a greater proportion of workers with higher levels of education and the slower growing or declining occupations have more workers with less education. This clearly does not mean that everyone must have a 4-year college degree to find a job. Nevertheless, an increasingly important difference is emerging in the opportunities available to people, depending on their educational preparation. When manufacturing was an increasing source of employment, job opportunties were available that offered the possibilities of access to higher paying jobs for those with less than a high school education. But manufacturing employment peaked at 21.0 million in 1979, had fallen to 19.1 million by 1990, and is projected to decline another 600,000 by 2005. Global competition, new technology, and other forces have also restructured employment within manufacturing, so that even manufacturing jobs are now more likely to require postsecondary education than they once were. The job market prospects for those with less than a high school education have clearly changed for the worse in the last decade.

Of course, this doesn't mean the lack of any jobs for high school dropouts in the future. The list of occupations projected to have extensive job growth show many for which they could quality. Further, many openings are projected in numerous occupations to replace workers who leave the labor force or transfer to another occupation. But high school dropouts are more likely to obtain jobs that are low paying, offer little advancement potential, and are projected to be declining or growing very slowly in the coming decade and a half. One concrete indication of the difficulties high school dropouts face is that their risk of unemployment is higher, as this tabulation for 25-34 year olds illustrates:
 Years of school Unemployment rate,
 completed 1990
 Total 5.0
Fewer than 12 years 12.0
12 years 6.3
1 to 3 years of
 college 4.2
4 years or more of
 college 2.5

The employment/population ratio--the proportion of an age group in the labor force who are employed--also shows that 25-34 year olds with more education are more likely to be working. The differences between groups of women, particularly those without a high school diploma compared to those with one, are especially striking:
 Years of school Employment
 completed population ratio,
 Men Women
 Total 89.0 69.5
Fewer than 12 years 78.3 43.0
12 years 89.2 67.8

1 to 3 years of

college 91.1 74.7

4 years or more

of college 93.5 82.2

The more promising growth rates for occupations requiring relatively more education also have significant implications for Hispanics and blacks, who taken together will account for more than a fourth of all entrants to the labor force between 1990 and 2005. Attainment of high school education is significantly lower than average for Hispanics. It is also somewhat lower than average for blacks. And both of these groups are also more likely to be currently employed in occupations for which growth is projected to be significantly less and for which earnings are currently lower. These two groups will be better able to compete in the future labor force if the challenge of achieving greater education is met.

Another issue with regard to education and the projections is the extent to which schools are now preparing young people for the jobs of tomorrow. The latest results of the mathematics tests conducted for the National Assessment of Educational Progress by the Department of Education's National Center for Education Statistics provides an indication of the importance of this issue. The following tabulation shows the mathematics proficiency of the country's 12th-graders in 1990: Level Percentage of students at or

above skill level

200 100 percent Skill: Simple additive reasoning and problem solving with whole numbers 250 91 percent Skill: Simple multiplicative reasoning and two-step problem solving 300 46 percent Skill: Reasoning and problem solving involving fractions, decimals, percents, elementary geometry, and simple algebra 350 5 percent Skill: Reasoning and problem solving involving geometry, algebra, and beginning statistics and probability

Judging from the results of this assessment, only a very small percent of 12th-graders are operating at the highest level and fewer than half are able to handle the kind of mathematics traditionally taught in the first couple of years of high school. Yet many occupations require at least this level of proficiency in mathematics. These include not only science and engineering but also many of the occupations in health care and the highly skilled blue-collar trades such as tool and die maker. Thus, a very small pool of young people seem to have either the mathematical skills needed or to be prepared for the advanced education and training required for many of the occupations found among those projected to grow most rapidly 1990-2005.
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Author:Kutscher, Ronald E.
Publication:Occupational Outlook Quarterly
Date:Mar 22, 1992
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