Labor Force Projections

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• Labor Force Projections
• Bureau of Labor Statistics
• Mitra Toossi
• Toossi_M_at_bls.gov
• 202-691-5721

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The OEP projections process
Labor Force
Aggregate Economy
Industry Final Demand
Industry Output
Industry Employment
Occupational Demand
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• The Labor Force--What is Projected?

We project the labor force by combining the
population projections and the estimation of the
trends in the labor force participation rates
for seventeen age groups, two gender
groups, and four race and ethnic groups. A
total of 136 age, sex, race and ethnic categories.
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• Definitions

• Civilian labor force comprises all persons 16
  years of age and older in the civilian
  noninstitutional population who
• -are working at full-or part-time jobs, or
• -are unemployed but are actively seeking work
• Civilian noninstitutional population all persons
  16 years of age and older who are not inmates of
  penal or mental institutions
• Labor force participation rate
• Labor force divided by civilian
  noninstitutional population
• 
  

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• Population Projections

• Population projections (estimated by Census)
• - Assumptions on birth rates
• - Assumptions on death rates
• - Assumptions on net migration
• - All assumptions lead to high,middle,low
  scenarios
• Get data in the form of resident population
  from Census middle series

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• Preparing and adjusting population data

• Subtract ages less than 16 years of age
• Aggregate to five-year categories of age data
• Remove the armed forces population
• - BLS makes assumptions on the level, age,
  sex, race and ethnic distribution of
  armed forces
• Remove the institutional population
• - BLS makes assumptions on
  institutionalization over the projection
  period
• Adjust for the undercount
• - Adjusting for changes in CPS weights as a
  result of a new census.

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• How do we project the labor force?

• Maintain a data base of labor force and
  population from the CPS on a monthly basis.
• Analysis of the trends and past behavior of
  participation rates.
• Extrapolation and smoothing of participation
  rates to target years.
• Labor force projection.

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• Smoothing and Extrapolation

• Smooth data to ensure changes are monotone and
  gradual.
• We use nonlinear smoother based on medians and
  moving averages.
• We use a smoothing technique developed by
  Hamming, a so called 5-3-H filter.

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• Smoothing and Extrapolation

• 5-3-H First smoothes using a median of length 5,
  then a running median of length 3 and then a
  center weighed average of length 3.
• Smoothed data transformed into logits or
  natural log of the odds ratio.
• Logits of the participation rates are
  extrapolated linearly by regressing against time.
• The fitted series is extended beyond the target
  year and into the future.

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• Review

• Projected labor force participation rates are
  reviewed for consistency . The time-path (both
  historical and projection), the cross-section in
  the target year and the cohort patterns of
  participation are all reviewed and if necessary,
  modified.
• Projected labor force participation rates are
  applied to the population projections, producing
  labor force projections for each of the different
  age, sex, race, and ethnicity categories.

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• Who uses the Labor Force Projections

• The Macro model within our division
• State Population Projection users
• Congressional Budget Office
• Market researchers
• EEO authorities

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• Some facts about Labor Force

• Factors responsible for Labor Force growth
• -Population growth
• -Labor force participation rate change
• Population growth accounts for most of the labor
  force growth

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• Old categories from 1990 Census

Total -- White -- Black --
Asian and other Total -- Hispanic origin
-- Other than Hispanic origin
White non-Hispanics
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• New Categories from 2000 Census

White (only?no other race) Black (only?no other
race) Asian (only?no other race) All other
groups Native Hawaiian and Pacific Islanders
American Indian Alaska Natives All persons
reporting more than one Race Hispanic (of any
race) Non-Hispanic (of any race) White
non-Hispanic
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• Switch to 2000-based CPS

• Begins with January 2003 data.
• Includes new race categories.
• Includes use of NAICS and SOC.
• Weighted to 2000 census.
• Implies large labor force,
  employment
• Implies more weight for Hispanics

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The labor force will grow more slowly
Annual rates of change
Source Bureau of Labor Statistics
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Population and labor force, 1950
85 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-5
9 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-
4
Labor force
Population
Source Bureau of Labor Statistics
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Population and labor force, 2000
85 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-5
9 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-
4
Labor force
Population
Source Bureau of Labor Statistics
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Population and labor force, projected 2050
85 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-5
9 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-
4
Labor force
Population
Source Bureau of Labor Statistics
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Labor force participation rates of men and women
21
White non-Hispanics remain the largest group of
workers
Percent
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Employment Outlook 2002-12

• Labor force
• Economic growth
• Industry employment
• Occupational employment

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Population and labor force continue to grow
Millions
Population
Labor force
Source Bureau of Labor Statistics
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Population growth rates
Annual rates of change
projected
Source Bureau of Labor Statistics
25
The labor force will continue to grow
Annual rates of change
projected
Source Bureau of Labor Statistics
26
Number of live births, 1920-2002
Millions
Baby boomers
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Population, 2012
80 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-
44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4
Source Bureau of Labor Statistics
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Growth in the labor force ages 55-64 will
increase significantly, 2002-12
Projected percent change
65 and over
55 to 64
45 to 54
35 to 44
25 to 34
16 to 24
Source Bureau of Labor Statistics
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The size of the labor force ages 55-64 will
increase significantly, 2002-12
Projected numeric change, thousands
Source Bureau of Labor Statistics
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Womens labor force growth outpaces mens
Percent change
projected
Source Bureau of Labor Statistics
31
Womens share of the labor force edges up
Percent of labor force
Women
Men
projected
projected
Source Bureau of Labor Statistics
32
Labor force growth rates of minorities will
outpace whites
Projected percent change, 2002-12
Source Bureau of Labor Statistics
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Whites will remain the largest group of workers
Percent of labor force
projected
Source Bureau of Labor Statistics
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Highlights Labor force

• The labor force will
• Continue to grow
• Grow older
• Become more diverse