w orkforce conditions & demographic challenges to growth
DESCRIPTION
W orkforce conditions & demographic challenges to growth. Presented to the Consensus Economic Forecasting Commission & Revenue Forecasting Commission July 23, 2013 Glenn Mills Chief Economist Center for Workforce Research Maine Dept. of Labor [email protected] 207-621-5192. - PowerPoint PPT PresentationTRANSCRIPT
Workforce conditions & demographic challenges to growth
Presented to theConsensus Economic Forecasting Commission
& Revenue Forecasting CommissionJuly 23, 2013
Glenn MillsChief Economist
Center for Workforce ResearchMaine Dept. of Labor
[email protected] 207-621-5192
Labor force & unemployment
Unemployment rates continue to trend lower…
Jan
08
Ap
rJu
lO
ctJa
n 0
9A
pr
Jul
Oct
Jan
10
Ap
rJu
lO
ctJa
n 1
1A
pr
Jul
Oct
Jan
12
Ap
rJu
lO
ctJa
n 1
3A
pr4%
5%
6%
7%
8%
9%
10%
U.S. Maine
Un
em
plo
yme
nt
Ra
tes
(Se
aso
na
lly-A
d-
just
ed
)
…a rising share of employed population is the primary reason Maine unemployment is lower. Nationally, the share
of employed population is not up; lower labor force participation is the reason unemployment is down.
Jan
08
Ap
rJu
lO
ctJa
n 0
9A
pr
Jul
Oct
Jan
10
Ap
rJu
lO
ctJa
n 1
1A
pr
Jul
Oct
Jan
12
Ap
rJu
lO
ctJa
n 1
3A
pr58%
59%
60%
61%
62%
63%U.S. Maine
Em
plo
yme
nt
to P
op
ula
tion
Ra
tio(S
ea
son
ally
-Ad
just
ed
)
Jobs & Wages
The gradual upward job trend continues…
Jan
08
Ap
rJu
lO
ctJa
n 0
9A
pr
Jul
Oct
Jan
10
Ap
rJu
lO
ctJa
n 1
1A
pr
Jul
Oct
Jan
12
Ap
rJu
lO
ctJa
n 1
3A
pr590,000
595,000
600,000
605,000
610,000
615,000
620,000
625,000
Benchmarked Job CountEstimates (to be revised March 2014)
No
nfa
rm P
ayr
oll
Job
s(S
ea
son
ally
-ad
just
ed
)
…government declines continue topartially offset private growth
Jan
08M
ayS
epJa
n 09
May
Sep
Jan
10M
ayS
epJa
n 11
May
Sep
Jan
12M
ayS
epJa
n 13
May
485,000
495,000
505,000
515,000
525,000
99,000
101,000
103,000
105,000
107,000
Private Job CountPrivate Estimates (to be revised March 2014)Government Job CountGovernment Estimates (to be revised March 2014)
Priv
ate
Jobs
Gov
ernm
ent J
obs
Job gains…total wages paid?(adjusted for inflation)
20
00
.12
00
0.3
20
01
.12
00
1.3
20
02
.12
00
2.3
20
03
.12
00
3.3
20
04
.12
00
4.3
20
05
.12
00
5.3
20
06
.12
00
6.3
20
07
.12
00
7.3
20
08
.12
00
8.3
20
09
.12
00
9.3
20
10
.12
01
0.3
20
11
.12
01
1.3
20
12
.12
01
2.3
20
13
.1
560,000
580,000
600,000
620,000
$4.75
$5.25
$5.75
$6.25
Jobs (left scale)Total Wages (right scale)
Wag
e &
Sal
ary
Jobs
Tot
al W
ages
(in
Bill
ions
of
2011
Q1
$)
Maine had a lower rate of job loss during the downturn and a slower job recovery (as well as personal income and GDP)
Jan
08
Ma
yS
ep
Jan
09
Ma
yS
ep
Jan
10
Ma
yS
ep
Jan
11
Ma
yS
ep
Jan
12
Ma
yS
ep
Jan
13
Ma
y93%
94%
95%
96%
97%
98%
99%
100%
101%
U.S. Maine
Ind
ex,
Ja
nu
ary
20
08
= 1
00
Recent news coverage has prominently announced we rank near the bottom among states in growth, but provided no context as to why this is the case. The age structure of our population is seriously constraining growth.
Demographic headwinds &
the job outlook
The population in their peak years of labor force participation and earnings is declining, limiting job
and economic growth
16-19 20-24 25-34 35-44 45-54 55-64 65+15%
25%
35%
45%
55%
65%
75%
85%
-60,000
-40,000
-20,000
0
20,000
40,000
60,000
80,000
Projected Population Change (right scale)Labor Force Participation Rate 2012 (left scale)Employment to Population Ratio 2012 (left scale)
Labo
r For
ce P
artic
ipati
on &
Empl
oym
ent t
o Po
pula
tion
Rate
s
Age Group
Proj
ecte
d Po
pula
tion
Chan
ge 2
012-
2020
Compared to before the recession, the share of employed population is up for those age 55+ and down for younger
groups. The largest declines occurred among the youngest.
16-19 20-24 25-34 35-44 45-54 55-64 65+10%
20%
30%
40%
50%
60%
70%
80%
90%
-30%-20%-10%0%10%20%30%40%50%60%70%80%90%
-10% -6
%
-6% -3%
-4%
3% 5%
-8% -3
%
-5% -2%
-3%
3% 4%
Difference 2012 from Avg 2000-07 Difference 2012 from Avg 2000-122012 Avg 2000-07Avg 2000-12
Empl
oym
ent t
o Po
pula
tion
Ratio
s
Based on recently published population projections, what would total employment be if the employment to population ratio for each age group recovered to:
-the 2000 to 2012 average by 2015?
-the 2000 to 2007 average by 2020?
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
0
25
50
75
100
125
150
175
200
225
250
Age 16 to 19
Population Employment LFPR E-Pop
Labo
r For
ce P
artic
ipati
on &
Empl
oym
ent t
o Po
pula
tion
Rate
s (li
nes)
Empl
oym
ent &
Pop
ulati
on (i
n th
ousa
nds)
2012 Emp: 26,000@avg E-Pop: 2015 +2,000; 2020 +3,000Avg monthly earnings: $541
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
0
25
50
75
100
125
150
175
200
225
250
Age 20 to 24
Population Employment LFPR E-Pop
Labo
r For
ce P
artic
ipati
on &
Empl
oym
ent t
o Po
pula
tion
Rate
s (li
nes)
Empl
oym
ent &
Pop
ulati
on (i
n th
ousa
nds)
2012 Emp: 55,000@avg E-Pop: 2015 +8,000; 2020 +7,000Avg monthly earnings: $1,553
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
0
25
50
75
100
125
150
175
200
225
250
Age 25 to 34
Population Employment LFPR E-Pop
Labo
r For
ce P
artic
ipati
on &
Empl
oym
ent t
o Po
pula
tion
Rate
s (li
nes)
Empl
oym
ent &
Pop
ulati
on (i
n th
ousa
nds)
2012 Emp: 100,000@avg E-Pop: 2015 +8,000; 2020 +16,000Avg monthly earnings: $2,675
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
0
25
50
75
100
125
150
175
200
225
250
Age 35 to 44
Population Employment LFPR E-Pop
Labo
r For
ce P
artic
ipati
on &
Empl
oym
ent t
o Po
pula
tion
Rate
s (li
nes)
Empl
oym
ent &
Pop
ulati
on (i
n th
ousa
nds)
2012 Emp: 130,000@avg E-Pop:2015 -6,000; 2020 -8,000Avg monthly earnings: $3,614
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
0
25
50
75
100
125
150
175
200
225
250
Age 45 to 54
Population Employment LFPR E-Pop
Labo
r For
ce P
artic
ipati
on &
Empl
oym
ent t
o Po
pula
tion
Rate
s (li
nes)
Empl
oym
ent &
Pop
ulati
on (i
n th
ousa
nds)
2012 Emp: 165,000@avg E-Pop:2015 -5,000; 2020 -24,000Avg monthly earnings: $3,897
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
0
25
50
75
100
125
150
175
200
225
250
Age 55 to 64
Population Employment LFPR E-Pop
Labo
r For
ce P
artic
ipati
on &
Empl
oym
ent t
o Po
pula
tion
Rate
s (li
nes)
Empl
oym
ent &
Pop
ulati
on (i
n th
ousa
nds)
2012 Emp: 133,000@avg E-Pop:2015 -2,000; 2020 -3,000Avg monthly earnings: $3,855
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
20
45
70
95
120
145
170
195
220
245
270
Age 65+
Population Employment LFPR E-Pop
Labo
r For
ce P
artic
ipati
on &
Empl
oym
ent t
o Po
pula
tion
Ratio
(lin
es)
Empl
oym
ent &
Pop
ulati
on (i
n th
ousa
nds)
2012 Emp: 40,000@ projected E-Pop:2015 +7,000; 2020 +21,000Avg monthly earnings: $2,590
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
0
125
250
375
500
625
750
875
1,000
1,125
1,250
Age 16+
Population Employment LFPR E-Pop
Labo
r For
ce P
artic
ipati
on &
Empl
oym
ent t
o Po
pula
tion
Rate
s (li
nes)
Empl
oym
ent &
Pop
ulati
on (i
n th
ousa
nds)
2012 Emp: 650,000@avg E-Pop:2015 +12,000; 2020 +13,000Avg monthly earnings: $3,256
Even if there had not been a recession employmentwould likely be lower today than in 2007
20002002
20042006
20082010
20122014
20162018
2020620
640
660
680
700
EmploymentProjected based on 2000 to 2007 avg E-Pop
Empl
oym
ent (
in th
ousa
nds)
A series break in level from the 2000 to 2010decennial Census populationas the benchmark is the primary reason for the bumpin projected employment.
This finding is based on applying the average employment to population ratio that prevailed for each age group in the eight years before the downturn to the population in that cohort to estimate what employment would have been, other things equal. Once we have recovered to “full employment,” baby boomers aging out of the labor force will take employment lower. Absent significant in-migration of working-age population, we may not see 2007 levels of employment again.
The population age structure will make it difficult to meet the CEFC’s April jobs forecast, especially after 2015
Jan
00
De
cN
ov
Oct
Se
pA
ug
Jul
Jun
Ma
yA
pr
Ma
rF
eb
Jan
11
De
cN
ov
Oct
Se
pA
ug
Jul
Jun
Ma
yA
pr
Ma
r580,000
590,000
600,000
610,000
620,000
630,000
Nonfarm Payroll Jobs
CEFC April Forecast
Alternative Based on Population and Participation by Age Group
The age structure of the population islimiting earnings as well as job growth
If there were no change in average earnings among age groups, total wages paid would rise modestly through 2015 and then decline through 2020. This is a simple simulation based on possible employment growth in each group. Labor markets are more dynamic than this, of course, but it is impossible to ignore the fact that growth is concentrated among those outside their peak years of productivity and earnings.
Jobs will continue to shift toward human capital intensive functions, many of which cannot be filled by young people who have not yet accumulated the required education or experience.
2015 2020
Total $3,256 $46 -$268
16-19 $541 $12 $18
20-24 $1,553 $137 $120
25-34 $2,675 $236 $473
35-44 $3,614 -$239 -$319
45-54 $3,897 -$215 -$1,032
55-64 $3,855 -$85 -$128
65+ $2,590 $200 $600
Change in total wages paid from 2012 implied by avg earnings times change in employment (in millions)
Age Group
Average Monthly
Earnings
AppendixRecent trends in payroll jobs
Highlights:• Sectors near all-time highs:
• Healthcare & social services, professional & business services, and educational services. These sectors tend to be human capital intensive, often requiring specialized education, knowledge, or skills.
• Leisure & hospitality, which tends to be labor intensive.
• Jobs in sectors that make, move, or sell physical products generally have stabilized, but there is no significant growth:• Manufacturing, construction, wholesale &retail trade, and
transportation, warehousing & utilities.
• All three levels of government continue to shed jobs.
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
1354
55
56
57
58
59
60
Professional & Business Services Jobs(seasonally adjusted in thousands)
Benchmarked Job Count
Estimates (to be revised March 2014)
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
1318
19
20
21
22
Educational Services Jobs(seasonally adjusted in thousands)
Benchmarked Job CountEstimates (to be revised March 2014)Likely Revisions
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
1397
98
99
100
101
102
Healthcare & Social Assistance Jobs(seasonally adjusted in thousands)
Benchmarked Job Count
Estimates (to be revised March 2014)
Likely Revisions
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
1358
59
60
61
62
63
64
65
Leisure & Hospitality Jobs(seasonally adjusted in thousands)
Benchmarked Job CountEstimates (to be revised March 2014)Likely Revisions
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
1323
25
27
29
31
Construction Jobs(seasonally adjusted in thousands)
Benchmarked Job CountEstimates (to be revised March 2014)Likely Revisions
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
1348
50
52
54
56
58
60
Manufacturing Jobs(seasonally adjusted in thousands)
Benchmarked Job Count
Estimates (to be revised March 2014)
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
1318
19
20
21
22
Wholesale Trade Jobs(seasonally adjusted in thousands)
Benchmarked Job Count
Estimates (to be revised March 2014)
Likely Revisions
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
1316
17
18
19
20
Transportation, Warehousing & Utilities Jobs(seasonally adjusted in thousands)
Benchmarked Job CountEstimates (to be revised March 2014)Likely Revisions
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
1380
82
84
86
88
Retail Trade Jobs(seasonally adjusted in thousands)
Benchmarked Job CountEstimates (to be revised March 2014)Likely Revisions
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
1330
31
32
33
34
Financial Activities Jobs(seasonally adjusted in thousands)
Benchmarked Job CountEstimates (to be revised March 2014)Likely Revisions
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
1314
16
18
20
Federal Government Jobs(seasonally adjusted in thousands)
Benchmarked Job CountEstimates (to be revised March 2014)Likely Revisions
TemporaryCensus
Jobs
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
1326
27
28
29
State Government Jobs(seasonally adjusted in thousands)
Benchmarked Job CountEstimates (to be revised March 2014)Likely Revisions
Growth in the University and Community College Systems has largely offset declines elsewhere in state government.
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
1358
59
60
61
62
63
Local Government Jobs(seasonally adjusted in thousands)
Benchmarked Job CountEstimates (to be revised March 2014)