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Not So Fast on NH’s Job Growth

March 14, 2019

The monthly payroll employment report gets a lot of attention. The monthly estimates are based on a survey sample of employers (differing from the monthly survey of households that is the source of unemployment and labor force estimates). Prior year monthly payroll estimates are revised early each year as more complete data (than the sample survey) are analyzed.  For a number of reasons (including the fact that newer firms are slow to get included in the survey) NH’s employment estimates more often than not have shown stronger (than first reported) job growth rates. Not this year. The new benchmark numbers have cut the state’s annualized job growth by more than half (to below 1%). The chart below shows the year-over-year growth rate in private sector employment in NH is about 1% (including government employment shows a slightly slower rate of job growth 0.8%).

Benchmark revisions

Early in 2018 I forecast NH’s job growth for 2018 would be about 0.6% (based on labor force constraints – not a weaker economy) and for several months I have been issuing a mea culpa for what looked like a significantly inaccurate employment growth forecast. While my sagacity is less challenged than I originally thought, I was more comfortable with NH’s employment trends when it was.

Categories: Employment Growth, job growth, Labor Force, NH Economy, Uncategorized
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Presidential Campaign Impacts on U.S. Job Growth and Implications for NH

June 9, 2016

The May U.S. jobs report with downward revisions to the March and April job numbers was bad, not bad enough that you should start stocking canned goods and bottled water in your basement but bad nevertheless.  The impact of 35,000 striking Verizon Corp. workers on the May numbers is cited as one explanation for the weak report but there were 25,000 temporary workers hired by the company during the strike so the overall impact was actually fairly small.  Seasonal adjustment factors (the statistical procedure used to smooth regular annual fluctuations in employment data throughout the year– things like Christmas hiring, summer employment of youth etc.) seem to be more problematic in recent years and that may also be a contributor.   Of course it is possible that hiring was just weak, plain and simple.  Hiring will continue to weaken, I just don’t think job growth is really as weak, and the slowdown as rapid, as the May jobs report suggests.

Presidential Campaigns Appear to Impact Job Growth

The first rule of politics is to forget all of the rules of economics and that is more problematic now that the national political climate seems to increasingly influence real economic variables. Think of the impact that debt ceiling debates and government shutdown threats have had on economic activity recently.  With almost no focus in the current presidential election on sound economics and economic policies it is easy to see how politics could  contribute to a weak May jobs report (when the empirical evidence doesn’t provide a clear explanation for economic events it is hard to go wrong blaming politics and politicians).  But there is some evidence that presidential elections can temporarily depress job growth.  The uncertainty of a presidential election, especially in a year without an incumbent, and the people and policies that candidates may employ in their administration can give pause to businesses investment and hiring decisions. The uncertainty surrounding future economic and fiscal policies in a presidential election year should arguably be greater several months prior to the election rather than a month or two when the election outcome and policy directions become clearer.  I compared average private sector job growth (government employment should not be affected) in the U.S. during the months of June-August in presidential election years, to the average job growth from September (of the year prior to the election) to May (of the election year).   Since 2000, in each presidential election year the average private sector job growth from June-August significantly lagged average job growth over the prior nine month (Sept-May) period. The pattern held in 2008 but because the U.S. economy was in free fall for other reasons it is not included here.   In years with no presidential election this generally was not the case (years such as 2002, 2003 and 2007 when the U.S. was entering or exiting a recession are exceptions).

UncertaintyJob growth in NH is going to slow regardless of political uncertainties given existing labor force constraints.  NH is essentially at full employment and the nation is close. The longer a recovery lasts the greater are the chances that job growth will slow.  Still,  there are more uncertainties regarding the presidential candidates and the policies that could affect business and the economy in this election than is typical in a presidential year so it is not unrealistic to think that politics is already affecting hiring and investment decisions.

Will New Hampshire Follow the National Trend?

State level job growth numbers for May will be released June 17th.  In a small state like NH monthly job growth can be especially volatile. Up or down  conclusions about a state’s economy should not be drawn from a single month of employment data.  A three month trend in private sector employment is a better reflection of the direction of a state’s economy and by that metric NH has been on a roll.  The chart below shows that after several years of below national average private sector job growth, the pace of job growth in NH is now at a level equal to the U.S. average.  Moreover, the growth trend for NH has accelerated while the rate of private sector job growth in the U.S. has decelerated.  The rate of private sector job growth NH is going to slow nonetheless,  just as it has in the nation overall.

private sector job growthI don’t think the private sector job growth trend has gotten enough attention in NH.  Many (including me at times) focused on several years of NH’s subpar total non-farm (including government) employment growth.  But as I have noted in prior posts, the percentage drop in government jobs in NH is among the largest of any state in the nation, masking some of the strength of hiring trends in NH’s private sector.  The chart below shows how both private sector and state and local government employment in NH have grown since each sector’s pre-recession peak.  Private sector employment in NH peaked in February of 2008 and after shedding 6% of those jobs during the recession NH has regained that many plus an additional 3%.  State and local government employment in NH did not peak until April of 2010.  It takes a couple of years for property valuations to reflect economic conditions so the largest declines in property valuations – and thus local revenues and employment- occurred as the recession had ended.  State and local government employment in NH is about 8.5% lower than at its peak, with local government shedding about 6,800 jobs and state government about 1,000 jobs.

public vs private sector growth

Labor Market Response in NH May Be Too Late

For too long in NH private sector job growth remained consistent at a subpar rate despite a large increase in help wanted ads in the state.  A combination of slow or no labor force growth and a mismatch between job opportunities and the skills of job seekers were the causes and not a fundamental erosion of NH’s business climate as I argued in this post.

NH US Help Wanted

But now help wanted ads in NH and the nation are slipping (chart above) and while the recovery isn’t over we are getting better more slowly.  Unfortunately, that is occurring just as the labor market conditions –  low unemployment, rising wages, and signs that NH is once again seeing net in-migration from other states, are all resulting in a more rapid expansion of the NH labor force, the key ingredient wages

the state has lacked in recent years to achieve a faster pace of  job growth.

NH Labor force growth

A Bumpy Ride for the Remainder of 2016

I am frequently in error but rarely in doubt and in this post  last fall I was confident NH would again exceed the U.S. rate of employment growth (it is still possible but not likely) and that NH would see a 2.5% increase in total employment in 2016 (that is not going to happen). In fairness, private sector job growth has been on a more than 2% growth pace for the year and I did include two caveats in my forecast last fall: first that labor force growth in NH would have to accelerate (in part due to a resumption in net in-migration to the state) and while the labor force is once again growing in NH,  it is at a pace that may not sustain the 2% plus growth that NH’s private sector is currently on.  Second, the decline in government jobs would have to abate – it hasn’t.  A month ago at a presentation at a local community bank I downgraded my job growth forecast for NH in 2016 from 2.5% to 1.8%.  With more recent national economic data – including the May jobs data and March/April revisions, readings from my PolEcon NH Leading Economic Index, along with the uncertainties produced by the nation’s political climate, I now believe the rate of growth will be just 1.2 to1.4 percent.

Categories: job growth, Labor Force, NH Economy, presidential election, Uncategorized
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A Perfect Labor Force Storm

May 24, 2016

A perfect storm is brewing for the economy and individual businesses in NH and across the country.  Slow labor force growth, the retirement of baby boomers, and weak growth in labor productivity are severely limiting the productive capacity of the nation’s economy.  Between 2010 to 2015 labor productivity in the U.S. increased by just 0.5 percent on average annually, and the labor force by an average of just 0.4 percent.  Since the end of World War II, the combined, labor productivity and labor force growth in the U.S. had never fallen below 1 percent – until 2015 when it was just 0.9 percent. I have written about the the limits labor force growth place on the U.S. and NH economies here and here (and others).  Factors such as the flow of population (state-to-state migration and  international migration), and changes in labor force participation rates will play a large role in determining which states and regions are most affected, but a real possibility exists that the economies of some  states and regions could shrink over time.

Figure 1

A quick assessment of the potential impact of baby boom retirements across the country is illustrated in Figure 1 which shows the ratio of the population in each state that will (or could) be entering the labor force approximately over the next decade – that is individuals currently ages 5-19 –  to those who will (or could) be exiting the labor force – individuals currently ages 50 to 64.   The bars in the graphic that fall below zero indicate states that face more retirements from their labor force than new entrants over the next decade or more.  As the chart shows, the labor force in New England and much of the Northeast will be especially challenged by baby boom retirements as far more individuals will leave than enter the workforce.

In NH, the impact of baby boom retirements will vary greatly by industry.  The Millennial generation will soon be the largest segment of the labor force but their distribution across industries varies greatly.  For this analysis I examined the demographic characteristics of each industry’s workforce in NH.  Figure 2 presents the ratio of early career (age 25-34) to older workers (age 55-64) in major industry groupings in NH.  The graph suggests industries that will be more and less challenged by retirements of the baby boom generation.  Industries that have higher ratios employ more individuals early in their working lives than individuals nearing retirement age.  Several industries stand out for the high percentage of older individuals in their workforce.  Manufacturing is one industry that has had difficulty attracting younger workers and I have written about that issue long ago in this blog, Educational services is another.  Professional, scientific, and technical industries have a surprisingly low percentage of younger workers but an examination of this industry grouping at a more detailed level shows that the legal profession has among the oldest demographics of any industry in the state.

Figure 2

Looking at the age composition of workers in broad occupational groups in NH (Figure 3)  shows how much difference there is across different occupations employed in professional, scientific, and technical industries. The ratio of younger to older workers in the legal profession is just 46 percent, while in computer and mathematical occupations there are many more younger workers and the ratio is 127 percent.

Figure 3

Health care is also a field with a larger percentage of older individuals in the workforce but when the demographics are examined at a more detailed industry level or by specific occupations, it is clear that the industry is bifurcated – with physicians and other health care practitioners having an older demographic while many of the support occupations in the industry that have emerged as health care has become a much larger portion of the economy, have a much younger demographic.

Industry Growth is as Important as Industry Demographics

 The retirement of baby boomers only hints at the industries that could face the most significant labor shortages over the next decade.  Retiring workers may need to be replaced but they may not.  If employment in an industry shrinks or if it grows slowly over the next decade, then labor shortages are likely to be less severe than baby boomer retirements would suggest, even in industries with a higher percentage or older and retiring workers.

 To capture the impact of industry trends on potential labor shortages related to baby boom retirements I combined projected industry growth in NH over the next decade with the ratio of younger to older workers in each industry to produce a supply/demand balance metric.  For illustrative purposes I present the supply/demand calculations for broad industry groupings in Figure 4.  I did the same calculations at a more detailed (50+ industry) level but that level of detail is not amenable to presentation in a single graphic.  It is not possible to know what industries workers entering the labor force over the next decade will work in so these calculations are only rough estimates of potential supply/demand imbalances. As the chart shows,  industries with a relatively older workforce, such as manufacturing, public administration, and utilities, will nevertheless likely confront fewer labor shortages because of slower employment growth in those industries.  Unfortunately, all industries are likely to face shortages in some occupations that are employed and in demand across many industries.

Figure 4

What Can States and Business Do?

The primary shortcoming of Figure 1 is that it is a static representation of the demographics each state’s workforce.  The population and demographic composition of states are not static however.  People move from place-to-place, state-to-state, county-to-county, and country-to- country.  A state or region with substantial labor shortages that is also viewed as an attractive location can see increases in labor supply in response to labor shortages and wages that are rising in response to shortages.   For more than two decades attracting skilled individuals with higher levels of educational attainment has been a key to NH’s economic success, since the mid 2000s however, NH has seen fewer individuals moving into the state from other states.

A popular meme in NH (and in many rural states) is that the state’s labor force challenges are largely the result of young people leaving the state.  But that is a phenomenon that has been occurring for decades in NH as it has in other rural states.   While it plays some role in the state’s labor force challenges, it has not been a key factor contributing to or detracting from NH’s economic performance – either NH’s strong successes of the 1980s and 1990s  or its subpar job growth of recent years. I wrote about who is moving to NH here, the chart below adds who (from an age perspective) left NH during the same recent 5 year time period.

Figure 5

I am not arguing that we ignore the issue of out-migration of youth, but a state budget in surplus along with the “migrating youth” meme is likely to produce proposals for labor supply policies that are likely to be as costly as they are ineffective.  In future posts I will examine the costs and benefits of several labor supply policies directed at increasing the percentage of young people in NH as well as the percentage attending college and remaining in NH after graduation.   NH is not monolithic, some communities and regions have been attracting younger workers and the age structure of their labor forces has not been increasing as rapidly as NH overall.  If policymakers want to attempt to change decades of youth migration trends then these communities are instructive of the types of actions that may or may not help NH capture higher numbers of workers early in their working lives.

Still, migration along with changes in the labor force participation rate among different demographic groups are going to be the primary determinants of the magnitude of NH’s labor force growth in the coming decades. As Figure 6 below shows, net migration from other states (the # moving in versus the # moving out) has been negative in recent years. That is largely the result of a slowdown in people moving to NH rather than a substantial increase in those leaving the state. The chart also shows that net international migration has offset much of the recent loss from state-to-state migration.

Figure 6

International migration of foreign workers into NH has played a critical role in meeting the demand for many occupations in NH.  Overall just under 8 percent of the labor force in NH is foreign born but in some occupations such as computer and mathematical occupations and life and physical sciences occupations, the percentage of foreign born workers in the NH labor force is over 20 percent (Figure 7).

Figure 7

The projections of labor supply/demand imbalances in this post don’t account for  potential increases in domestic or foreign migration but each of these will  play an important role in meeting the demand for labor in the Granite State.  Businesses have little control over net migration to NH so what can businesses do in the face of impeding labor shortages?  Here are some possible strategies to help businesses  meet their labor needs in an era of slow labor force growth:

  • Increase Wages and Pass Costs on to Consumers
  • Expand Automation and Increase Productivity
  • Move to Areas with More Labor
  • Increase Teleworking to Expand Potential Labor Pool
  • Tap the Untapped Labor Pools
  • Provide Incentives to Delay Retirement
  • Rely More on Contingent Workers
  • Recruit (and Train) Discouraged Workers.

These strategies are not available to all businesses or all industries.  Of all, I like providing incentives to delay retirement the best – it is the “revenge of the baby boomers”. More occupations today are less physically demanding and older citizens are healthier than any time in our nation’s history.  Combined, this should allow individuals to work (if they so chose) well beyond traditional retirement years.  For a long while now younger workers have been all the rage.  It is fitting that baby boomers who entered the workforce in numbers large enough to depress wages, and who have seen workplace cultures that increasingly look to appeal to the youngest workers, could see increasing demand for their services at the end of their working lives.

 

Categories: Demographics, Labor Force, New Hampshire, Uncategorized, Workforce
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Who is Moving to NH and Why Does it Matter?

October 5, 2015

A lot of time and energy is expended fretting over young people and recent college graduates from New Hampshire moving to other states. It would be nice if many young people remained in the state but keeping a larger percentage of a shrinking demographic is, at best, a small part of New Hampshire’s longer-term demographic and economic challenges. New Hampshire, along with the rest of Northern New England has been a net supplier of 18-24 year olds to other states for decades and it that hasn’t changed much in recent years. It isn’t exactly a trade but what NH got in return, that is until the mid-2000s to the mid-2010s, was a lot of 30-44 year olds with high levels of educational attainment. The movement of individuals and families into New Hampshire during their early and mid-career years was what set New Hampshire apart from the rest of New England and the Northeast and it is what provided the fuel for the extraordinary rise in prosperity in the state from the 1980s to the early 2000s.

If NH becomes more attractive to young people that is great, but with the lure of several great and exciting cities so close, I don’t think our appeal to the youngest entrants to the working world is likely to be fundamental strength of our state. Still, I say go for it, it can’t hurt unless it takes our state’s “eye off the ball” of what contributed so greatly to our state’s prosperity. Take whatever actions to make our state a “hipper” place for young people as long as those actions also make NH even more attractive to those we have already proven we can attract and retain. Attempting to address whatever shortcomings NH has in the eyes of young people is a noble goal but no entity thrives for very long if it spends most of its time addressing its failures instead of feeding its successes. In this case, NH’s success is its demonstrated appeal to early and mid-career individuals and young families. After a decade of limited net in-migration from other states (more people moving in than moving out) and even net-out migration, in-migration to NH from other states is once again rising.

I confess to being a huge fan of the middle of the age distribution. Attracting those in the middle won’t give a state the lowest median age but it does help keep a state’s median age relatively stationary in the face of declining birth and mortality rates. More importantly, the benefits that individuals age 30-54 confer on an economy are much more important than are the benefits conferred by the 18-25 crowd. A younger workforce has been in favor since the 1980’s and capturing recent college grads is an obsession in NH and in many states, but in reality the strong economic growth that characterized the US and NH economies during much of the 80s and 90s, was, in part, the result of an increasingly high percentage of workers age 35-54, and a corresponding decline in the % age 20-34. In the aggregate, workers age 35-54 are our most productive. They have more accumulated expertise, knowledge and training than younger workers, at the same time they work more and are in their “peak” earning years. The high % of workers age 35-54 during the 1990s likely played a significant role in boosting our national and state productivity. The 35-54 age group works and earns earn more than older workers, boosting overall income levels and government revenues, at the same time this age group invests and saves more than the 20-34 age group, contributing to lower inflation and interest rates at the national level. As the chart below shows, NH’s period of strongest economic growth (as well as the nation’s) coincides with an increasing % of workers age 35-54.

Age comp of labor force

So, as I hurtle relentlessly toward the dying of the light I say three cheers for middle-age and let’s hope NH keeps attracting skilled, well-educated individuals and families in their peak working and earning years. My analysis of the last five years of NH data from the Census Bureau’s “Current Population Survey” suggests that is what is happening, boosting the prospects for accelerating prosperity in NH along the way. I examined the characteristic of some 22,000 individuals from the survey, over four years, who indicated that they had moved into NH during the prior 12 months period (I also examined the characteristics of those who moved out but that is another post). The age composition of in-migrants age 18 and older is presented in the chart below. It shows that the largest group of in-migrants was ages 25-34, representing 44 percent of the adult age migration to NH during the 2011 to 2014 time period. Another 25 percent were in the larger age 35-54 age group. New Hampshire will do quite well thank you very much if it can attract more of these individuals than it loses to other states each year. Net in-migration to NH resumed in 2013 and anecdotally appears to be accelerating in some parts of the state.

age comp of in migrants

As encouraging and important as the age composition is of in-migrants to NH is, the educational attainment of in-migrants is perhaps even more so. On that front there is even more encouraging news. About 55 percent of in-migrants age 25 and above hold a post secondary degree, with 47 percent holding a bachelor’s degree or higher. This is significantly higher levels of educational attainment than in the current population of NH residents age 25 and above.
ed attain of in migrants

I am waging my own private campaign (with limited success) to keep three of NH’s best and brightest young people in our state. Efforts to attract well-educated, early career and middle-aged residents aren’t nearly as exciting as campaigns to entice the young and the restless to remain or migrate to New Hampshire, but they are likely to pay greater dividends over the long-term for New Hampshire.

Categories: in-migration, Labor Force
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Jobs Just Don’t (and Won’t) Grow Like They Used To

June 29, 2015

A late boss of mine used to say “We all know the time when education in this country started to go downhill; it was the day after each of us graduated.” I am trying to not let nostalgia influence my views of the current labor market and prospects for job and economic and growth. In prior posts I have tried to make the case that slower labor force growth (and to a degree a skills gap) is the fundamental factor constraining growth in the NH economy. In my last post I wrote: “Looking ahead, population and demographic projections show that both nationally and in NH, the working age population (defined here as age 18-64) will show almost no growth over the next 25 years.” If that was written in another’s blog I would have dismissed it if it was not empirically supported, especially if it was as fundamental to the analysis as it was in my post. Regardless of whether you agree with or have even read the analysis in that post, the population and labor force trends it references are keys to understanding critical obstacles to future economic and employment growth.  In this post I provide some documentation and my interpretation of those trends.

It is important to make the distinction between growth in the “working age population” (which my prior post referenced) and “growth in the working age labor force,” (which is a more appropriate measure for the main thesis in that post.). While the two measures  move in the same direction, the magnitude of change can differ as the age composition of the population changes and as  trends in labor force participation among different age and demographic groups change over time. Longer-term trends (as opposed to shorter-term or cyclical trends – those affected by business and economic cycles) in labor force participation can mitigate or exacerbate some of the population trends affecting the size of the labor force.

“Prediction is very difficult, especially if it’s about the future”
—Neils Bohr, Nobel Laureate in Physics

First, let’s look at the assertion from my prior post that: “the working-age population …..will show almost no growth over the next 25 years.” That is a remarkably imprecise statement on which to base any analysis and its accuracy depends on your definition of “almost no growth,” as well as how you define the working-age population.  The chart below shows the U.S. Census Bureau’s “middle scenario” for U.S. population growth to the year 2060. In the chart I show four definitions of “working-age population” along with the cumulative growth rate of each. Three of the four definitions begin at age 22 to reflect the adult working age population. The three definitions include: ages 22-64 that recognizes a historical traditional retirement age at 65, as well as two others (ages 22-69 and ages 22-74) that reflect mortality, health, occupational, and retirement trends that have many individuals working beyond traditional retirement ages. To show that adding the younger population has relatively little impact on the trends I include a traditional definition of working-age population that includes individuals ages 16-64.

working age pop growth

The chart shows that the “adult working-age population” is projected to grow by about 10 percent over the next 25 years (between 2015 and 2040) in the first two (more traditional) definitions of working-age and by a much larger 15 percent for the definition that extends “working-age” population to ages 22-74. “Almost no growth” may overstate the decline in the rate of growth but, for me, 10 percent growth over 25 years is pretty close to almost no growth, especially by historical standards. I think the chart highlights the important role that older individuals could play in employment growth in the future. I like to call this the “revenge of the baby boomers” who first entered the labor market in competition with large numbers of other boomers and who experienced resulting demand for their labor that could not always keep up with the big increase in supply. Much later in life boomers who wish to continue working will likely see demand for their labor higher than it has been in the past for older workers.

The Distinction Between Population and Labor Force Growth

How growth in the “working-age” population translates into growth in the labor force is a function of the age composition of the labor force and the labor force participation rates among the different age groups in the population. Participation rates are highest between ages 25 and 54, much lower among teenagers, lower among 22-24 olds and much lower and declining at ages 55 and above. Thus when the population is growing in high participation age groupings (between 25 and 54) labor force growth will grow more similarly to population growth than when more of the growth in population is among younger (under 25) and older (55+ individuals). That is illustrated in the following two charts. The chart below compares cumulative population and labor force growth between 2015 and 2060 in the broadest definition of “working-age population” which here includes ages 16-74. Labor force projections incorporate a forecast of an increase in labor force participation rates for all age groups above age 55 (averaging about a 5% increase in participation rates) consistent with projections of participation made by the U.S. Bureau of Labor Statistics. The increase in labor force participation among individuals aged 65 and above is not simply a result of individuals who are not able to financially retire (although that does play a role), it is also a function of the better health of older individuals and a decrease in the percentage of jobs in the economy that are physically demanding, among other factors. For age groups in the middle age ranges there is a slight decline in participation rates (averaging about 0.4%), and for the youngest age groups a decline averaging 3.6 percent.

Combining the age distribution of the growth in the working-age population with trends in labor force participation shows that actual labor force growth among the population ages 16-74 is going to be much smaller than population growth because so much of the population growth will be among age groups with the lowest labor force participation rates.

16-74

When a the “adult working-age population” is examined (including ages 22-69), little difference between the cumulative population and labor force growth is seen, with time periods where growth rates are identical and some during which cumulative population growth is slightly higher.. This occurs because the combination of growth in the ages 55-64 population and an increase in the labor force participation rate of this age group compensates for the decline in participation among the youngest age groups and slower population growth in the high participation age groups (25-54).
22-69 growth

Population and Labor Force Growth Over the Next Several Decades Will Support Job Growth That is Less Than One-Half of Current Employment Growth Rates

Each of the graphs above show a labor force that is growing nationally (in fact some states will likely see an outright decline in their labor force). Because the charts show labor force growth it is easy to miss the significance of a slower rate of labor force growth on the U.S. economy and future job growth. Over the past three years the average monthly job growth in the United States has averaged about 200,000 jobs. Real labor force growth hasn’t been sufficient to accommodate that level of growth but because of the layoffs in the labor market during the recession there was enough slack (unemployed individuals and individuals temporarily out of the labor market) in the labor market to allow for that level of job growth. Eventually that slack will be taken-up and job growth will be more constrained because of labor force growth and wages will rise in response to tighter supply (that is just beginning to happen). That was the essence of my thesis about the interaction between NH’s business taxes and demographic and labor market trends.

During the non-recessionary years of the 1990’s the average monthly job growth in the U.S. was about 243,000. Those monthly job growth numbers include jobs going to individuals below the age of 22.  While my analysis primarily is concerned with the adult working-age population (ages 22+), including the labor force ages 16-21 into the analysis changes the population and labor force growth trends very little. Even including individuals ages 16-21 into labor force projections labor force growth will not support an increase in 200,000 plus jobs in the coming decades (except following a recession when substantial layoffs and slack in the labor market exist)..

To illustrate that point the chart below translates the annual increase in the nation’s adult labor force into a potential monthly job growth for the nation (if all of the increase in labor force were employed) under four definitions of the labor force. The chart shows that under a traditional (ages 22-64) or a maximum expansion (ages 16-74) definition of the labor force, annual growth will not sustain current or historical rates of monthly employment growth. During years of the highest labor force growth, jobs would grow only at about one-half the current monthly rate of job growth in the U.S.

LF to job growth conversion

Caveats and Conclusions

Long range forecast and projections are always problematic but the scenario of slower labor force growth and greater competition for labor outlined in this and my previous post will play out even if the degree to which it does has some uncertainty. Despite the overall U.S. trends it is important to note that population and labor force growth will vary greatly among states. Unfortunately NH and other Northeastern states currently are confronting trends that are on the negative end of the spectrum for population and labor force trends.

When the percentage of women in the labor force increased dramatically beginning in the 1970s the labor market was fundamentally changed and the growth potential of the economy was given a tremendous lift. There are no equivalent transformative changes on the labor market horizon. More individuals will work later into their lives but it won’t have the same economic effects as did the increase in labor force participation among half the nation’s population. In addition there has been on ongoing trend of declining labor force participation rates among young people that is, in large part I believe, attributable to the increase in post secondary school enrollments over the past few decades and this partially offsets increases in participation among older individuals. Perceptions of the need for and value of a at four-year college degree are increasingly being challenged so it is possible that the trend of lower labor force participation rates among the young may begin to reverse. The scenario presented here is based on the assumption that current international immigration and state-to-state migration trends will continue unchanged into the future. It is possible that if labor shortages are severe enough in the northeast, we would we see increased net migration into the region, and once again into NH.  But the potential pool of labor which NH can attract will be growing more slowly, making attracting “talent” to the state ever more challenging. That is one reason why I stress the importance of making states and communities attractive to individuals (of all ages) as well as attractive to businesses. Net inter-state migration to NH will likely increase from recent low levels, however, only if the state and its communities offer enough of the amenities and enough of a value proposition to justify that net in-migration. Finally, it is also possible that labor shortages will spur action to increase rates of international immigration to the U.S.. Prediction is indeed very difficult – especially when it is about the future. and especially when it involves a long horizon and as many variables as do population and labor force growth. But for now, my money is on the scenario outlined in this and my previous post.

Categories: Employment Growth, Labor Force, Labor Force Participation, NH Economy, Population Growth
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Give Me Your Huddled, Talented Masses

April 19, 2013

This is a week that reminds us of how many people from around the world  want to harm the U.S.  and just how easy it can be.  This is a day when a daughter who was supposed to be coming home for the weekend  is unable to leave her apartment, catch the “T”  or even get a cab to North or South Station where no trains or buses are leaving the city of Boston anyway.  For me at least, its not an easy time to be rationale and analytical.  That is precisely why this is an especially good afternoon to highlight, in one small way, how much the presence in the U.S. of individuals from the rest of the world contributes to our economy, communities, and society.

A lot of attention is focused on the relative inability of the U.S. to produce enough individuals with the education and training needed to fill critical  openings in scientific, technology engineering and mathematics (STEM) fields.  Why that is is the subject for another (or many other) posts.  There aren’t enough individuals in this country with STEM degrees to meet existing demand according to businesses that employ them.  Looking at unemployment rates for individuals with science, tech, engineering and math degrees seems to validate that belief.   But the U.S. would be even further from meeting the demand if it were not able to tap a global labor market.

I’ve been looking at trends that affect recent college graduates so I will focus on the importance of foreign-born individuals to the supply of skilled workers among recent college graduates and younger workers in the U.S..  I sorted data on individuals in the U.S. workforce,  age 24-29, with a Bachelor’s degree or higher, according to the college major of their first college degree, and then by the percentage of individuals in each major that were foreign-born.  The results are striking.  Overall, about 13.6 percent of all workers age 24-29, with at least a Bachelor’s, are foreign-born.  However, the percentage in STEM majors is dramatically higher, comprising  30, 40, to as much as 50 percent of young people and recent graduates in some major fields of study.  By far, the majors with the highest percentage of individuals that are foreign-born are STEM majors.

Foreign Born STEM Grads

The data make clear how important the rest of the world is, and will continue to be, in meeting our economy’s demand for skilled workers.  On an afternoon, in a day, during a week, like this one, data doesn’t have much influence on our thoughts or maybe just not on mine, and that is all the more reason to look closely at it.

Categories: Educational Attainment, Labor, Skills Gap
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The Feminization of NH’s Workforce

October 22, 2012

Nothing gets you thinking about gender equity issues more than being the father of three daughters, except maybe being the father of four or more daughters.  In my upcoming October edition of  “Trends Lines” I am looking at trends in NH’s labor force.  One of the more significant trends is the increasing percentage of women employed at businesses in NH.  Despite the fact that men participate in NH’s (and the nation’s) labor force at higher rates (about 9% higher in NH) than do women, women now are a slight majority of employees at businesses in NH.  Women comprised 51% of employees covered by unemployment insurance during the third quarter of 2011 – the most recent data available.   Only in Hillsborough and Sullivan Counties are men a majority (and by less than 1%) of employees at NH businesses.

Among workers with the highest level of educational attainment, those with a bachelor’s degree or higher, women comprise 52% of those employed by NH businesses.   Moreover, the percentage of NH workers with the highest levels of educational attainment who are women is likely to increase because the percentage of new hires (not including recalls of  layoffs), with at least a bachelors degree, who are women, is now even higher (53% – see chart below).  These differences don’t seem large, but over time  they have tremendous implications for the economy and for society.

I don’t know if this data says more about the changing nature of the workplace or the changing nature of the male workforce, but as the father of three daughters, my anecdotal experience leads me to believe it is more about the latter.

Categories: Demographics, Gender, Help Wanted, job growth, Labor, Recession
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