by Teri Fritsma
Economists rely a lot on employment projections to predict labor market trends over time. These projections are “best estimates” about how much different career fields will grow over the next ten years. Each state, including Minnesota, develops a new set of these projections every two years, and there are also national-level employment projections.
Most people assume that a high-growth field is also a high-demand field. If the field of computer programming is projected to double in size, for example, it’s logical to think that there will be a high demand for computer programmers over that time period. But is that right? Does employment growth always translate into demand?
It turns out, the answer is — not always. There are at least two reasons.
The first has to do with basic math. A high growth rate doesn’t always mean a large number of new openings. Think about a small occupation, like Athletes & Sports Competitors. In 2006, there were about 209 professional athletes in Minnesota. The occupation is projected to grow by about 25% between 2006 and 2016, which is a much faster growth rate than the Minnesota average of 9.8%. But because this is a pretty small occupation to begin with, a 25% growth rate translates into just 51 new jobs. In a state with 2.6 million workers, that’s not a lot of jobs.
The second reason is turnover. People leave their jobs to retire, move, or take a different job. Take an occupation like Machinist. This occupation is projected to shrink in overall employment over the next ten years. Yet the number of projected openings between 2006 and 2016 is 1,380 — a lot more openings than some of the fastest-growing occupations will have. Why? Because about 1,380 people are projected to retire or permanently leave the field.
So does this mean that projections are meaningless? Not at all. What it means is that, like any data, you have to understand what it can tell you. Labor demand is complicated; to really get a handle on it you have to know more about what’s going on in an occupation and the labor market conditions surrounding that occupation. More on this later. For now, it’s just important to know that there may be better indicators of demand out there — for example, check out this Occupations in Demand tool on the Minnesota Department and Economic Development website. (ISEEK also publishes this OID data on our regional web sites, like this one.)