The economy in 1995.
The picture of the 1995 economy developed by BLS is based on an analysis of the 1982 economy and past trends. Assumptions concerning possible trends through 1995 also play a major role in determining the projections. Those assumptions deal with such factors as inflation, productivity, the labor force participantion rate of women, and over 100 other variables. Three different sets of assumptions were used by BLS in order to arrive at high, low, and moderate rates of change.
BLS prepares new medium-range projections like these every 2 years. The program produces projections for five areas: (1) The labor force; (2) aggregate economic performance; (3) final industry demand and total industry production; (4) industry employment; and (5) occupational employment. This article describes the method used in making projects for each area and presents some highlights of the results for the moderate scenario, The Labor Force
The number of young workers will actually decline in the coming years, according to the new projections. This represents a major change in trends from the 1960's and 1970's, when this group grew faster than any other in the labor force. One result of the decline is that employers--including the Armed Forces, the single largest employer of young men--may have increasing difficulties finding young workers.
The labor force projections are themselves based on other projections. The Bureau of the Census prepares projections for the population as a whole, and BLS projects the labor force participation rate for various groups, such as young people and women over the age of 55. These rates are derived through an analysis of the actual participation of the groups from 1962 to 1981; modifications are made if change is deemed likely--as is the case for women age 20 to 44, women age 45 and over, and men age 55 and over. The participation rate for the various groups (there are 64 of them all together) are then applied to the population projection.
The labor force projections portray a group of workers very different from that of the recent past because of the aging of the baby-boom generation and the continued, but slower, rise in participation among women age 20 to 44. Young, new workers will have a smaller share of the labor force and the average age of workers will rise. Both the number and the percentage of prime-age (25-to-54-year-old) workers will increase. Blacks and other minorities are also expected to increase their share of the labor force over the period. GNP and Industries
The projected gross national product (GNP) for 1995 is over $2 trillion. (Start spending a million dollars a day right now and you won't run through that much money in 6,000 years.) In order to make these projections, economists built a model of the economy that correlates various economic factors with each other. The model used, developed by Chase Econometrics Associates, has almost 700 variables, such as the size of the labor force, income, investment in homes, consumption, government expenditures, changes in business inventories, and foreign trade. Assumptions are specified for 110 of the variables; the other variables change as a result of the correlations built into the model. The results are analyzed for reasonableness and consistency.
Depending on the assumptions made for such variables as those stated, the GNP in 1995 would be $2.1 to 2.3 trillion--in 1972 dollars. Under the moderate scenario, employment would increase by 25 million jobs between 1982 and 1995, the unemployment rate declining from 9.7 percent to 6.0.
The largest component of GNP is consumer spending, which accounted for more than 65 percent of the whole in 1982. Other major components are private investment, foreign trade, State and local government, and Federal government. Consumer spending, in turn, is divided among purchases of durable goods, nondurable goods, and services.
Purchase of durables--especially autos and auto parts and household applicances--are projected to grow strongly. About 12 million new cars are projected to be sold in 1995. And recovery of the housing industry is projected to fuel demand for household appliances. In addition, a new boom in household appliances and furnishings, much like the growth of television in the 1950's, will feature consumer electronics. Purchases of home computers and supplemental equipment, such as printers and software, are foreseen to grow strongly in the next decade. Other new electronic products, such as compact audiodiscs, video casette recorders, and sophisticated electronic telephone systems, are also expected to become increasingly important.
Consumer purchases of nondurables--such as food and clothing--will account for a smaller share of GNP in 1995 than they did in 1982. Drugs and medical sundries is the only category of nondurables expected to show rapid growth. Many categories will decline, and expenditures in restaurants, which grew fairly rapidly in the 1970's, will increase only 1.1 percent a year.
Purchases of services have been taking larger and larger shares of the family budget for some time; the trend is projected to continue. Consumers are expected to buy substantially more telephone and telegraph service, including cable TV; purchases of these services are projected to rise 5.2 percent each year between 1982 and 1995. Expenditures for medical services will grow at an even greater rate, in part because of the increase in the number of people over 65; the projected rate of increase in expenditures is 8 percent.
The portion of GNP devoted to investment includes purchases of equipment and construction of commercial and residential buildings. The computer and peripheral equipment industry is projected to absorb about 20 percent of all investment in equipment in 1995, up from just 8 percent in 1977. Developments such as laser systems, data communications, and electronic mail will result in rapid growth in investment in radio and telephone equipment also. Under the conditions of the projected economy, both commercial and residential construction would recover strongly from their weak performance in the mid-1970's.
Foreign trade accounts for a very small portion of the GNP because imports and exports largely cancel each other out. The five largest export industries, will be computers, food and feed grain, airplanes, electronic components, and motor vehicles. The fastest growing are telephone and telegraph apparatus, communications, floor coverings, furniture and fixtures, and computers.
Government expenditures will grow slowly and the government's share of GNP will decline. State and local expenditures will show little growth as a result of the completion of the highway construction program, the slowdown in Federal grants outside of health, slower growth in the school-age population, and diminished citizen expectations from government. Federal expenditures are projected to rise about 1 percent a year, well below the GNP's 3 percent annual increase; defense will account for most of the purchases. Employment by Industry
Many industries are projected to show very rapid growth in empolyment over the next several years, but much of the growth will represent a return to prerecession levels.
The projections of industry empolyment are based in part on the projected GNP discussed above. They also depend on projections of productivity by industry and measures of change in the number of hours worked. Among the assumptions that enter into the projections are that the number of hours worked per week will continue its long-term decline and that productivity will increase at the rate it did in the late 1960's and early 1970's. Specific assumptions are also made with regard to the effects of rising energy costs, the increased affordability of electronic components, the changing age structure of the population, and many other factors. Employment projections, based upon a broad range of economic information, are actually made for 372 industries.
According to the projections, manufacturing industries, contrary to popular reports, will still be an important source of new jobs during the next decade--led by such industries as computers and instruments. Nevertheless, despite the strength of manufacturing, service-producing industries will continue to generate most of the new jobs in the country. Strong growth in employment is projected in such industries as medical care, business services, and professional services. Occupational Employment
The growth of particular occupations depends on economic developments in general, the growth of the industries where those occupations are concentrated, and the effects of technology. Thus, the projections of occupational employment rely on the industrial projections discussed above. More information about the development of occupational projections appears in the introduction to "The Job Outlook in Brief," which appears elsewhere in this issue of the OOQ. "The Brief" however, deals only with occupations that are analyzed for the Occupational Outlook Handbook. The following lists are based on projected changes in more than 400 occupations.
Growth can be viewed in two ways: rate and absolute numbers. In terms of growth rate, the five fastest growing occupations, according to the new projections, are computer service technician, legal assistant, computer systems analyst, computer programmer, and computer operator. A longer list would show more occupations from the medical, financial, and business service industries.
The following 20 occupations have the highest projected growth rates:
Computer service technician
Computer systems analyst
Office machine repairer
Physical therapy assistant
Civil engineering technician
Peripheral EDP equipment operator
Medical insurance clerk
Electrical and electronics technician
Banking and insurance credit clerk
Mechanical engineering technician
Plastics compression and injection mold machine operator
In terms of numbers of new jobs, a very different list emerges. Just 40 occupations will account for about half of all new jobs between now and 1995, according to the projections. Leading the list are building custodian, cashier, secretary, general office clerk, and sales clerk. For the first time in many years, kindergarten and elementary school teacher appears among the occupations accounting for the most growth. The increase in the school-age population will require half a million additional teachers by 1995. The other occupations on the list tend to be very large ones that are not easily simplified by technology.
The following 40 occupations have the largest projected employment growth:
General office clerk
Waiter and waitress
Kindergarten and elementary school teacher
Nursing aide and orderly
Technical sales representative
Accountant and auditor
Supervisor of blue-collar workers
Guard and doorkeeper
Food preparation and service worker in fast-food restaurants
Electrical and electronics technician
Licensed practical nurse
Computer systems analyst
General utility maintenance repairer
Nontechnical sales representative
Stockroom and warehouse stock clerk
Delivery and route worker
Short-order cook, specialty and fast-food
Technology is expected to have a significant impact on many occupations, however, slowing the growth of some and stimulating the growth of others. For example, the increased use of word processing equipment will slow the growth of typists, and the introduction of industrial robots will affect the employment of welders, production painters, and material moving occupations. But expansion of high technology industries will spur the growth of scientists, engineers, and technicians, as well as computer specialists. For a more detailed discussion of high technology industries and occupations, see "High Technology and Employment Growth" elsewhere in this issue of the OOQ.
Occupations decline not only as a result of changes in technology but also as the population changes or other factors decrease the demand for the goods and services produced by a group of workers. The following 20 occupations have the largest projected rate of decline:
Shoemaking machine operative
Aircraft structure assembler
Central telephone office operator
Private household worker
College and university faculty member
Postmaster and mail superintendent
Rotary drill operator helper
Data entry operator
Railroad brake operator
Faller and bucker
Farm owner and tenant
Typesetter and compositor
Butcher and meatcutter
Note that because of the need to replace workers who leave an occupation, some of these occupations will still have numerous openings in the next decade.
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|Publication:||Occupational Outlook Quarterly|
|Date:||Mar 22, 1984|
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