Labor Market and Demographic Analysis: A National Picture of Short-term Employment Growth by Skill

Transcription

1 URBAN INSTITUTE M Street NW Washington, DC Labor Market and Demographic Analysis: A National Picture of Short-term Employment Growth by Skill Pamela Loprest & Josh Mitchell Unemployment and Recovery Project May 2012

2 Unemployment and Recovery Project This w orking paper is part of the Unemployment and Recovery project, an Urban Institute initiative to assess unemployment s effect on individuals, families, and communities; gauge government policies effectiveness; and recommend policy changes to boost job creation, improve w orkers job prospects, and support out -of-w ork Americans. This w ork is funded in part by the Center for Community Change. The authors gratefully acknow ledge the research assistance of Janice Park. Copyright May 2012 The view s expressed are those of the author and do not necessarily reflect those of the Urban Institute, its trustees, or its funders. Permission is granted for reproduction of this document, w ith attribution to the Urban Institute.

3 Labor Market and Demographic Analysis: A National Picture of Short-Term Employment Growth by Skill Pamela Loprest and Josh Mitchell Executive Summary It is almost three years since the official end of the Great Recession the worst economic downturn since the Great Depression. Yet there are only limited signs of genuine labor market recovery. Employment remains well below its pre-recession 2007 peak even though employment has grown over the past five quarters at about the same rate as it grew following past recessions. The unemployment rate continues to exceed 8 percent, and many economists, including the Congressional Budget Office, predict it will remain above 8 percent for the next several years. The Federal Reserve recently forecast the unemployment rate at between 6.8 and 7.7 percent at the end of Despite this dreary national outlook, there is some cause for optimism. Between the fourth quarter of 2010 and fourth quarter of 2011, the US experienced a net total increase of 1.7 million jobs and forecasters project additional increases over the next few years. 1 Exhibit 1 depicts the slow but improving recovery through 2011 following the dramatic fall in employment during the Great Recession, where the economy lost over 8.4 million jobs. Economists project employment to grow from 2012 to 2017 at an average rate of roughly 1.8 percent per year. 1 Current and historical employment and employment by industry numbers in this report are from the Current Employment Statistics (CES) data published by the Bureau of Labor Statistics. Industry projections are from Moody s Analytics. The CES covers non-farm payroll employment. Excluded groups include the self-employed, domestic, and unpaid workers. See Appendix for further details. A National Picture of Short-Term Employment Growth by Skill Page 1

4 Exhibit 1. Total Nonfarm Employment (thousands) 150, , , , , , , Source: BLS Current Employment Statistics and Moody's Analytics Over the next five years, employment growth is projected to be slightly higher for jobs that require both the lowest and highest levels of education, although job growth is modest to slow across the board. The prospects for low-skill workers in the short-term are best in the leisure and hospitality sector and the professional and business services sector, with additional jobs appearing in construction as that sector continues to recover. A companion portrait of unemployed workers highlights that a disproportionate number of those seeking work are low-skilled. In addition, low-skilled unemployed are more likely to be young, workers of color, or have a health problem that interferes with work than similarly skilled employed or higher-skilled unemployed workers, factors that are likely to make finding work in a slack labor market even more challenging. National Employment Picture: Long, Slow Recovery During the Great Recession, some sectors were hit harder than others, and during the recovery, sectors are regaining employment at different rates. Exhibit 2 shows employment for selected industry sectors since the beginning of the recession. Employment in 2007 is normed to 1.0 across industries allowing for easier comparisons of growth in employment across industries starting from this base year. 2 The solid lines show actual employment and the dotted lines 2 The graphic shows only eight of thirteen industries for ease of viewing (the legend read from left to right lists industries from highest to lowest in 2017). The level of employment varies substantially across all these industries. A National Picture of Short-Term Employment Growth by Skill Page 2

5 show projections into the future. The construction industry has been hit the hardest, followed by the manufacturing industry. The only sectors with employment increases in 2011 since the beginning of the recession (over 1.0 in the graphic) are health services (private sector), leisure, and hospitality. Projections for future employment growth over the next 5 years show improvements in all sectors, but even with continued growth, construction, manufacturing, wholesale, and retail trade are not projected to regain prior 2007 employment levels by Exhibit 2. Change in Employment since Health Services Leisure and Hospitality Professional and Business Services Total Government Financial Activities Wholesale and Retail Trade Manufacturing Construction Source: BLS Current Employment Statistics and Moody's Analytics To understand what sectoral growth means for job seekers and to put employment recovery rates in context, we examine the present distribution of employment in the economy. Exhibit 3 shows the percent of total non-farm employment by broad industry category in Despite continuing declines in employment, total government (combined federal, state, and local which includes teachers, firefighters, and police officers) is the largest industry sector, accounting for 16.7 percent of employment. Wholesale and retail trades also remain large, accounting for 15.4 percent of all employment. The next two largest sectors are professional and business The level of employment and net employment change numbers for all thirteen industries from 2007 to 2011 are reported in Appendix Exhibit A.1. A National Picture of Short-Term Employment Growth by Skill Page 3

6 services (13.3 percent), and health services (12.7 percent). Manufacturing is 8.9 percent of employment and construction is 4.2 percent of employment. 3 Exhibit 3. Distribution of Employment by Industry 2011 Total Government Wholesale and Retail Trade Professional and Business Services Health Services Leisure and Hospitality Manufacturing Financial Activities Construction Other Services Transportation and Utilities Educational Services Information Mining 5.8% 4.2% 4.1% 3.7% 2.5% 2.0% 0.6% 10.2% 8.9% 13.3% 12.7% 16.7% 15.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% Source: BLS Current Employment Statistics. Jobs can also be grouped into occupations which reflect job activities and duties. Using a fairly high level of aggregation, occupations may fall within one of twenty-two groups. 4 Within industries, the mix of occupations differs. For example, construction occupations are obviously a large part of the construction industry, but there are also management and administrative jobs within that industry. 5 Exhibit 4 shows the distribution of national employment in 2011 by occupations. The largest occupation categories in 2011 were office and administrative support (accounting for 17.9 percent of employment) and sales occupations (accounting for 11.9 percent of employment). 3 In our categorization, we include public school education employees (including teachers and higher education instructors) in the education sector. The standard CES categorization includes these workers in the government sector. 4 Occupation data come from the BLS Occupational Employment Statistics. See appendix for further details. 5 Appendix exhibit A.2 shows industry by occupation employment for A National Picture of Short-Term Employment Growth by Skill Page 4

7 Exhibit 4. Distribution of Employment by Major Occupation 2011 Office and Administrative Support Sales and Related Food Preparation and Serving Related Transportation and Material Moving Installation, Maintenance, and Repair Business and Financial Operations Education, Training, and Library Construction and Extraction Management Personal Care and Service Computer and Mathematical Building and Grounds Cleaning and Production Arts, Design, Entertainment, Sports, and Protective Service Healthcare Practitioners and Technical Architecture and Engineering Community and Social Service Healthcare Support Legal Life, Physical, and Social Science Farming, Fishing, and Forestry 7.7% 7.2% 6.1% 5.7% 5.6% 5.1% 5.1% 4.0% 3.9% 3.4% 3.4% 2.9% 2.4% 2.2% 1.8% 1.0% 1.0% 0.9% 0.8% 0.1% 11.9% 17.9% 0.0% 5.0% 10.0% 15.0% 20.0% Source: BLS Current Employment Statistics & Moody's Analytics Employment and Skill Levels A key dimension for understanding the impact of the slow recovery on different groups of workers is the skill-level requirements of both the jobs that were lost and the jobs that are being created. The recession affected workers of various skill levels differently. Low-skill workers lost a higher percentage of jobs in the recession than higher skilled workers. Employment for those with less than a high-school education fell by more than 10 percent over the course of the recession. 6 Employment losses were lower as skill-level increased 9.1 percent for high school, 3.9 percent for those with some college, and roughly flat for those with a college degree or more. 6 These numbers are based on the BLS employment situation numbers, table A-4 for December 2007 to December 2009, the low point of employment following the start of the recession. See P. Loprest and A. Nichols (2011) Less Educated Continue to Lose Jobs in Recovery The Urban Institute for more information A National Picture of Short-Term Employment Growth by Skill Page 5

8 The skill requirements associated with newly-created jobs are one indication of the likely demand for workers at different skill levels. We use educational attainment here as a measure of skill level. 7 In national employment data we do not observe the educational level requirements of jobs, but the education level of those who are employed in the jobs. During a recession, some individuals work in jobs requiring a lower level of education than they have. This means the education levels of those holding jobs in the recession is likely a bad proxy for education requirements of the jobs. To get a better measure of the education level requirements of jobs, we use pre-recession information from 2007 on the distribution of education levels of the workers within individual occupations and industries. This will also include some individuals with education levels above and below the actual job requirements, but we expect this bias to be far less than the bias during a recession or early recovery period. Exhibit 5 shows the distribution of jobs of differing skill level requirements across different industries. Exhibit 5. Educational Attainment Requirement by Industry No HS Degree HS Degree Some College Bachelor's Degree Advanced Degree Construction Educational Services Financial Activities Health Services Information Leisure and Hospitality Manufacturing Mining Other Services Professional and Business Services Total Government Transportation and Utilities Wholesale and Retail Trade Source: Authors' calculations using BLS Current Population Survey, 2007 The required skill levels of jobs vary substantially across industries. For example, while 24 percent of construction jobs require less than a high school degree and 41 percent require a high school degree, in the government sector, 27 percent of jobs require a college degree and 22 percent an advanced degree. 7 Although education is only one dimension of the skill requirements of jobs, it is the only measure available in national data sets that also allow us to track industry and occupation employment. A National Picture of Short-Term Employment Growth by Skill Page 6

9 The skill requirements in this exhibit reflect the different requirements for specific occupations and the underlying distribution of occupations within each industry. 8 For example, in the construction industry most of the jobs are in the construction and extraction occupation. Consequently, the distribution of skill requirement for this occupation (22 percent less than high school, 44 percent high school, 20 percent some college, 4 percent college, and 1 percent advanced degree) is closely aligned to the skill requirements for the industry. Employment in the health services industry is spread across more occupations primarily management, business and finance; professional and related; services; and office and administrative occupations. Each of these occupations within health services has different educational requirements, which summed together give industry educational requirements. Job Growth in the Near Term What does the slow recovery mean for job growth by sector and for workers of different skill levels moving forward? It is typical after a recession that some sectors recover more quickly than others. In this past recession, the collapse of the housing market led to huge declines in construction employment, and continuing foreclosures and declining home prices have contributed to the slow recovery in that sector. Meanwhile, the large healthcare sector continued to grow faster than other sectors over the past year. We examine what forecasts of employment by sector over the next five years mean for industry/occupation growth and skill requirements. Our national employment forecast by industry for 2012 through 2017 is based on data from Moody s Analytics, Inc. Net employment growth over this period is projected to be 11.3 percent. The measure net employment growth provides information on new job creation that is over and above any job destruction occurring in a given industry. 9 This is not the same as the total number of new jobs created over the period. The US economy is dynamic, even in this sluggish recovery; firms go out of business and new firms open. If there were no change in employment level for an industry over a year (no net employment growth), new jobs would still have been created and others destroyed over the time period, just in a balanced number. We apply our knowledge of the distribution of occupations within industries and the distribution of educational attainment within occupations to arrive at job projections by skill level. Exhibit 6 shows employment in 2011 and projected employment in 2017 by industry. 8 A complete industry occupation distribution of requirements by education level is in the appendix. See Exhibit A.3. 9 The net employment change is also different from job openings which includes job turnover, that is, someone leaving a job and a new person filling that job. A National Picture of Short-Term Employment Growth by Skill Page 7

10 25,000 20,000 15,000 Exhibit and 2017 Employment Level by Industry (000s) (change in employment ) +1,801 +3,447 +2,977 +2, ,000 5, Employment Level 2017 Employment Level Source: BLS Current Employment Statistics & Moody's Analytics The industry sectors with the largest projected net employment increases are professional and business services and health services. These sectors are also the largest projected job gainers in terms of growth rates. In contrast, employment gains in manufacturing, mining, wholesale and retail trade, and transportation and utilities will be much more modest. Using these industry forecasts, we compute employment in 2011 and 2017 by occupation and change in employment, illustrated in exhibit 7. Projected net employment over this period and growth rates are also shown in Exhibit 8. The largest number of net jobs gained by occupation over the next 5 years is in the office and administrative support occupation with over 2.6 million net jobs expected to be added. 10 This is followed by sales occupations adding over 1.2 million jobs. The projected growth rate across occupations varies considerably. The occupations with the highest growth rates are education, personal care services, and community and social services, all growing at over 16 percent. It is worth noting that occupations with the greatest projected net employment gains or the highest growth rates do not necessarily pay the highest wages. Exhibit 8 also shows the median hourly wage by occupation for 2010 (the most recent data available). The occupation with the greatest net increase in jobs (office and administrative support) pays on average $14.77 per hour, which is lower than the median hourly wage in We assume here that the occupational distribution within industries remains the same in 2017 as in This is a reasonable assumption over a 5 year period. However, it is possible that coming out of a major recession the nature of how goods and services are produced within industries may shift and as such the skill and occupation mix will also shift. Any such shift that had already happened by 2011 is captured. A National Picture of Short-Term Employment Growth by Skill Page 8

11 of $ High growth in lower paying jobs is in line with research showing that in the early part of the recovery low-paying jobs have dominated employment growth. 11 Exhibit and 2017 Employment Level by Major Occupation (employment change 000s) Office & Administrative Support Sales & Related Food Prep. & Serving Related Transp. & Material Moving Install., Maintenance, & Repair Business & Financial Operations Education, Training, & Library Construction & Extraction Management Personal Care & Service Computer & Mathematical Building & Grounds & Maint. Production Arts/Design/Ent./Sports, & Media Protective Service Healthcare Practitioners & Tech. Architecture and Engineering Community & Social Service Healthcare Support Legal Life, Physical, & Social Science Farming, Fishing, & Forestry , , ,231 +2, ,000 10,000 15,000 20,000 25,000 30,000 Source: BLS Current Employment Statistics & Moody's Analytics 2011 Employment Level 2017 Employment Level Using our measures of how skill requirements vary across industry and occupation categories we can translate these forecasts into employment gains for jobs of different skill levels. 11 The Good Jobs Deficit: Low-Paying Jobs & Falling Wages Dominate Growth Since 2010 National Employment Law Project, July A National Picture of Short-Term Employment Growth by Skill Page 9

12 Exhibit 8. Net Employment Change and Growth by Major Occupation, Occupation Net Employment Change Growth Rate Median Hourly Wage Office and Administrative Support +2,656, % $14.77 Sales and Related +1,230, % $11.72 Food Preparation and Serving Related +325, % $9.02 Education, Training, and Library +1,199, % $21.97 Installation, Maintenance, and Repair +1,166, % $19.29 Construction and Extraction +988, % $18.79 Business and Financial Operations +929, % $29.17 Transportation and Material Moving +891, % $13.66 Personal Care and Service +852, % $9.92 Management +815, % $43.96 Computer and Mathematical +662, % $35.44 Arts, Design, Ent., Sports, and Media +571, % $20.61 Production +510, % $14.58 Building & Grounds & Maintenance +445, % $10.81 Protective Service +424, % $17.63 Healthcare Practitioners and Technical +338, % $28.12 Architecture and Engineering +248, % $33.95 Community and Social Service +235, % $18.89 Healthcare Support +160, % $11.90 Life, Physical, and Social Science +133, % $28.14 Legal +128, % $35.86 Farming, Fishing, and Forestry +10, % $9.44 Source: BLS Current Employment Survey and Moody's Analytics Net Employment Increase by Skill Levels Exhibits 9 to 13 show where net employment growth in 2012 is forecast by selected industry sectors for different skill level requirements. 12 Exhibit 9 shows that the largest net gains in employment for jobs that require less than a high school education will be in the leisure and hospitality sector. The second largest growth will be in the professional and business services sector. 12 Appendix exhibit A.4 presents net employment change numbers by industry and skill level. A National Picture of Short-Term Employment Growth by Skill Page 10

13 Exhibit 9. Net Employment Growth for Less than High School Degree, ,200,000 1,000, , , , , ,000 15,000 29, ,000 14, ,000 13, Total Growth=1,759, ,000 91,000 63,000 25, ,000 Exhibit 10. Net Employment Growth for High School Degrees, ,200,000 1,000, , , , ,000 Total Growth=3,936, , , , ,000 48, ,000 62,000 38,000 1, , ,000 99, ,000 A National Picture of Short-Term Employment Growth by Skill Page 11

14 Exhibit 11. Net Employment Growth for Some College, ,200,000 1,000, ,000 1,062, , ,000 Total Growth=4,374, , , , , ,000 84, ,000 92,000 26,000 1, ,000 75, ,000 Exhibit 12. Net Employment Growth for College Degrees, ,200,000 1,000, , , , ,000 Total Growth=3,200, , , , , , ,000 93, ,000 17, ,000 35, ,000 A National Picture of Short-Term Employment Growth by Skill Page 12

15 Exhibit 13. Net Employment Growth for Advanced Degrees, ,200,000 1,000, ,000 Total Growth=1,653, , , , , , , , ,000 77,000 27,000 47,000 7, ,000 8,000 27,000 A National Picture of Short-Term Employment Growth by Skill Page 13

16 Exhibit 10 shows that employment growth is spread across several industries for jobs requiring just a high school education. Professional and business services, leisure and hospitality, and health services have the largest net gains. Wholesale and retail trade, as well as the recovering construction and government sectors, will also show gains. The net employment growth for those jobs requiring some college education (exhibit 11) is also spread across these same industries, although health services industry has the largest net employment gains. For jobs that require a college or advanced degree (exhibits 12 and 13), 2017 net employment growth is concentrated in the professional and business services sector. We also see significant net gains in the health services sector and government sector. If we aggregate across all sectors by skill requirement, we see net employment gains for every educational level (exhibit 14). Exhibit Net Change in Employment, by Education Requirement 14.0% 12.0% 10.0% 11.4% 9.6% 10.8% 11.3% 11.5% 8.0% 6.0% 4.0% 2.0% 0.0% Less Than High School Degree High School Degree Some College College Degree Advanced Degree Source: BLS Current Employment Statistics, BLS Current Population Survey, and Moody's Analytics Employment growth rates are slightly higher for those with less than a high school degree than other groups, 11.4 percent. 13 It is also notable that those with exactly a high school degree will experience the slowest rate of job growth over the next five years at 9.6 percent. This is in part attributable to the high concentration of jobs requiring exactly a high school degree in the 13 Other research shows an increasing demand over time for jobs with higher education requirements. See Carnevale, A., N. Smith, and J. Strohl, 2010, Help Wanted: Projections of Jobs and Education Requirements Through 2018, Georgetown Center on Education and the Workforce. Although the methods we use differ from this study, our projections of total employment requiring less than high school or high school in 2017 are not far different from their projection for The trends historically over a longer period than from 2011 to 2017 show bigger gains for higher education levels. A National Picture of Short-Term Employment Growth by Skill Page 14

17 manufacturing, mining, and transportation and utilities sectors which are all projected to grow slowly. The slightly higher rate of growth among jobs requiring less than a high school degree over the next five years needs to be placed in the context of the large decline in jobs requiring less than a high school degree during the recession. Exhibit 15 shows employment change by skill requirement starting in 2007 and projected through While employment is growing across all educational requirement categories, it is clear that jobs requiring less education have the most ground to make up. Jobs requiring high school or less than high school education are not projected to return to their 2007 level until Exhibit 15. Employment Change by Education Requirement Advanced Degree College Degree Some College Less than High School Degree High School Degree Source: BLS Current Employment Statistics, BLS Current Population Survey, and Moody's Analytics Unemployment through the Recovery: Who is Left Behind? The net increase in jobs requiring different skill levels is only one side of the economic recovery story. The other side is the size of the labor pool by skill level that is searching for jobs. We typically use the unemployment rate as an indicator of the size of this labor pool. The unemployment rate tells us the number of individuals actively searching for work as a percentage of the labor force. The labor force is A National Picture of Short-Term Employment Growth by Skill Page 15

18 the total number of employed and unemployed workers. In February 2012, there were 12.9 million unemployed workers in the U.S.; almost 7 million of these workers had a high school degree or less. One of the stark realities of the recovery is that there are still many more people seeking jobs than there are job openings. There were 3.5 million job openings in January which means 3.7 unemployed people for every job opening. While even in a healthy economy there are more job seekers than openings, this is still a high number, especially this far into a recovery. For comparison, during the 2001 recession the highest value of this ratio was 2.8 job seekers per job opening. Moreover, the official unemployment data only includes those who are actively searching for work. Many others have given up actively searching, but would still take a job if one was offered the socalled marginally attached or discouraged workers. 15 In February 2012, in addition to the unemployed there were another 2.8 million marginally attached persons. If marginally attached individuals were counted as unemployed, the unemployment rate for February 2012 would increase from 8.3 to 9.8 percent. In addition to the unemployed and those who have stopped searching for work, over time there will be other additions to the pool of potential workers. Natural growth in the labor force occurs as the population grows and young people enter the labor market seeking work. In the next five years after such a deep recession, there will also be labor market entry from pent up supply people who refrained from entering during the recession because unemployment was so high. This includes young people who went on for more schooling than they might have otherwise or parents with older children who chose not to join or re-join the labor market when they would have in normal economic times. These delayed labor market entrants will also be competing for work as the recovery continues. 16 In some ways, low-skill workers are at a disadvantage in this recovery. Workers with lower education have higher unemployment rates than more educated workers. 17 In February 2012, the unemployment rate for individuals age 18 and over with less than a high school degree was 17.6 percent. It was 10.9 percent for those with just a high school degree and 5.0 percent for those with a college degree. Exhibit 16 shows that the low skilled are disproportionately represented among the unemployed relative to the employed. In 2012, only 8 percent of the employed have less than a high school degree compared to 17 percent of the unemployed. Among discouraged workers, the proportion with lower education 14 US Department of Labor, Job Openings and Labor Turnover, 15 The US Department of Labor officially defines someone as marginally attached to the labor market if they are not working, searched for work in the last year but are not in the last week, and are willing to take a job if offered. Discouraged workers are a subset of the marginally attached who say the reason they are no longer searching is because they do not believe there is a job available in their line of work or they lack the necessary schooling or training, or they cannot find work due to discrimination. US Bureau of Labor Statistics How the Government Measures Unemployment. 16 Predicting labor supply in the recovery is difficult because it is made up of natural labor force population growth as well as this pent-up supply. In addition, other factors that are difficult to predict include patterns of immigration in response to the recovery and changes in retirement patterns as some unemployed older workers leave the labor force for early retirement while others with jobs work longer because of reductions in the value of their retirement assets. 17 Unemployment rates for less skilled workers are almost always higher than for more skilled workers, even in a robust economy. A National Picture of Short-Term Employment Growth by Skill Page 16

19 levels is even higher, with 22 percent without a high school degree and 38 percent with exactly a high school degree. Exhibit 16. Education Distribution of Employed and Unemployed 100% 90% 80% 37.1% 20.5% 20.9% 70% 60% 50% 40% 30% 20% 10% 0% 18.7% 28.5% 28.1% 38.3% 34.4% 27.2% 22.1% 16.6% 7.7% Employed Unemployed Discouraged College or More Some College High School Less than High School Source: Author's calculations from February 2012 CPS Exhibit 17 shows the absolute size of the unemployed population by skill level. There are more than 2.3 million unemployed with less than a high school degree and 4. 6 million who have a high school degree. A closer examination of the characteristics of the unemployed, especially among those with low skill levels, reveals who is likely to face the greatest challenges in finding employment. Exhibit 18 shows how the unemployment rate varies across gender, race, and age over the whole population and within skill levels. Generally, these patterns are similar to before the recession, although the specific rates are higher. 18 In early 2012, the unemployment rate for men is higher than for women, in line with characterizations of the recession as hitting men harder than women. However, this varies across skill level. Female workers with less than a high school degree have a higher unemployment rate than men at the same education level; similarly among o those with some college, women have a higher unemployment rate than men. 18 Appendix exhibit A.5 presents unemployment rates for each skill level by age within race/ethnicity group. A National Picture of Short-Term Employment Growth by Skill Page 17

20 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 Exhibit 17. Size of Unemployed Population by Skill Level 4,658,000 3,676,000 2,369,000 1,662,000 1,000, , ,000 0 Less than High High School Some College Bachelor's Degree Advanced Degree School Source: Author's calculations from February 2012, CPS. The unemployment rate for Hispanic and for black workers is substantially higher than the overall rate, 14.0 and 11.2 compared with 8.5 percent. 19 This pattern encompasses all education categories for black workers and for most categories (except some college and advanced degree) for Hispanic workers. Unemployment rates for low-skill workers of color are exceptionally high. For example, unemployment among black workers with less than a high school degree is 29.5 percent. Young workers (ages 18 to 25) are more likely to be unemployed than older workers across all skill levels, with an unemployment rate of 15.2 percent. One quarter of the unemployed are ages 18 to 25. Younger workers who are also low-skilled fare far worse; 29 percent of young workers without a high school degree are unemployed and 21 percent of those with a high school degree. These workers likely have less work experience, which creates more difficulty competing for jobs. 19 The official unemployment rate for February was 8.3 percent. This number is different because we are calculating from the same data for workers age 18 and older (rather than 16 and older) and we are not seasonally adjusting. Published statistics are not available for all the characteristics by education level that we present. A National Picture of Short-Term Employment Growth by Skill Page 18

21 Exhibit 18. Unemployment Rates by Gender, Race, Age, and Skill Level, 2012 All Less than High School High School Some College Bachelor's Degree Advanced Degree Unemployment Rate 8.5% 17.6% 10.9% 8.0% 5.0% 3.4% Unemployed (000s) 12,954 2,369 4,659 3,677 1, Gender Male 9.0% 16.4% 10.4% 7.6% 5.5% 3.1% Female 7.9% 18.2% 9.5% 8.4% 4.6% 3.4% Race White, Non- Hispanic 7.0% 17.0% 9.3% 7.2% 4.5% 3.0% Black, Non- Hispanic 14.0% 29.5% 17.7% 11.3% 7.3% 6.7% Hispanic 11.2% 16.1% 11.6% 7.5% 7.5% 3.4% Other 8.1% 13.5% 10.5% 11.4% 5.5% 3.6% Age % 29.2% 21.0% 9.9% 7.8% 4.3% % 18.2% 12.2% 9.5% 4.8% 2.9% % 14.7% 9.4% 7.1% 4.2% 2.7% % 15.0% 8.4% 6.4% 4.5% 3.7% % 10.1% 6.6% 6.8% 5.5% 3.6% Source: Author's calculations from the February 2012 CPS. There are other personal barriers to re-employment for some unemployed workers including language fluency, disability, and having a criminal record. For example, it is estimated that 65 million Americans have a criminal record which can limit their access to jobs. 20 Not all of these barriers are measured in national data. Exhibit 19 provides information on the prevalence of several barriers that are available, including lack of citizenship, not speaking English as your primary language, health problems, and debt. It presents the prevalence of these barriers among all unemployed workers and by skill level. It also shows the prevalence among all employed workers for context. Overall, unemployed are more likely than employed workers to lack citizenship, to speak a primary language other than English, and to have a work-limiting physical or mental health condition. These factors could be part of the reason some workers are unemployed. Among those unemployed with less than a high-school degree, the prevalence of these potential barriers is even higher than all 20 National Employment Law Project The Case for Reforming Criminal Background Checks for Employment A National Picture of Short-Term Employment Growth by Skill Page 19

22 unemployed. For example, the unemployed with less than a high school degree are almost twice as likely as all unemployed to speak a primary language other than English (45% vs. 23%). The prevalence of all three of these barriers declines as skill level increases. These results suggest that a high percentage of unemployed, less-skilled workers face disadvantages in the labor market when seeking work over and beyond the challenges posed by job availability at their respective skill levels. Exhibit 19. Potential Barriers to Re-Employment Among Unemployed, by Skill Level Unemployment Rate Employed All Unemployed Less than High School Unemployed High School Unemployed Some College Unemployed Bachelor's Degree Unemployed Advanced Degree Unemployed 8.5% 17.6% 10.9% 8.0% 5.0% 3.4% (Number in 000s) 139,566 12,954 2,369 4,659 3,677 1, Not U.S. Citizen 8.7% 11.0% 27.9% 8.2% 5.0% 7.0% 9.5% Primary Language other than English Work limiting physical or mental condition Median level of non-housing debt ($) 17.09% 22.95% 44.93% 20.72% 16.25% 16.69% 8.71% 5.05% 9.35% 11.27% 9.68% 9.77% 5.57% 4.00% 10,000 6,000 1,000 5,000 9,700 12,000 13,000 Source: Employment, unemployment and citizenship are from the February 2012 CPS. Primary language other than English, work limiting physical or mental condition, and median level of non-housing debt are from the 2008 Survey of Income and Program Participation (SIPP), representing the second half of The median debt includes those reporting 0 debt. Conclusions The recovery is continuing, but at a slow pace with relatively modest employment growth projected over the next five years and unemployment forecast to remain well above 7 percent for the next several years. Sectors such as professional and business services, health services and leisure and hospitality are forecast to grow over the next five years while the depressed manufacturing and government sectors are forecast to gain jobs very slowly, remaining well below their pre-recession levels. Using our national industry forecast, we estimate employment growth by the required skill levels of jobs, occupations, and industry sectors. A National Picture of Short-Term Employment Growth by Skill Page 20

23 Within the overall low national employment growth forecast, predicted employment growth rates for 2012 through 2017 are slightly higher for jobs requiring the lowest and highest level of educational attainment and lowest for those with exactly a high school degree. Across given skill level requirements, the industries with the highest net employment gains vary. This stems from the very different distributions of specific occupations and jobs within industries. The largest number of jobs added that require less than a high school degree are in the leisure and hospitality industries. For those requiring just a high school degree, net employment gains are highest across leisure and hospitality, professional and business services, and health services. Jobs requiring higher education levels are increasing, on net, the most in health services and professional and business services. Putting net employment gains in perspective, the size of the unemployed population is still many times the number of job openings in the economy. Low-skill workers are disproportionately represented among the unemployed. In addition, the low-skill unemployed are more likely to have personal characteristics and circumstances that can make finding work difficult. The economy has not yet seen the job growth necessary to get us back to employment levels before the recession, much less meeting the job needs of a growing labor force. More job creation is needed across industry sectors and all skill levels to return to a truly healthy economy. A National Picture of Short-Term Employment Growth by Skill Page 21

24 LABOR MARKET AND DEMOGRAPHIC ANALYSIS: A NATIONAL PICTURE OF SHORT-TERM EMPLOYMENT GROWTH BY SKILL APPENDIX This appendix describes the methods used for the analysis in the main report. We start with a description of data we use. The appendix also provides additional detailed result tables that are referred to in the main text. Data We use data from several different sources in this study. They are described below. Current Employment Statistics (CES). The CES is a monthly survey conducted by the Bureau of Labor Statistics of approximately 140,000 establishments representing payroll employment in non-farm sectors. Besides the farm sector, the CES also excludes the self-employed, proprietors, unpaid, and domestic workers. The CES is considered the most reliable data source for current employment figures by industry sector and geographic region. Moody s Analytics. Historical data from the CES as well as projections from 2012 and 2017 are provided by Moody s Analytics Inc., a private forecasting firm. We use this data to measure employment by industry from 2007 through 2011 and projections from 2012 through Current Population Survey (CPS). The CPS is a monthly survey conducted by the Bureau of Labor Statistics of approximately 60,000 households representing the civilian non-institutionalized population. The CPS is the only data source that can provide current information on employment by both industry and occupation, as well as information on educational attainment levels. While the CES is generally considered the most reliable source for industry employment counts, the CPS provides accurate information on the employment share of an industry that is in a particular occupation or education category. We use the CPS to calculate the occupation employment share of each industry sector and the distribution of educational attainment within each industry-occupation cell. Applying the CPS shares to the CES employment counts allows us to estimate the number of workers by educational attainment category. For the ten major occupation categories, the CPS uses the 2010 Census occupation classification system which is derived from the Standard Occupational Classification system. We apply the same NAICS industry sectors as used in the CES to make the two samples compatible. For educational attainment, we construct five categories: less than high school graduate, high school graduate, some college, college graduate, advanced degree. Our CPS sample is restricted to wage and salary earners age 16 and over. We exclude the selfemployed and farm workers to conform to the CES sample. A National Picture of Short-Term Employment Growth by Skill Page A1

25 Occupational Employment Statistics (OES). The OES produces annual estimates of employment and wages by occupation and industry. We use the 2010 OES (latest available) to measure the occupational employment distribution within each of our industry sectors. The twenty-two occupational groups we use come from the 2010 Standard Occupational Classification system. Methodology 1 Establishing 2011 Baseline Employment by Industry and Occupation (OES) We measure average monthly industry employment each quarter of the CES data. Appendix table A.1 presents employment levels by industry for the last quarter of 2007, 2009, and These data are the basis of Exhibit 2 in the report. We apply the matrix of the 2010 OES occupational employment distribution within each industry to the 2011 industry employment numbers to generate 2011 baseline employment by occupation estimates. For example, the CES indicates that there are 11.8 million workers in the manufacturing sector and the OES indicates that 6% of manufacturing workers are employed in management occupations. This gives approximately 708,000 workers in management occupations in the manufacturing industry. Aggregating the number of managers across all industries gives estimates of total employment by occupation found in Exhibit 3 in the report. Establishing 2011 Baseline Employment by Industry and Occupation (CPS) We repeat the above technique to estimate an alternative set of industry-occupation employment figures using the occupational employment distribution matrix from the 2011 CPS. Although the CPS occupation data is less detailed and reliable than the OES, we are using the CPS because it provides needed information on skill requirements. The CPS industry-occupation matrix is found in exhibit A.2. Measuring Skill Requirements (CPS) We use the 2007 full calendar year of CPS to measure the distribution of educational attainment within each industry-occupation cell. While education is only one proxy for skill, it is the only such measure available in the CPS. We use the 2007 pre-recession year because we believe that during the Great Recession and its aftermath, the overall lack of jobs induced many individuals with higher levels of educational attainment to fill jobs for which they may be overqualified. To get a better sense of the underlying job requirements of a particular industry-occupation, the 2007 educational levels are likely more accurate than 2011 levels. Appendix exhibit A.3 contains five industry-occupation matrices, one for each level of educational attainment. For example, in the manufacturing industry and production 1 Our national employment projection methodology differs from the often-cited BLS Employment Projections in several ways. First, we are creating an intermediate term forecast that does not assume full employment and utilization across industries. Second, we attempt to adjust for the fact that educational attainment within an industry-occupation cell during the most recent years of high unemployment may reflect workers taking jobs for which they are overqualified. Our methods are also distinct from those used by Center on Education and the Workforce--Carnevale et al. (2010) who argue that the BLS understates education requirement growth because their methods ignore education upgrading that occurs within detailed occupations. We do not assume educational requirement upgrades in education within occupation between 2007 and In practice, however, Carnevale et al. arrive at predictions for the educational distribution for 2018 that are similar to our projection numbers for A National Picture of Short-Term Employment Growth by Skill Page A2

26 occupation, 20% of the jobs require less than a high school degree while 50% require a high school degree. Incorporating Industry Forecasts for 2017 We incorporate the employment by industry forecasts from Moody s Analytics for 2012 through 2017 and compare to the 2011 baseline. Combining the industry forecasts with the 2007 and 2011 CPS matrices, we estimate employment by educational attainment. We then calculate the net employment change between 2011 and 2017 by industry and level of education as shown in exhibit A.4. Unemployment Statistics by Skill Level The report also presents information on the unemployed by skill level. As a complement to these data, Appendix exhibit A.5 presents unemployment rates for each skill level by age group within race/ethnicity group. These data are from the CPS State Forecasts The report focuses on national data. The same techniques can be used to create estimates for states. Table A.6 provides estimates of employment by education skill-level for 2007, 2011, and projections for 2017 for 25 selected states using the same methodology as above except state employment estimates. The numbers in the final column, percent change from 2011 to 2017correspond to the national numbers in Exhibit 14 in the report. Exhibit A.1 Change in Employment by Industry between 2007 and 2011, Quarter 4 Industry 2007 Q4 Employment 2009 Q4 Employment 2011 Q4 Employment Change in Employment, Change in Employment Construction 7,526,000 5,686,000 5,528,333-1,840,000-1,997,667 Educational Services 2,971,167 3,097,100 3,271, , ,600 Financial Activities 8,238,400 7,686,200 7,689, , ,367 Health Services 15,544,934 16,218,600 16,778, ,666 +1,233,633 Information 3,025,333 2,753,333 2,645, , ,333 Leisure and Hospitality 13,527,900 12,973,400 13,431, ,500-96,600 Manufacturing 13,751,667 11,497,333 11,788,333-2,254,334-1,963,334 Mining 734, , ,166-72, ,032 Other Services 5,505,000 5,325,000 5,352, , ,667 Prof. & Business Services 18,023,900 16,440,900 17,532,034-1,583, ,866 Total Government 22,335,667 22,513,000 22,007, , ,333 Transportation & Utilities 5,107,533 4,731,433 4,873, , ,433 Wholesale & Retail Trade 21,592,899 19,862,333 20,272,400-1,730,566-1,320,499 Total Nonfarm 137,884, ,446, ,984,700-8,437,902-5,899,834 Source: BLS Current Employment Statistics A National Picture of Short-Term Employment Growth by Skill Page A3

27 Exhibit A Occupation-Industry Employment Matrix Occupation Industry Management, Business, & Finance Professional and Related Services Sales Office & Admin Farming Construction & Extraction Installation & Maintenance Production Transportation Industry Total Construction 741, ,444 45,698 92, ,823 3,889 3,532, ,926 98, ,218 5,528,333 Educational Services 468,258 2,045, ,249 31, ,306 2,353 16,044 36,367 10,663 39,064 3,271,767 Financial Activities 2,994, , ,302 1,346,253 2,137,126 1,803 40, ,868 44,231 86,751 7,689,033 Health Services 1,437,880 7,484,342 4,998,950 54,380 2,401,686 3,167 38,277 96, , ,972 16,778,567 Information 528, ,789 84, , ,331 2,436 20, ,858 64,416 48,895 2,645,000 Leisure and Hospitality 1,514, ,822 9,064,646 1,056, ,545 2,257 43, , , ,280 13,431,300 Manufacturing 1,835,828 1,626, , ,933 1,090,437 45, , ,540 4,718, ,071 11,788,333 Mining 100,463 86,935 7,088 15,134 62,529 5, ,256 61,179 54,095 90, ,166 Other Services 504, ,924 1,818, , ,724 5,027 24, , , ,490 5,352,333 Professional and Business Services 3,760,069 5,416,898 3,123, ,320 2,848,194 18, , , , ,274 17,532,034 Total Government 2,554,178 9,632,114 4,385, ,034 3,238,664 30, , , , ,191 22,007,334 Transportation and Utilities 508, , , , ,380 8, , , ,849 2,377,949 4,873,100 Wholesale and Retail Trade 1,306,511 1,024, ,349 9,781,368 3,513,803 71, , , ,373 2,057,913 20,272,400 Source: Authors' calculations using BLS Current Employment Statistics and Current Population Survey A National Picture of Short-Term Employment Growth by Skill Page A4