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The major trends.

The Major Trends

Continued economic growth, which carries with it the promise of resolving some of America's lingering labor force inequalities, characterizes the most recent Bureau of Labor Statistics projections of economic activity for the period from 1988 to 2000. By the year 2000, the labor force is projected to have added 18 million workers and the economy to have grown by more than 30 percent.

The Bureau prepares projections such as these every 2 years. These projections replace those for the 1986-2000 period that were published in 1987 and 1988. This article indicates the methods used to develop the projections, summarizes the projections for the economy, labor force, industrial employment, and occupational employment, and discusses some important implications of the projections. Articles in the November 1989 issue of the Monthly Labor Review contain greater detail on these subjects.

Developing the Projections

The projections BLS develops result from solving thousands of equations that model the behavior of the economy. Providing the data needed for the equations requires the analysis of innumerable statistics. The projections also reflect many judgments regarding the probable continuation of recent trends.

Some of these judgments concern general economic and social conditions. Among these are that broad social and educational trends will continue, that there will be no major war, and that work patterns will not change significantly. 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; this influences local government spending and the demand for teachers.

Other assumptions focus on more than 200 numerical variables that must be defined before the equations in the model can be solved. They can be divided into three groups, according to the degree of certainty with 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 response of the Federal Reserve System's Board of Governors to economic growth, and the size of the Armed Forces. Finally, some variables do not follow predictable 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, and energy prices.

In addition to specifying variables before the model is solved, analysts determine that certain projections must fall into a particular numerical range if they are to be reasonable. For example, a range is set for the unemployment rate, 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 gross national product (GNP), real disposable income, the civilian labor force, civilian employment, real output per person, and the unemployment rate. By specifying alternatives for these, BLS can generate different scenarios, or projected levels of activity for the target year.

For the 1988-2000 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. The variations in the projections due to the use of different target ranges are significant. Projected real GNP in the year 2000 differs by $1.1 trillion for the low- and high-growth scenarios. Total employment ranges from 127 million in the low-growth projections to 144 million in the high-growth projections. In the rest of this article, as in "The 1990-91 Job Outlook in Brief," which follows, only the moderate-growth projections are discussed.

The Economy

The projected rate of growth in real GNP for the 1988-2000 period is 2.3 percent per year, which will result in more than a 30-percent expansion of the economy over the period. This is a slower rate of GNP growth than the 2.9-percent annual rate that prevailed during the previous 12-year period, 1976-88, primarily because labor force growth--a major factor in changing the GNP--is projected to slow appreciably. Productivity--a second important catalyst--is projected to increase at a slightly faster rate than the average experienced over the 1976-88 period. The net effect of these two offsetting factors is that growth of real GNP will slow during 1988-2000, but not as much as it would if productivity were to increase less.

Among the major categories of GNP, foreign trade is projected to change the most compared with long-term historical trends. From 1976 until 1986, imports grew faster than exports. At the same time, both of the components of foreign trade--exports and imports--increased faster than overall GNP. However, exports have grown faster than imports since 1986, reversing the trend. The projected rate of growth for foreign trade continues this very recent trend--primarily because of a slower projected growth for imports.

Another GNP category projected to break with the trend of the 1980's is the share of GNP devoted to defense expenditures. An increasing share of GNP was spent on defense over the 1979-86 period. An absolute decline is projected for real defense expenditures for 1988-2000.

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.

In the 1980's, labor force growth slowed considerably compared to the 1970's. The projection for the 1988-2000 period is for 16-percent overall growth in the labor force. This contrasts sharply with the 26.5-percent growth over the 1976-88 period, but it is only modestly slower than the rate of labor force increase over the 1980-88 period.

Two factors account for most of the slowdown. First, the baby-bust generation, which is now entering the labor force, is much smaller than the baby-boom generation, which entered the labor force in the 1960's and 1970's. Second, the very rapid growth in the participation rate of women in the labor force is projected to slow, generally because it is already very high. Despite this slowdown, women will continue to increase their share of the labor force. Women were only 40 percent of the labor force as recently as 1976; by 2000, they are projected to be 47 percent. This change will occur because the rate of growth of women in the labor force is projected to continue at nearly double that for men and because more men will be retiring, since they are more numerous than women in the labor force's older age groups.

In terms of the age distribution of the labor force, some important compositional changes are also expected. Most importantly, the share of the work force for 16-to 24-year-olds is projected to be smaller in 2000 than in 1988, declining from 19 percent to 16 percent, because this age group is expected to continue to decline absolutely until the mid-1990's--when it will experience a turnaround. The next oldest group, 24- to 34-year-olds, will also decline in size during the period; after growing 64 percent from 1976 to 1988, it will be at its largest in 1990 and then decline 12 percent by 2000. At the other end of the age spectrum, the share of workers age 55 and over is expected to remain relatively constant. Thus, workers in the prime working ages--25 to 54 years old--will be the only group to increase its share in the labor force.

Another projected change in the composition of the labor force is growth in the shae held by minorities. Blacks, who made up 11 percent of the work force in 1988, are projected to grow to 12 percent in the year 2000, reflecting their relatively rapid rate of growth. Hispanics, currently 7 percent of the labor force, are projected to increase even more rapidly than blacks and to reach 10 percent of the labor force in 2000. Asians and other races, who constitute 3 percent of the work force today, are projected to grow to 4 percent in 2000.

Employment by Industry

For the total economy, employment changes over the long term mirror closely the aggregate demographic changes. Thus, the rapid labor force growth of the 1970's and the slower rate of increase in the 1980's are also found in the overall rate of employment growth of the U.S. economy. For 1988-2000, employment is projected to expand at an annual rate of 1.2 percent. The expected increase for the entire period is 15.3 percent or 18.1 million jobs.

Continuing the long-term trend from goods- to service-producing industries, most of the U.S. job growth during the 1988-2000 period is expected to be in the service-producing sector--which will account for 16.7 million of the 18.1 million increase in jobs. Two industries in this sector--business services and health services--are very significant both in terms of their rates of growth and the absolute number of jobs expected to be added. Other important service-producing industries contributing to the projected job growth are retail trade and education. Retail trade is expected to generate more jobs than either health or business services, although its rate of growth is not projected to match that of either of those industries. The number of retail trade jobs is projected to reach almost 23 million by 2000, accounting for almost 1 out of every 5 wage and salary jobs in the economy. Further, many self-employed workers are found in retail trade as well, adding 1.9 million to the total in that industry in 2000.

Occupational Employment

At the aggregate level, of course, the rate of growth is the same for industries and occupations. Among the major occupational groups projected to show faster than average rates of growth over the 1988-2000 period are technical and related support occupations; professional specialty occupations; and executive, administrative, and managerial occupations; most workers in these groups are highly skilled. Two other occupational groups are also expected to show faster than average growth--service occupations and marketing and sales occupations. Operators, fabricators, and laborers will grow by less than 1 percent over the 1988-2000 period, and agriculture, forestry, and fishing occupations will decline by nearly 5 percent by 2000.

Many people are primarily interested in the projected change in employment for particular occupations. This information appears in "The 1990-91 Job Outlook in Brief." People also have great interest in knowing which occupations are growing most rapidly or are adding the most jobs. The accompanying tables give this information; because these occupations are drawn from the more than 500 for which projections are made, not all of them are among the 250 in the "Brief."

Emerging Issues

The projections raise several important issues. These include the relationship of productivity growth to expected future increases in our standard of living and our global competitiveness; the extent of the educational preparation needed for the types of jobs our economy is increasingly generating, particularly for minorities, who represent a growing share of our labor force; and the possibility of a general education shortfall. Another important issue emerges from an analysis of the occupations currently held by minorities and the projected rates of growth for these various occupational groups. That analysis shows that blacks and Hispanics currently are overrepresented in those occupations with the slower rates of projected growth, while they are underrepresented in occupations projected to have the faster rates of growth. Some ramifications of these topics are discussed below. For a more detailed analysis of the implications of the projections, see "Projections: Summary and Emerging Issues," in the November 1989 Monthly Labor Review.

One of the major issues facing the U.S. economy is productivity growth. Productivity has grown much more slowly in the past 10 to 15 years than in earlier periods. This has had an important effect on the rate of growth of real GNP and real disposable personal income. The prospects for productivity growth depend on many things--such as spending on research and development, spending on capital equipment, utilization of our productive capacity, and the cost of energy--but, clearly, the education and training of the labor force are important. We can only remain competitive through the participation of highly skilled and highly educated workers. Consequently, the potential imbalance between the educational preparation of those entering the labor force and industry's requirements raises an important concern.

The projections indicate that the occupations that require the most education will generally grow faster than occupations with the lowest educational requirements. The difference between the educational requirements for some jobs and the educational proficiency of the population as a whole has led some to conclude that we have a shortage--or a potential shortage--of educated workers, particularly college graduates. This shortage is best looked at separately in terms of the college-educated labor force and those who have other postsecondary training.

The latest BLS analyses of the supply and demand for college-educated workers show a significant easing of the competition that characterized the job market for college graduates from the early 1970's to the present. It should be noted, however, that the narrowing gap between he supply and demand for college graduates does not rule out some problems with the number of college graduates prepared for particular occupations. The rapid growth of jobs for technicians with postsecondary training below the bachelor's degree level may indicate a potential gap between supply and demand for three reasons. First, the proportion of high school graduates who go on to college has grown, rising nearly 10 percentage points over the last decade; some of these college students would have been candidates for technical training in past years. Second, a substantial proportion of young people do not complete high school and are, therefore, unqualified for further training. Third, some individuals who have completed high school may not qualify for postsecondary training because of difficulties with mathematics, English, or other basic subjects.

Another frequently discussed issue about the American economy is the reported "shortage" of entry level workers, particularly in geographic areas that currently have low unemployment rates. The difficulty experienced by employers in hiring entry level workers has resulted primarily from a very sharp drop in the number of workers age 16 to 24 entering the labor force. This decline is expected to continue until at least the mid-1990's. Thus, institutions and firms that recruit primarily from this age group are going to be competing for a declining number of young people. This is expected to have an impact on colleges and universities, the military, and industries that recruit young entry level workers.

Blacks, Hispanics, and Asians and other races are all projected to increase their share of the U.S. labor force over the 1988-2000 period. Blacks and Hispanics currently are overrepresented in occupations with the slowest rates of projected growth, while they are underrepresented in occupations projected to have faster growth rates. At the same time, the shortfall of educational achievement mentioned above is particularly pronounced among minorities. As a consequence, the question arises as to the extent to which minorities are preparing for occupations likely to represent good job opportunities. Given the lower completion rate from high school for blacks and Hispanics, it is evident that many are not being well prepared for the advanced education or training necessary in many of the rapidly growting occupations. Jobs are available for those without a high school education, but entry into the better paying jobs is severely limited for such workers.

The low labor force participation of black men is an additional element of the problem of assuring the highest possible involvement of the whole population. The labor force participation rates for black men age 25 to 54 have only recently shown any evidence of leveling off after a long-term decline. In 1988, the labor force participation rate for black men was still nearly 6 percentage points lower than for white men.

An analysis of the projected growth of employment by industry reveals other aspects of problems with educational attainment and the supply of workers. For example, health services and business services, which are both projected to have significant overall job growth over the 1988-2000 period, require many workers with specialized education or training, highlighting again the need for workers with sufficient educational preparation. Further, health services includes several occupations that women predominantly hold. In some of these occupations--nursing, for example--achieving the projected growth will require a sharp increase in the proportion of women enterting them or a large increase in the number of men entering them.

Despite overall growth, the projections also show some industries and occupations declining in employment. Individuals in declining industries or occupations who lose their jobs are often unable to find new ones that suit them. Further, they often do not have the training and education needed for the jobs that are opening up in their geographic areas. The potential for displacement adds to the need to ensure that workers are trained and educated for the types of jobs that will be most in demand.

All these issues are interconnected. The lagging rate of productivity growth is linked to the need for our economy to remain competitive, which demands the availability of a highly skilled and educated work force. Education and training requirements for future jobs increase the concern that many who will enter our labor force, particularly minorities, will not meet job requirements with regard to educational preparation. For us to attain the brighter future inherent in the projections requires dealing with these issues not just separately but as interrelated problems.

Ronald E. Kutscher is Associate Commissioner, Office of Employment Projections, BLS.
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Title Annotation:Outlook 2000
Author:Kutscher, Ronald E.
Publication:Occupational Outlook Quarterly
Date:Mar 22, 1990
Previous Article:Projected change in state populations, 1990-2000.
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