The Changing U'S' Economy: What Does It Mean for Oklahoma

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The Changing U.S. EconomyWhat Does It Mean for
Oklahoma?
Governors Council for Workforce and Economic
Development April 10, 2006

• Chad Wilkerson
• Oklahoma City Branch Executive
• Federal Reserve Bank of Kansas City

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I. The U.S. Industrial Structure of the Future
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The structure of the U.S. economy will change
over the next 5-10 years. Why?

• The short answer is

Because it always has.
Source U.S. Bureau of Labor Statistics
4
The longer answer includes several inter-related
factors

• Technological improvements

• Changing consumer tastes

• Increasing globalization

• Changing workforce skills

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How will the structure of the U.S. economy change
over the next 5-10 years?

• Obviously no one knows exactly.

• One respected source is the U.S. Bureau of Labor
  Statistics, whose economists do detailed 10-year
  projections of industrial and occupational
  employment every other year.

• The latest projections go through 2014 and were
  finalized in late 2005.

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15 U.S. industries projected to ADD jobs the
fastest through 2014
Health and social services 1. Home health care
services 4. Residential care facilities 9.
Outpatient laboratory services 10. Child day
care services 12. Offices of health
practitioners 15. Rehabilitation services
High-tech services 2. Software publishers 8.
Computer systems design
Business services 3. Management consulting
services 5. Facilities support services 6.
Employment services 7. Office administrative
services 13. Accounting, tax, payroll services
Education services 11. Other educational
services 14. Colleges universities

• Among industries with more than 100,000
  employees

Source U.S. Bureau of Labor Statistics
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15 U.S. industries projected to SHED jobs the
fastest through 2014
Nondurable manufacturing 1. Cut and sew apparel
mfg. 2. Fabric mills 3. Basic chemical mfg.
6. Rubber product mfg. 8. Synthetic materials
mfg. 13. Pulp paper mills 14. Petroleum coal
mfg.
Durable manufacturing 4. Industry machinery
mfg. 5. Electrical equipment mfg. 7.
Foundries 10. Computer mfg. 12. Metalworking
machinery mfg. 15. Other machinery mfg.
Natural resources 9. Sawmills wood
preservation 11. Crop production

• Among industries with more than 100,000
  employees

Source U.S. Bureau of Labor Statistics
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II. Industrial Structure and Future Oklahoma Job
and Income Growth
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How much impact does a changing U.S. industrial
structure have on state job growth?

• Research suggests about 15-20 percent of the
  variation in state job growth rates over 10-year
  periods can be explained by industrial structure.

• In addition, states with favorable industrial
  structures tend to grow even faster than one
  would expect, due to spillover growth to other
  industries.

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Annual employment growth, 2004-2014 if states
industries grow at projected national rate
1.30-1.50
1.20-1.29
1.11-1.19
0.98-1.10
Source U.S. Bureau of Labor Statistics
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The 10 industries contributing the most to
differences between OK and US projections
Source U.S. Bureau of Labor Statistics
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Oklahoma City is projected to have a higher share
of the long-term job growth
Percent
Source U.S. Bureau of Labor Statistics
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The net effect of expected changes in the mix of
jobs is to raise average salaries in OK
Source U.S. Bureau of Labor Statistics
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U.S. and Oklahoma job growth is projected to be
fastest among high-paying occupations
Projected Annual Job Growth by Average Pay
Through 2012
Source U.S. Bureau of Labor Statistics
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III. Meeting Oklahomas Future Workforce Needs
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From 1994-2004, OK met its employment demand
largely by population growth
Average annual growth in employment and working
age population, 1994-2004
Percent
Source U.S. Bureau of Labor Statistics, U.S.
Census Bureau
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but also by increased labor force participation
United States
Oklahoma
Source U.S. Bureau of Labor Statistics
18
Meeting future job demand could be a little
tougher
Projected annual growth in employment and working
age population, 2004-2014
Percent
Sources U.S. Bureau of Labor Statistics, U.S.
Census Bureau
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Non-metro Oklahoma may have an advantage an
untapped labor supply
Source U.S. Census Bureau
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Oklahoma must ensure potential workers obtain
the training necessary to succeed
Source U.S. Bureau of Labor Statistics
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Oklahomas share of college graduates is slightly
lower than in the U.S.
Source U.S. Census Bureau
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Conclusions

• The industrial structure of the United States is
  expected to continue to change in the years ahead
• Oklahomas intermediate-term outlook for jobs and
  incomes, based on industrial structure, is
  slightly less favorable than the nations
• A challenge for Oklahoma heading forward will be
  finding and training the workers needed to fill
  the jobs of the future