The Changing Labor Market: Current Conditions and Future Predictions

1
The Changing Labor Market Current Conditions
and Future Predictions

• Rachel Hillman
• Regional Labor Market Analyst
• MN Dept. of Employment Economic Development
• St. Paul WorkForce Center

2
About DEEDs regional analysts

• Collaborate with regional stakeholders on new
  research
• Extend access to DEED reports and statistics
• Conduct presentations and training onregional
  economy and labor market
• Original research and analysis intended to
  answer the tough questions
• Five regional analystsstationed across the state

3
What is labor market information?

• Labor market information is any information about
  people, work and the job market
• Geographic area where people work
• Industry or business who people work for
• Occupation what people do
• Wages how much they earn

4
Firsthand knowledge versus LMI

• Labor market information adds context to what we
  know from talking with people and what we read in
  the news
• Economy is all about jobs
• St. Paul Pioneer Press February 19, 2008
• Job losses pile up
• St. Paul Pioneer Press January 16, 2008
• Consumers winter blues put a chill on economy
• Star Tribune January 11, 2008
• More manufacturers going green
• Star Tribune December 28, 2007

5
Trends at a regional scale beyond employment and
the labor force

• Gaining 1 million people in 30 years
• Rapid population growth on the developing edge
• Continued spread of suburban and exurban
  development
• Population churn brings diversity and
  diversification of the region
• Traffic congestion not getting better
• Gas prices not getting better
• Finite supply of land rising land prices
• Redevelopment and intensification of land use in
  the core

6
Twin Cities area labor shed (or where workers in
the Twin Cities area live)
7
Minnesotas year end review

• Over the year Minnesota gained 6,200 jobs in
  December 2007. REVISED
• This was below the nations growth rate of 0.9.
• In terms of over-the-year job gains by sector,
  Minnesota is ahead of nationwide job growth in
  the education health services and financial
  activities. 
• Manufacturing makes up a lower percent of
  employment than 6 years ago.
• The health care and financial services sectors
  are growing.
• Minnesotas unemployment rate was 4.0 in 2006
  with 117,000 unemployed, but that doesnt count
  discouraged or marginally attached workers.
  In 2007, monthly unemployment rates have been on
  the rise, reaching 4.7 in December.
• Labor force participation rate is around 72.6.
• Number of job opportunities has remained
  consistent, but some occupations are in demand.

Source MN Dept of Employment Economic
Development
8
Annual unemployment rates Twin Cities,
Minnesota, and U.S.
Monthly rate not seasonally adjusted Source MN
Dept of Employment Economic Development
9
Alternative national unemployment rate
calculations, January 2008

• U-3 Total unemployment, as a percent of the
  civilian labor force 4.9 This is the official
  unemployment rate.
• U-4 Total unemployed discouraged workers, as
  a of the civilian labor force discouraged
  workers 5.2
• U-5 Total unemployed discouraged workers
  all other marginally attached workers, as a of
  the civilian labor force all marginally
  attached workers 6.0
• U-6 Total unemployed all marginally attached
  workers total employed part time for economic
  reasons, as a of the civilian labor force all
  marginally attached workers 9.0

Source Bureau of Labor Statistics, Current
Population Survey
10
Twin Cities statistics in unemployment insurance
applicants, 2007
Age of Unemployment Insurance Applicants, 2007
Educational Attainment of Unemployment Insurance
Applicants, 2007
Source MN Dept of Employment Economic
Development
11
Recent employment trends in the Twin Cities

• Employment Change December 2005 to December 2007
• Manufacturing -4,050 (-1.9)
• Medical equipment and supplies mfg. 1,410 (3.7)
• Specialty Trade Construction -7,140 (-12.7)
• Professional and Business Services 8,290
  (3.2)
• (includes legal services, architectural and
  engineering services, computer systems designs,
  management of companies, administrative and
  support)
• Health Care and Social Assistance 20,410
  (10.3)
• All industries 13,710 (0.8)

12
Employment changes since 2000

• Manufacturing -36,500 (-15.4)
• Machinery mfg. -8,860 (-28.9)
• Navigational, measuring, electromedical and
  control instrument mfg. 2,100 (9.9)
• Medical equipment and supplies mfg. 4,151
  (37.4)
• Professional and Business Services -50 (0.0)
• Health Care and Social Assistance 53,930
  (32.8)
• Leisure and Hospitality 19,000 (13.4)
• (includes arts, entertainment, accommodation and
  food services)
• Finance and Insurance 4,110 (3.9)
• All industries 32,362 (1.8)

13
Minnesota job vacancy survey

• In 2000, Minnesotas Labor Market Information
  (LMI) Office began tracking the number of job
  vacancies currently open for hire.
• Job vacancy statistics are produced twice a year
  for the second quarter (April to June) and fourth
  quarter (October to December).
• Describe job vacancies in terms of
• Education and experience
• Wages
• Part-time/full-time
• Temporary/seasonal or permanent

14
Vacancies are down but the nature of vacancies
has changed as well.
Source MN Dept of Employment Economic
Development
15
Where are the jobs now?

• 35,150 job openings in the Twin Cities job market
  during 2nd Quarter 2007
• 2.2 job vacancy rate
• 5.4 job vacancies for every 10 unemployed people
• Hiring demand is highest in some high-skill
  occupations
• Health care practitioners and technical
• Management
• Health care support
• Computer and mathematical
• Business and financial operations

16
Job vacancies by industry sector
Source MN Dept of Employment Economic
Development
17
Occupations with the most openings in the Twin
Cities
Source MN Dept of Employment Economic
Development
18
Median starting wage rates of job vacancies
Median Wage of all openings 13.00
Source MN Dept of Employment Economic
Development
19
Skill levels required for job openings in the
Twin Cities
Note Second quarter data presented. Source MN
Dept of Employment Economic Development,
Minnesota Job Vacancy Survey
20
Are these occupations in demand?
21
Occupations in demand

• Sort jobs by wages, growth rates or
  education/training requirements
• Job titles link to educational programs in
  Minnesota for these occupations
• Job codes link to ISEEK career information for
  these occupations

22
Minnesotas industrial and occupational
employment projections

• Every states Labor Market Information (LMI)
  Office is charged with producing employment
  projections on an industry and occupational
  level.
• Projections are estimated over a 10 year period
  every two years for the nation, state and
  regions.
• Projections are largely based on past trends. We
  cannot predict
• Recessions, depressions, energy crises, etc.
• Wars
• Technology change
• New business processes
• Legislation

23
Where will the jobs be?

• In the Twin Cities region, we project that
  225,000 new jobs will be created between 2004 and
  2014 this is a 13 growth rate.
• Another 402,000 new work force entrants will be
  needed to replace workers who have retired or
  otherwise left their position.
• More than one-fourth of the new jobs will be
  either an education or health related job.
• Post-secondary education will be required for 15
  of the top 20 fastest growing jobs in the Twin
  Cities.
• 16 of the top 20 occupations have average wages
  of greater than 20/hour.

Source MN Dept of Employment Economic
Development
24
Health care will add the most new jobs in the
Twin Cities.
Source MN Dept of Employment Economic
Development
25
Projected employment growth by detailed industry
Source MN Dept of Employment Economic
Development
26
Fastest growing occupations in the Twin Cities,
2004 to 2014

• Network Systems and Data Communication Analysts
• Home Health Aides
• Personal and Home Care Aides
• Physician Assistants
• Computer Software Engineers, Applications
• Computer Software Engineers, Systems Software
• Biomedical Engineers
• Athletic Trainers
• Hazardous Materials Removal Workers
• Medical Assistants

• Dental Hygienists
• Dental Assistants
• Community and Social Service Specialists
• Medical Scientists
• Database Administrators
• Biochemists and Biophysicists
• Environmental Engineers
• Network and Computer Systems Administrators
• Vocational Education Teachers, Postsecondary
• Social and Human Services Assistants

Source MN Dept of Employment Economic
Development
27
Occupations adding the most jobs in the Twin
Cities, 2004 to 2014

• Office Clerks, General
• Receptionists and Information Clerks
• Sales Representatives, Wholesale and
  Manufacturing
• Executive Secretaries and Administrative
  Assistants
• Computer Software Engineers, Systems Software
• Truck Drivers, Heavy and Tractor-Trailer
• Social and Human Services Assistants
• Computer Systems Analysts
• Network Systems and Data Communications Analysts
• Carpenters

• Retail Salespersons
• Registered Nurses
• Combined Food Preparation and Serving Workers,
  Fast Food Workers
• Personal and Home Care Aides
• Computer Software Engineers, Applications
• Customer Service Representatives
• Home Health Aides
• Janitors and Cleaners
• Accountants and Auditors
• Waiters and Waitresses

Source MN Dept of Employment Economic
Development
28
Skill and knowledge areas for in demand jobs

• Skills areas projected to be most utilized by
  future occupations
• Reading Comprehension
• Active Listening
• Speaking
• Writing
• Active Learning
• Coordination
• Monitoring
• Instructing
• Critical Thinking

• Knowledge areas projected to be most utilized by
  future occupations
• Customer Service
• Mathematics
• Clerical
• Education/training
• English
• Sales/marketing
• Psychology
• Computers/electronics
• Administration/management

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Skills shortagenow!

• Almost half of respondents said the availability
  of qualified applicants was a concern, but even
  more (77) said they were concerned about the
  cost of employee benefits.
• 1 in 12 were concerned about the number of
  pending employee retirements
• Hiring difficulties were more pronounced in
  healthcare and manufacturing.
• Increased hours for current employees
• Used temporary agency employees
• Shifted work to other company locations
• Employers generally saw hiring problems as an
  issue of quality, not quantity.

• About one-third indicated that they have trouble
  with employee retention and turnover.
• Competition from other local firms
• Competition from metropolitan area firms
• Retirements
• 27 are concerned about the skill levels of their
  current employees.
• 9 out of 10 employers provide some type of
  on-the-job training.
• 73 said they need to offer employee training
  because it is a business necessity.

Source MN Dept of Employment Economic
Development, South Central Employer Survey
Results, July 2006.
30
Perceived deficiencies

• Perceived Deficiencies of Current Workforce by
  Employers Concerned with Employee Skills
• Inadequate basic employability skills, e.g.
  attendance, timeliness, work ethic (48)
• Inadequate problem-solving skills (30)
• Inadequate reading/writing or communication
  skills (30)
• Inability to work in a team environment (27)
• Inadequate math skills (15)
• Lack of degree or vocational technical training
  (13)

• Perceived Deficiencies of
• Job Seekers
• Unstable work history (64)
• Not enough work experience (56)
• Poor technical skills as demonstrated in the
  selection process (35)
• Too little formal education (26)
• Poor language or communication skills in an
  interview (20)
• Poor reading or comprehension skills as
  demonstrated in the selection process (16)
• Poor math skills as demonstrated in the
  selection process (4)

Source MN Dept of Employment Economic
Development, South Central Employer Survey
Results, July 2006.
31
Return of labor shortage worries

• Job growth is projected to be steady overall, but
  very high in some industries like health care
• An increasingly tight labor market
• The existing workforce is aging
• Labor force growth is slowing and will start
  shrinking
• While renewed economic growth will tighten the
  labor market, demographics may play an even
  bigger role.

32
Twin Cities population forecast compared to
United States growth per decade, 1950-2030
Source U.S. Census Bureau, Metropolitan Council
estimates
33
20 Year projected change in Twin Cities
population by age group (2005-2025)
Source MN State Demographic Center
34
Immigration is a key growth component
70,000
60,000
50,000
Twin Cities residents new to the US
Racial minority
40,000
30,000
20,000
White
10,000
0
1955-1960
1965-1970
1975-1980
1985-1990
1995-2000
Source U.S. Census Bureau, Metropolitan Council
estimates
35
A more diverse population and workforce

• Minnesotas nonwhite and Latino populations are
  projected to grow substantially faster than the
  white population
• By 2030, 1 in every 5 Minnesotans will be
  Hispanic or of color
• Source MN State Demographic Center
• Only 10 percent of baby boomers in the Metro
  area are from a minority group, but minorities
  comprise one-quarter of the next generation
• of workers.
• Source Mind the Gap Disparities and
  Competitiveness in the Twin Cities,
• Brookings Foundation Metropolitan Policy,
  October 2005.

• In 2005, 6.3 percent of Minnesota's total
  population were foreign born.
• In 2005, the foreign born represented 6.8 percent
  of Minnesota's civilian employed workforce.
• The number of foreign-born workers in Minnesota
  grew by 37.9 percent between 2000 and 2005.
• Source Migration Policy Institute
• In 2005, 3.7 percent of employed workers in
  Minnesota were limited English proficient.
• Source Migration Policy Institute

36
Future labor force growth in the Twin Cities
Source MN State Demographic Center
37
What does this mean?

• We expect 225,000 new jobs to be created between
  2004 and 2014 in the Twin Cities.
• Labor force projections estimate 104,000 new
  workforce entrants between 2005 and 2015.
• Will the education/skills of these workers match
  employer demand?
• ANDthis does not even include the openings that
  will exist as people start to retire.

38
Labor force participation rates

• Minnesota ranks 2nd nationwide for the percent of
  people age 16 to 64 who are in the labor force
  72.9 in 2006.
• The labor force participation rate of women in
  Minnesota was 68.3 in 2006, the 2nd highest rate
  in the United States.
• Minnesota teens (16 to 19 years of age) have one
  of the highest labor force participation rates in
  the country.
• Minnesota ranks 7th nationwide in the employment
  rate of people with disabilities.
• Trends show that labor force participation of
  people 65 years of age and over has been growing
  in the past 10 years.
• Minneapolis-St. Paul MSA ranks 3rd nationwide in
  the percent of people 65 years of age and over
  engaged in the labor force - 25 in 2006.

Source BLS, Geographic Profile of Employment
Unemployment Cornell University, Rehabilitation
Research and Training Center of Disability
Demographics and Statistics
39
Connecting workforce supply and demand some
solutions

• Education system working to meet demand
• Getting the word out of youth and displaced
  workers
• Marketing high demand occupations
• Establishing career ladders in the workforce
• development system
• Increase productivity
• New technologies
• More and specialized training
• Outsource or offshore
• Expand recruitment efforts and increase
  in-migration
• Increase labor force participation (or lower
  unemployment) for certain groups

40

• Minnesota-produced Labor Market Information is
  online atwww.deed.state.mn.us/lmi
• Rachel Hillman
• Regional Labor Market Analyst
• Phone [phone]
• E-mail rachel.hillman_at_state.mn.us