May 20, 2005
The Outlook for the Labor Market
When you study economic statistics for a living, you can lose perspective on a lot of things. Take the labor market, for instance. In any given month, millions of American workers are hired and fired, promoted, demoted, and transferred. Some drop out of the labor force to have children or to go to school, while others retire altogether or begin new careers. When the smoke clears after all of those changes, the statisticians in Indiana and in Washington tally it up and tell us how many more people are working today than had jobs last month.
Those of us who keep tabs on the economy watch this jobs report like a hawk. Its importance as perhaps the most timely and comprehensive gauge of our aggregate economic performance is undeniable. Job growth fuels income growth, and with it the confidence that prosperity can continue.
Yet the monthly ritual of counting heads in America’s business places and tallying the result misses so much of what is going on in the labor market as to be almost laughable. The kinds of things that we do for a living, and the ways in which markets reward us for them, are changing before our eyes. And those who are preparing to enter the workplace for the first time should know it.
Much has been written and said in Indiana about the kinds of jobs that are disappearing in communities throughout the state. But much less is said, or understood, about the kinds of jobs that are taking their place.
The Bureau of Labor Statistics in Washington regularly projects employment and occupational demand for the national economy well out into the future. According to the BLS statisticians, between the years 2002 and 2012, the U.S. economy will create about 21.3 million net new jobs. What kind of jobs will they be?
The answer resembles a two-sided coin. On one side, we have the highly paid professional and related occupations, whose growth is the fastest of any occupational group. This includes engineers, lawyers, accountants, teachers and consultants. These are white collar occupations with high skill and educational requirements. One out of every three new jobs will be in this category.
The other side of the coin represents the other end of the earnings spectrum – service occupations. Health care support, protective services, and a wide range of lower skilled personal service jobs will account for about 1 in every 4 net new jobs created in the economy of the next decade.
What’s largely left out are many of the middle-paying occupations, particularly in goods-producing industries. But the relative decline of production, transportation, and material handling occupations doesn’t mean there won’t be job openings there in the future. Many manufacturing and construction employers are wondering where the next generation of skilled die makers, bricklayers, and millwrights will come from when their aging workforce retires, and it’s easy to understand why.
But the big message coming out of the labor market is about the rewards to skill. Six of the ten occupations adding the most jobs in the coming years will require an associates or bachelors degree. That’s not surprising in an economy where nine of the ten fastest growing occupations are either health care or computer/information technology related.
The two-headed nature of job growth, where both the highest and the lowest paying jobs experience the fastest growth, may not be good for our political and social stability. But it’s a reality that shouts a very simple message that every young person should hear – if you want to get ahead, you’d better get a skill.
About the Author
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