Industry Output and Employment Projections to 2010: U.S. Employment to 2010 Is Expected to Rise, Although Not as Quickly as in the 1990s; Nonfarm Wage and Salary Workers Should Account for Most of the New Jobs. (Employment Outlook: 2000-10)

Berman, Jay M., Monthly Labor Review

Employment in the United States is projected to increase by 22.2 million over the LJ 2000-10 period. Even though the growth (1.4 percent) is slightly slower than that experienced during the past decade, employment in the economy is expected to reach 167.8 million. Nonfarm wage and salary workers are expected to account for most of the projected employment gains, 152.5 million. Agricultural employment--including wage and salary workers, self-employed persons, and unpaid family workers--is projected to increase by 323,000. Nonfarm self-employed and unpaid family workers are also expected to increase--to 9.1 million--while private household wage and salary jobs are projected to decline by 226,000. (See table 1 .)

Real output among industries is expected to expand by nearly $6.1 trillion between 2000 and 2010, to $22.3 trillion from $16.2 trillion. (1) The resulting average annual growth rate of 3.3 percent closely mirrors that experienced during the 1990-2000 period. Nearly 60 percent of total output growth will be attributed to the service-producing industries, where real output is expected to expand at about the same rate experienced during the past decade--3.4 percent--and reach $13.1 trillion by 2010. Real output growth in the goods-producing sector is projected to increase 3 percent annually, slightly slower than that of the 1990-2000 period. Although comprising just 1.8 percent of the economy's total output, agriculture output is expected to grow at 1.9 percent annually, slightly lower than its previous 10-year growth rate. (See table 2.)

The aggregate picture of the economy for the year 2010 has labor force and gross domestic product growth remaining constant, while rising productivity rates continue to lead the way for output increases. Macroeconomic factors providing the foundation for the industry and output projections include the labor force and demographic changes, Government defense spending and tax policies, foreign economic activity, business investment decisions, personal consumption patterns, and aggregate productivity trends. (2)

Most recent BLS projections of the economy has the labor force growing at an annual rate of 1.1 percent, which echoes that experienced during the 1990-2000 period. Growth of the nonfarm labor productivity index is projected to average 2.8 percent per year from 2000 through 2010, a significant increase from the 2.0-percent rate observed over the previous 10 years. Annual GDP growth is expected to mirror the 3.3-percent rate experienced during the previous 1990-2000 period. Within GDP, business investment is set to continue to outpace household consumption as companies continue to take advantage of technological advances to enhance productivity. Foreign trade, however, is expected to accelerate the fastest as the trade deficit on average by 8 percent annually throughout the projected period, thereby depressing the dollar exchange rate.

Continuing the 1990-2000 historical trend, virtually all nonfarm wage and salary employment growth will be generated by service-producing sector. (3) Even though the goods-producing sector will continue to add jobs, its relatively slow 0.5 percent annual growth is dwarfed by the expected 1.8-percent pace and 20.5 million jobs created by the service sector.

The service industry division represents the strongest growth within the service-producing sector, both in terms of absolute and percentage change. Generating 12.9 million jobs at an average annual rate of 2.9 percent, this industry overshadows the 3.1 million jobs expected to be created by the retail trade industry, the next largest source of employment growth. Together, these two industry divisions make up about 73 percent of the total increase in nonfarm wage and salary employment between 2000 and 2010. Buoyed by a projected increase of approximately 2 million jobs at the State and local level, government employment is expected to rise to 22.4 million. Federal Government employment, only about 17 percent of total government employment in 1990, is expected to continue to decline to 11.7 percent, shedding an additional 154,000 workers by 2010.

Within the goods-producing sector, construction employment is expected to grow at an annual rate of 1.2 percent rate, adding 825,000 jobs over the 2000-10 period; manufacturing employment is projected to grow 0.3 percent annually, but only regain its 1990 employment level of 19.1 million workers. Employment in mining industries is expected to contract 1.1 percent annually--losing 55,000 jobs.

On the other hand, output for the goods-producing sector is anticipated to keep pace with the service-producing industries. Through strong productivity gains, output for the goods-producing sector is projected to increase by 3.0 percent annually (compared with 3.3 percent for the service-producing sector), and generate $2.0 trillion in additional output over the projected period. Manufacturing, the dominant goods-producing industry, is projected to expand by $1.7 million from its 2000 level of $4.6 trillion. Real output for durable goods manufacturing, projected to grow annually at 4.0 percent, is almost double the expected pace of its nondurable goods counterpart. The economy, however, is expected to remain service dominated as that sector's output reaches $13.1 trillion by 2010. The goods-producing sector, alternatively, is expected to generate $7.7 trillion in output by 2010. Almost 40 percent of the projected output for the service-producing industries will be attributed to the services division, which is expected to grow at an annual rate of 3.7 percent, to $4.4 trillion in 2010 from $3.0 trillion in 2000. The transportation, communications, and utilities division, as well as the finance, insurance, and real estate division, are expected to be the next two most influential sources of output growth--increasing 4.4 and 3.0 percent, respectively--and generating $1.3 trillion of combined additional output.

Service-producing sector

Transportation. Jobs in the transportation industries are projected to increase at a 1.9-percent annual rate, to 5.5 million jobs in 2010 from 4.5 million jobs in 2000. Output is projected to increase at a 4.2-percent annual rate, which is faster than that of the overall economy, and the 3.2-percent growth this sector experienced during the last decade. Almost a third of the transportation sector's employment growth and half of its output increases occur in trucking and courier services, except air. (See table 3.) This industry's above-average projected output growth rate of 4.2 percent results in $121.2 billion worth of additional output being generated by 2010, and is one of the largest sources of output growth projected for the economy. With accompanying employment gains of 313,000, rising to more than 1.9 million in 2010 from 1.6 million in 2000, this industry is also expected to be one of the economy's largest sources of employment growth. Complementing the trucking industry, the warehouse and storage industry is expected to be one of the fastest employment and output gainers--increasing by 3.8 percent to 300,000 jobs in 2010, up from 206,000 in 2000. Output for this industry is projected to grow at an aggressive 7.2 percent, and reach $34.9 million by 2010. The effect of electronic commerce and expansion into logistical services such as computer inventory management and just-in-time shipping has been the driving force for growth in these industries. As manufacturers continue to improve supply chain efficiencies by outsourcing their distribution needs, the trucking and warehouse industries will have more visible roles in the economy.

Due to increases in population, disposable income, and domestic and foreign business activity, the air transportation industry is projected to be another sector that stands out. Employment is expected to increase at a healthy 2.2 percent annually over the projected period, resulting in 319,000 new jobs. The projected output growth rate of 4.4 percent surpasses the 2.6-percent rate experienced during the last decade and results in a $66.6 billion increase.

Communications. With a 6-percent projected output growth rate, the communications sector is the fastest growing sector in the economy. Spurred by deregulation and technological innovation, real output for this sector is expected to increase by $330.9 billion between 2000 and 2010, to reach $750.2 billion by 2010. Employment is projected to increase by 277,000 and attain 1.9 million jobs by 2010. Accounting for almost a third of this sector's employment and 80 percent of its output in 2000, the telephone and telegraph communications and communication service industry is this sector's dominant industry. Strong residential and business demand for improved wireline and wireless systems will ensure this industry's prolonged growth. Technology and competition are expected to continue working concurrently to lower prices, increase demand, and spur new innovations. This will result in this industry being the 6th largest and 10th fastest in terms of output. Real annual output growth of 6.5 percent is anticipated, resulting in an increase of $297.1 billion over the projected period. Deregulation has accentuated this trend by allowing this industry to offer a variety of services, such as high-speed Internet access.

As the above-mentioned developments progress, the distinctions between the telephone and the cable and pay television industries will continue to blur. Specifically, industry deregulation and fiber optic technology have enabled the cable and pay television services industry, which was solely a pay television service, to expand into new telecommunication services such as high-speed Internet access, telephone communication, and digital television programming. This has resulted in the cable and pay television industry being in the top 20 in terms of output growth pace. Real annual output growth of 5.7 percent is projected, a $25.4 billion increase over the 2000 level. Similarly, the industry's employment is projected to grow to 325,000 jobs in 2010, up from 216,000 in 2000, making the resulting 4.2-percent growth rate the fourth fastest in the economy. (See tables 4 and 5.)

Retail trade. The retail trade industry, excluding eating and drinking places, is the Nation's largest employer, with about 15.2 million jobs in 2000. Even though the projected employment annual growth rate of 1 percent represents a slowdown relative to the past decade, this industry, by adding 1.6 million new jobs and reaching 16.8 million jobs by 2010, will continue to be the dominant source of employment. Real output for retail trade, excluding eating and drinking places, is projected to grow to $1.2 trillion in 2010 from $926.1 billion in 2000, or at an average annual rate of 2.9 percent. The eating and drinking industry, which is expected to add about 1.5 million jobs, also plays a principal job creation role in the economy. Demographic factors such as increases in population, personal incomes, leisure time, and dual-income families will contribute to employment in this industry increasing to 9.6 million from 8.1 million during the 2000-10 projection period. Output for eating and drinking places is projected to increase at an annual average rate of 2.8 percent.

Wholesale trade. Employment in the wholesale trade industry is projected to increase by 776,000, reaching 7.8 million in 2010, up from 7.0 million in 2000. Real output is expected to expand by nearly $489.3 billion between 2000 and 2010, to $1.4 trillion from $920 trillion. Due in part to its relative size, this ranks the wholesale trade industry as one of the main sources of employment and output growth over the projections period. Employment's projected annual growth rate of 1.1 percent is constrained by consolidations and productivity-enhancing technology such as e-commerce.4 However, reflecting the 4.4-percent growth rate in output, the economy will still need the valuable supply and distribution services provided by the wholesale trade industry.

Finance, insurance, and real estate. Employment in the finance, insurance, and real estate sector is projected to increase by 687,000, up from its 2000 level of 7.6 million. This reflects an annual growth rate of 0.9 percent, slower than the total nonfarm wage and salary increase (1.6 percent) and caused, in part, by deregulation, industry consolidation, heightened competition, and technology-driven productivity gains. However, reflecting aggressive output gains in the security and commodity brokers industry, real estate, and depository institutions--all in the top 20 in terms of output growth--the finance, insurance, and real estate sector's projected output growth rate of 2.9 percent keeps pace with the overall economy. Real output is projected to increase to $2.4 trillion in 2010, up from $1.8 trillion in 2000.

Depository institutions, which include commercial banks, credit unions, and savings and loans, are projected to continue shedding jobs. Trends such as electronic home banking, the increased use of ATM machines and debit cards, and improved credit scoring software that streamlines the loan approval process will underline a projected job loss of 31,000, ranking it in the top 10 largest employment declines. This is contrasted by the $150 billion output growth over the period, reaching $596.3 billion in 2010 (the 2000 level was 446.2 million). With recent industry deregulation, the traditional boundaries between banking and other financial services continue to be obscured as banks begin to offer financial planning, brokerage, and insurance services, a trend that should help mitigate employment declines, while fostering output growth.

The security and commodity brokers industry is expected to be one of the fastest growing sources of annual output growth--6.4 percent. Baby-boomers entering the middle of their peak savings years, the growth of tax-favorable retirement plans, and the globalization of security and commodity markets will contribute to this industry, growing by $248.7 billion to an output level of $540.4 billion--almost double the 2000 level. Employment, adversely effected by telecommunication and computer technology that automates transactions, will create less than half as many jobs over the projected 2000-10 period (152,000) than over the previous 10 years (324,000). This industry's projected total employment of 900,000 represents a 1.9-percent annual growth rate, compared with the 5.8-percent rate experienced over the 1990-2000 historical period.

Real estate employment is projected to rise to 1.8 million (from 1.5 million) between 2000 and 2010, slightly faster than that of the overall economy. A general population increase and the shift in its age distribution over the next 10 years will also contribute to output expanding by 2.3 percent annually, a continuation of the rate experienced over the previous decade. This industry will continue to see productivity and efficiency increases as agents use the Internet to disseminate housing, credit, and payment information, along with wireless products that can transmit data on site.

Services. The variety of industries that make up the services industry, a subset of the service-producing sector, will collectively account for 3 out of every 5 new jobs created in the U.S. economy between 2000 and 2010. Businesses within this sector supply services to a wide variety of other businesses and to individuals. The services industry will contribute 12.9 million of the 21.8 million increase expected in nonfarm wage and salary employment through 2010. Service industry employment is expected to reach 52.2 million jobs in 2010, up from 39.3 million in 2000. This 2.9-percent increase is the highest annual growth rate of any industry division.

Business services. Employment for the business services group increased by 4.7 million over the 1990-2000 period, posting a 6.7-percent annual growth rate. The projected 2000-10 employment increase of almost 5.1 million translates into 14.9 million total jobs, and represents an annual growth rate of 4.2 percent. Despite the relative slowdown in the rate of employment growth, business services are expected to be the fastest growing industry group in the services division. Real output in the business services sector is also projected to grow strongly to $1.3 trillion in 2010 from $713 billion in 2000, or at a division leading average annual rate of 6.0 percent.

The economy's fastest growing industry, and the second largest in terms of employment, is computer and data processing services. Firms in this industry provide prepackaged and specialized software, data and computer systems design and management, and various computer-related consulting services. Reflecting businesses' need to integrate new technologies, capitalize on software enhancements, expand Internet usage and electronic commerce, and maintain network security, this industry is projected to gain 1.8 million jobs over the 2000-10 period, the result of 6.4-percent annual average growth. The persistent evolution of technology and businesses' constant efforts to absorb and integrate these resources in order to enhance their productivity and expand their market opportunities will be the growth catalysts in computer and data processing services. Resonating this trend, this industry is also expected to be both the fourth fastest and largest source of output growth in the economy by 2010. Output is expected to reach $600.8 billion by 2010 (an increase by $322.6 billion from its 2000 level), reflecting an 8.0-percent average annual growth rate.

The largest source of employment growth in the economy is projected to be the personnel supply services industry. (See table 6.) This business services industry, comprising employment agencies and temporary staffing services, is projected to add 1.9 million jobs, to 5.8 million in 2010 from 3.9 million in 2000. Staffing services will be responsible for the majority of this industry's aggressive growth, as businesses endeavor to become more responsive to changes in market demand. However, as companies also strive to reduce costs by contracting out their preliminary employment screening tasks, this sector's employment agency portion will experience growth as well.

Strong employment and output growth is projected in the miscellaneous business services industry. This industry provides a wide variety of services ranging from credit reporting and collection agencies to photocopying, graphic design, and paralegal services. Between 2000 and 2010, real output is expected to expand to $312.8 billion from $197.7 billion, and employment, to 3.3 million jobs from 2.3 million. The miscellaneous equipment rental and leasing industry is another business service whose employment is expected to grow faster than the overall economy. This industry engages in the rental and leasing of equipment primarily to the medical and construction industries. The projected 3.6-percent average annual growth rate yields 118,100 new jobs by 2010.

Health services. Approximately 71.7 million people are expected to be 55 or older by 2010, 15.4 million more than that demographic cohort represented in 2000. Their projected 2.4-percent annual growth rate is more than double the annual increases for the total population aged 16 and older. The gradual aging of the population, coupled with advances in medical technologies that increase life expectancies, will create strong demand for health services. Comprised mostly of health practitioner offices, nursing and personal care facilities, and hospitals, this sector's projected 2.5-percent average annual employment growth rate will yield 2.8 million new jobs.

Reflecting the aging population, nursing and personal care facilities and health services (not elsewhere classified) are expected to be among the economy's fastest and largest sources of future employment growth. Employment in nursing and personal care facilities is projected to increase 394,000 from its 2000 level of 1.8 million. Government budget constraints, the shift toward less expensive home healthcare and assisted living, and a healthier elderly population will limit employment growth in nursing homes. Health services, not elsewhere classified, which includes home healthcare services, is expected to increase at a 4.6-percent annual rate to 1.9 million jobs in 2010, up from 1.2 million jobs in 2000. An aging population, many of whom will have functional disabilities, and the elderly's desire to maintain an independent style of living will result in this industry having the distinction of being the economy's third most rapidly growing industry in terms of employment.

Employment in private hospitals, the slowest growing health services sector, is expected to increase at an average annual rate of 1.2 percent. However, due to this industry's relatively large size, private hospitals are projected to add 510,000 jobs by 2010 and reach a total employment level of 4.5 million. The aging population, new medical technologies, and developments in diagnostic testing and screening that allow more medical ailments to be detected and treated, will continue to increase demand for hospital services. However, shifts from inpatient hospitals to outpatient facilities coupled with progressive technological improvements and industry consolidations will continue to impede long-term growth. These sources that constrain employment growth in hospitals will result in aggressive growth in health practitioner offices. These facilities provide medical, surgical, and dental services outside the traditional hospital setting and are expected to create 1.3 million new jobs--almost half of the new jobs generated by the health services sector. As the shift from inpatient hospital care to outpatient facilities continues, facilitated by medical technology enhancements and managed care cost constraints, employment in health practitioner offices is expected increase at a 3.4-percent annual rate, to 4.3 million jobs in 2010 from 3.1 million in 2000. (5)

Social Services. Industries within the social services sector, second only to the business services sector in terms of employment and output growth, are projected to maintain their relative importance. Social services employment is projected to increase 1.2 million from its 2000 level of 2.9 million. This reflects an annual growth rate of 3.6 percent, more than double the projected employment growth for the overall economy. Output for this sector is expected to increase to $171.4 billion in 2010, up from $103.4 billion in 2000--an annual average rate of 5.2 percent.

The residential care industry--encompassing homes for the elderly, emotionally disabled, and the handicapped, in addition to orphanages, halfway homes, and rehabilitation centers--is also projected to experience rapid growth. The aging population, the avoidance of costly nursing home or hospital care, and an effort to better integrate the physically and mentally disabled into society will result in the residential care industry expanding by 512,000 jobs to 1.3 million by 2010. The subsequent 5.0-percent annual employment growth rate marks this industry as the economy's second most rapidly growing industry. Output for this industry, projected to grow at 5.5 percent annually, is also expected to be among the economy's fastest.

With women's labor force participation rate rising instep with those of childbearing age, the childcare services industry has also emerged as one of the fastest sources of employment growth. Highlighting the progressive social services sector, childcare service employment increased by 6.2 percent, to 712,000 jobs in 2000, up from 391,000 jobs in 1990. As the demographic dynamics effecting this industry slow over the projected 2000-10 period, employment is expected to increase by 298,000, an average annual rate of 3.6 percent. Even though the growth rate pales in comparison to this industry's past, it is still more than double the rest of the economy.

Government. Public sector employment is expected to add almost 1.8 million jobs over the projected years, reaching 22.4 million in 2010. This represents an annual growth rate of 0.8 percent, slightly slower than the 1.2-percent increase experienced during the last decade. Federal Government employment is expected to decline from 2.8 million jobs in 2000 to 2.6 million in 2010. Due to budgetary constraints, the growing use of private contractors, and the transfer of some functions to State and local governments, the annual rate of decline is expected to slow from the 1.0 percent posted between 1990 and 2000 to 0.6 percent through 2010.

The tempering of Government employment at the Federal level is juxtaposed against the size and growth of State and local governments. State and local government employment, adding more than 1.9 million jobs and reaching 19.8 million by 2010, is expected to increase at a 1 percent average annual rate, slightly less than the 1.6-percent rate for all of nonfarm wage and salary employment. Driving this growth is the expected 1.1 million jobs from State and local government education, where more than half of all State and local government employment is found. Slower student enrollment rates at elementary and secondary schools are projected to be offset by increasing demand for post-secondary education, continued career and skills training, and new distance learning opportunities. In addition, proposed government initiatives at the early childhood level such as universal preschool, full-day kindergarten, and reduced class size will sustain this sector's strong growth. (6) By contrast, State and local government hospitals are expected to have large employment declines, shedding 22,000 jobs by the year 2010. These hospitals, providing many safety-net services, are projected to contract due to privatization and budget constraints that temper this often inefficient healthcare provider.

Goods-producing sector

Agriculture. Continued productivity growth, facilitated by more efficient farm machinery and equipment, is expected to be the main catalyst for increased agricultural production. Real output is projected to expand to $315 billion in 2010, up from $260 billion in 2000. However, total employment in agricultural production is projected to decline by 155,000, reaching 1.8 million in 2010. This trend is predominantly due to continued industry consolidation. (7) At the same time, employment in agricultural services--such as veterinary services, crop, livestock, and soil preparation, as well as farm labor and management services--is expected to increase at a steady 2.7-percent rate over the projected period, generating 477,000 new jobs. Increases in the pet and farm animal population, enhanced breeding and livestock management, and continued public health and disease control concerns are expected to raise employment in agricultural services.

Mining. Historical productivity increases are expected to continue this industry sector's dichotomy between output growth and employment decline. Wage and salary jobs, declining by 2.6 percent between 1990 and 2000, are projected to decrease by an additional 55,000. The mining industry as a whole is projected to experience the largest annual decline in employment for any major division, 1.1 percent. Conversely, output is expected to continue to increase to $229.9 billion in 2010, up from $212.1 billion in 2000--an annual average rate of approximately 0.8 percent. The coal mining industry exemplifies this divergence between output and employment growth. As more efficient and automated production methods require fewer workers, employment is projected to decline by 3.5 percent annually, while output is expected to grow to $32.5 billion in 2010, from $25.7 billion in 2000. Dampening the demand for this industry's output is stringent environmental regulations that mandate the reduction in sulfur emissions from coal combustion. However, coal is America's cheapest and most abundant fossil fuel, which will result in its continued reliance.

Accounting for …

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Publication information: Article title: Industry Output and Employment Projections to 2010: U.S. Employment to 2010 Is Expected to Rise, Although Not as Quickly as in the 1990s; Nonfarm Wage and Salary Workers Should Account for Most of the New Jobs. (Employment Outlook: 2000-10). Contributors: Berman, Jay M. - Author. Journal title: Monthly Labor Review. Volume: 124. Issue: 11 Publication date: November 2001. Page number: 39+. © 1999 U.S. Bureau of Labor Statistics. COPYRIGHT 2001 Gale Group.

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