Assumptions and Methods Used in Preparing Employment Projections

The projections reflect the knowledge and judgment of staff in the Bureau's Office of Employment Projections, who prepared them, and of knowledgeable people from other offices in the Bureau, other government agencies, colleges and universities, industries, unions, professional societies, and trade associations, who furnished data and information, prepared reports, or reviewed the projections. The Bureau, of course, takes full responsibility for them.

Assumptions. Because the future course of the economy is uncertain, the Bureau prepares three scenarios of future economic growth—low, moderate, and high—with varying assumptions about growth of the labor force, output, productivity, inflation, and unemployment. The information in the Handbook is based on the moderate-growth scenario, which is characterized by slightly higher productivity growth than in the past, slowing labor force growth, a roughly constant unemployment rate, and a decreasing trade deficit. Other assumptions include real cuts in defense spending, a slight decline in consumer spending on automobiles, and an increase in consumer spending on durable goods such as computers and household electronics. Spending on food and beverages will grow more slowly than the average for all consumer expenditures, while spending on health care and other services, such as entertainment, recreation, and financial services, will grow faster. Investment in production equipment, including that for factory automation, communication, and computer items, will grow rapidly. Offsetting the expected slowdown in residential construction will be a relatively strong resumption of growth in nonresidential construction, leaving overall construction growing roughly as it did in the past.

While the Bureau considers these assumptions reasonable, the economy may well follow a different course, resulting in a different pattern of occupational growth. Growth also could be different from that projected here because most occupations are sensitive to a much wider variety of factors than those considered in the various models. Unforeseen changes in consumer, business, or government spending patterns and in the way goods and services are produced could greatly alter the growth of individual occupations.

Methods. This section summarizes the steps by which the Bureau arrives at projections of employment by occupation. BLS uses Bureau of the Census projections of the population by age, gender, and race, combined with projections of labor force participation rates, to arrive at estimates of the civilian labor force.

The projections of the labor force and assumptions about other demographic variables, fiscal policy, foreign economic activity, and energy prices and availability form the input to the macroeconomic model. This model provides a balanced and internally consistent representation of the U.S. economy. It projects GDP and the distribution of GDP by its major demand components—consumer expenditures, investment, government purchases, and net exports. These are broken down by detailed component, such as health or housing. The resulting estimates of demand for goods and services are used, in conjunction with detailed input-output tables, to project industry output of final products as well as of products required in the production process—total output by industry.

Industry output of goods and services is then converted to industry employment. Studies of trends in productivity and technology are used to estimate future output per worker hour, and regression analysis is used to estimate worker hours. These estimates, along with output projections, are used to develop the final industry employment projections.

An industry-occupation matrix is used to project employment for wage and salary workers. The matrix shows occupational staffing patterns—each occupation as a percent of the work force in every industry. It includes 260 detailed industries and 513 detailed occupations. Data for current staffing patterns in the matrix come primarily from the Bureau's Occupational Employment Statistics surveys, which collect data from employers on a 3-year cycle. The occupational staffing patterns for each industry were projected based on anticipated changes in the way goods and services are produced, then applied to projected industry employment, and the resulting employment summed across industries to get total wage and salary employment by occupation. Using this method, employment is projected to grow faster than average in those occupations concentrated in fast-growing industries and more slowly in slow-growing industries. For example, health care workers are expected to grow rapidly, reflecting rapid growth of health care industries.

Employment in an occupation also may grow or decline as a result of many other factors. For example, rapid growth is expected among teacher aides and educational assistants as increasing attention to the quality of education leads schools to hire more support staff. Rapid growth is also expected among computer systems analysts as technology advances and organizations place more emphasis on network applications and maximizing the efficiency of their computer systems. On the other hand, automation, the expanding use of computers, and developments in computer software enhance productivity and will result in slower than average growth among many clerical workers, machine operators, and assemblers—thus lowering their proportion of the labor force. The projected-year matrix incorporates these expected changes.

Data on self-employed workers in each occupation come from the Current Population Survey. Self-employed workers were projected separately.

Replacement needs. In most occupations, replacement needs provide more job openings than growth. Replacement openings occur as people leave occupations. Some individuals transfer to other occupations as a step up the career ladder or to change careers. Some stop working temporarily, perhaps to return to school or care for a family. Other workers—retirees for example—leave the labor force permanently. A discussion of replacements, including separation rates for selected occupations, is presented in Occupational Projections and Training Data, 1996 Edition, BLS Bulletin 2471.

Occupational Outlook Handbook Home Page