Academic journal article Economic Review (Kansas City, MO)

What Do Expected Changes in U.S. Job Structure Mean for States and Workers in the Tenth District?

Academic journal article Economic Review (Kansas City, MO)

What Do Expected Changes in U.S. Job Structure Mean for States and Workers in the Tenth District?

Article excerpt

Public interest in the future structure of the U.S. labor market has been understandably high in recent years, for several reasons. Some types of manufacturing and service jobs are going offshore. The recovery in employment from the 2001 recession has been sluggish. And the quality of job creation has been called into question. Against this backdrop, policymakers, businesses, workers, and students in the Tenth Federal Reserve District are asking difficult questions about the future of jobs in their area. Will local industries increase or decrease employment in the years ahead? What types of workers will be in highest demand? Are future jobs in the area likely to be high paying?

This article looks at the potential impact of expected changes in U.S. job structure on employment in the Tenth District. (1) Specifically, it analyzes the latest national industrial and occupational employment projections made by the U.S. Bureau of Labor Statistics and discusses what the projections mean for states and workers in the region--both in terms of quantity and quality of job growth through 2012.

The article draws two primary conclusions from the data. First, except in Colorado, the current industrial structures of Tenth District states are less favorable for future job growth than in the nation, although in some cases only slightly so. Second, the prospects for high-quality job growth in several district states may be somewhat lower than in the nation. While high paying jobs are projected to grow faster than low paying jobs across the district, the industrial structures of Kansas, New Mexico, Oklahoma, and Wyoming are not quite as conducive to growth in high paying jobs as in the country as a whole.

The first section of the article explains why and how U.S. industrial structure has changed over time and identifies the industries projected to add and shed jobs the fastest in coming years. The second section discusses the relative importance of industrial structure for state employment growth. It also analyzes the industrial structures of Tenth District states to see if they are favorable for future job growth. The third section describes the projected changes in the mix of occupations nationally and assesses the potential for high-quality job growth in the Tenth District.

I. THE U.S. INDUSTRIAL STRUCTURE OF THE FUTURE

The industrial structure of the United States is likely to change considerably in the years ahead. This section draws from historical data and economic theory to explain why tomorrow's distribution of jobs across industries will look different from that of yesterday and today. The section also analyzes the data available on future industrial structure to determine which industries are expected to add or shed jobs most rapidly.

Why will U.S. industrial structure change?

There are both short and long answers to why U.S. industrial employment structure will change. The short answer is because it has always changed. Over the past 150 years, the industrial composition of U.S. employment has evolved considerably (Chart 1). In 1850, nearly two-thirds of U.S. jobs were in agriculture (Urquhart). By 2000, agriculture's share of total jobs had dropped below 3 percent. The relative importance of the goods-producing sectors of the nonfarm economy (manufacturing, mining, and construction) has also changed, rising steadily from the mid-1800s to the mid-1900s and then dropping off considerably. Meanwhile, service workers in industries such as retail, finance, information, healthcare, and tourism made up less than a fifth of all U.S. workers in 1850--but in 2000 those jobs represented nearly 80 percent of the workforce.

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The longer answer to why U.S. industrial employment structure will look different in the future includes several interrelated factors. First, technological advancements are likely to produce more rapid productivity gains in some U. …

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