Thursday, July 17, 2014

Growth and Replacement, A Look At Employment Projections

By Katie Bass, Project Associate. 

In community and economic development, we are constantly trying to look into our crystal ball to prepare communities for changes in consumer preferences, technological advances, and business practices or organizational structures. We try to see what industries are growing and which are declining so that communities can best prepare their workforce through educational attainment and workforce training. The Bureau of Labor Statistics (BLS) publishes ten-year employment projections every two years to aid policy makers, career advisers, economic developers, and educational stakeholders in order to appropriately adjust recruitment efforts of companies and training program development.

There are two key indicators that, together, offer insight into growing professions. One, clearly, is the growth rate of the occupation which estimates how many jobs are going to be created or lost in a certain field over the next ten years. A number of factors can influence demand for certain occupations. Changing demographics and consumer preferences can increase the demand for certain services, while a technological change can create demand for a new service or product and conversely cause the decline in demand for another product. The changing demographics of the population as the percentage of older Americans grows, affects demand for health care services. As we saw during the recession, health care was one of the few sectors to post positive annual growth rates. Other changes, such as technological advances, can create rapid changes in the labor market. Look simply at the devastating effect that technology had on the job market in the postal industry. The number of postal service mail carriers is projected to decline by 26.8 percent by 2022. Similarly, my co-worker, Evan, blogged about the change in employment at businesses related to photography and how it impacted consumer preference as technology advanced, from one-hour photos to Facebook photo albums and cell phone cameras.

The other key indicator – job openings due to growth and replacement needs – measures the number of job openings from retirements and/or people leaving the occupation, in addition to the number of jobs created. This estimate reveals areas of potential weakness in a community due to the impending retirement of baby boomers that may be overlooked if you only examine the growth rate. It also includes those occupations that are typically short-term and “stepping-stones” as employees move along their career path. Occupations such as bartenders and waiters/waitresses are popular for college students because of their flexible schedules; however, once they graduate, they leave that occupation (hopefully) never to return. Tellers potentially act as an entry-level position for finance careers. As the employee gets their degree and moves up the corporate ladder, they vacate that teller position permanently. Regardless of whether the employee is a retiree or simply moving to a new position, between 2012 and 2022, replacement needs are expected to account for 67.2 percent of job openings, or roughly 34 million of the projected 50.6 million job openings.

Take for example, air traffic controllers. Employment as an air traffic controller is expected to increase by only 1.4 percent, or 400 jobs. However, over the next ten years there will be nearly 12,000 job openings as air traffic controllers retire (approximately one-third of total employment in the occupation). Recall the 1981 illegal federal strike by air traffic controllers and Reagan’s unprecedented firing of around 11,000 strikers – at the time there were roughly 17,500 total air traffic controllers working for the FAA. Reagan further placed a life time ban on the strikers from ever working as controllers for the FAA again, and as a result, thousands of new employees were hired and trained to be air traffic controllers. The FAA has an age distribution unlike many occupations causing a vicious cycle of large numbers of air traffic controllers retiring at the same time and subsequently large training classes to fill the imminent need for new employees. Roughly one-fifth of air traffic controllers are over the age of 55 and will need to be replaced in the coming years.

Occupations that require post-secondary education or long-term training are the most disconcerting with regards to workforce sustainability. They require the most amount of time to train and educate and can lead to potential skills gaps or strains on the market. The number of registered nurses, for example, is projected to increase by 19.4 percent, which translates to just over half a million jobs. However, there will be nearly an equal number of job openings that stem from replacement needs as older registered nurses retire. As such, there has been an increased effort in training registered nurses nationwide to fill both newly created jobs and those soon-to-be vacated jobs.

The Wall Street Journal recently published an article highlighting the shortage of truck drivers in the United States. A prolonged shortage of truck drivers would affect multiple industries and cause strains on the market. In the past a person could enter this career at 18, however requirements have changed and currently a person must be at least 21 years old to have an interstate commercial driver’s license. Further, some insurance companies are placing even higher age requirements to then insure a driver. The lack of interest in the career for those old enough to work as a truck driver and competition from employers in construction or energy businesses has contributed to fewer people entering the career, which causes a concern for those companies that don’t have a pool of applicants to replace the impending retirees.

Understanding and preparing for growth and replacement needs or a change in requirements, consumer preferences, or technological advances is crucial to having a sustainable workforce. Communities across the country are stepping up and implementing programs to best prepare their local workforce for careers in occupations where they will be able to find a job.

The growing need for a stronger local workforce and a national demand for technically trained employees led the community in Grand Island, Nebraska and the Grand Island Public Schools (GIPS) to come together to create a state-of-the-art career and technical training center – the Career Pathways Institute (CPI). Working with Central Community College, freshman and sophomore high school students can take introductory courses at CPI without charge and then apply their junior and senior years to earn college credits towards an associate’s degree. The programs offered range from welding to business and look promising to help fill the community’s need for trained workers by sparking the students’ interest in the career early on and providing the resources to get the training and education in it.

Career Pathways Institute Classroom
Image Source: Market Street Services

New York City partnered with IBM to create Pathways in Technology Early College High School (P-TECH) with a “9-14 School model.” Students attend up to grade 14, and upon graduation obtain both a high school degree and an associate’s degree in applied science in either computer systems technology or electromechanical engineering technology, in addition to gaining experience. IBM, for its part, will benefit with having a qualified pool of talent for its future workforce.

The growing, newly created jobs and those that are needed for replacement of retirees are two important components when analyzing the sustainability of a workforce. Going beyond the growth rate and numbers and understanding your local communities’ demands and national trends is necessary to prepare your residents and future residents with the most opportunities for an improved quality of life. Whether it’s the welders and agribusiness professionals in Grand Island or the engineering technicians and software specialists in New York, increasing the wealth of your community by identifying problems early, giving residents the tools to succeed, and getting them qualified for the future supply of employment opportunities is what makes the job for those of us working in economic and community development so rewarding.