The BLS released its employment and labor force projections for the period 2008-2018. The report highlights a more diverse and slower growing labor force stemming from a falling labor-force participation rate. Some headline findings of the report are (bold font by yours truly):
Total employment is projected to increase by 15.3 million, or 10.1 percent, during the 2008-18 period, the U.S. Bureau of Labor Statistics reported today. The projections show an aging and more racially and ethnically diverse labor force, and employment growth in service-providing industries.
Projected employment growth is concentrated in the service-providing sector, continuing a long-term shift from the goods-producing sector of the economy. From 2008 to 2018, service-providing industries are projected to add 14.6 million jobs, or 96 percent of the increase in total employment. The 2 industry sectors expected to have the largest employment growth are professional and business services (4.2 million) and health care and social assistance (4.0 million).
The largest decline among the detailed industries is expected to be in department stores, with a loss of 159,000 jobs, followed by manufacturers of semiconductors (-146,000) and motor vehicle parts (-101,000).
Occupations that usually require a postsecondary degree or award are expected to account for nearly half of all new jobs from 2008 to 2018 and one-third of total job openings. Among the education and training categories, the fastest growth will occur in occupations requiring an associate degree.
The last part is very interesting. According to Table 9 of the employment projections, the growth rates of jobs requiring an associate degree or higher are generally in the double digits. In order to work in a top 10 wage and salary growth industries, one must attain a higher degree.
That little fact explains the projected trend in labor-force participation among those aged 16-24 years: down.
The chart illustrates the BLS’ projection of the labor-force participation rate (LFPR) by age group (Table 3.3). The LFPR is the percentage of the population that is either working or seeking employment. There are two important points here.
First, the 16-24 LFPR is expected to fall another 4-points to 54.5% by 2018. This furthers a downward trend that has been underway for some time.
Second, the population is growing older, but that is not the full LFPR story: older workers are working longer. The LFPR for those aged 65 and older is expected to jump 33% to 22.4% by 2018. This trend has emerged more recently, where just one decade ago the LFPR went essentially unchanged from the ten years prior to that.
In spite of their working longer, and with the downward trend in the 16-24 LFPR, the growing baby-boomer population (individuals born 1946-1964) is expected to drag the aggregate LFPR a point-and-a-half to 64.5% by 2018 (the aggregate LFPR is an average of all age groups).
It should be noted that this is a long-term projection. Therefore, the 2007-2009 recession affects primarily the rates of growth toward the long-run values rather than the levels of employment and the labor force per se. According to the forecast, the unemployment rate is 5.1% by 2018, and the average annual rate of GDP growth is 2.4% (slower productivity growth is expected to drag GDP growth).