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Proposed Changes to BLS Replacement Rate Methodology Michael Wolf Employment Projections Program PMP Summit June 3, 2014.

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Presentation on theme: "Proposed Changes to BLS Replacement Rate Methodology Michael Wolf Employment Projections Program PMP Summit June 3, 2014."— Presentation transcript:

1 Proposed Changes to BLS Replacement Rate Methodology Michael Wolf Employment Projections Program PMP Summit June 3, 2014

2 Overview Proposed Methodology Advantages of New Method Analysis of Results Issues and Future Considerations 2

3 Proposed Methodology 3

4 Proposed Method Survey data are used to measure labor force exits and occupational transfers Regression models are used to estimate projected rates of separations for each occupation Projected rates are used to calculate projections of separations 4

5 Labor Force Exits 5 CPS measures individual household members for 4 months, then for 4 months again after an 8 month break If a matched worker was in the labor force for the first 4 months, and out of the labor force for the last 4, they are counted as having exited the labor force

6 Labor Force Exits 6 Records where individuals moved in and out of the labor force within either 4 month period are excluded from analysis Intended to remove temporary leavers and those marginally attached to the labor force Also removes noise from the data

7 Occupational Transfers 7 If CPS ASEC (March) supplement asks about work activity in prior calendar year Respondents are asked whether their longest job in the prior year was the same as their current job If not, the occupation of their longest job from the prior year is coded

8 Occupational Transfers 8 If Why ASEC supplement? Monthly CPS occupation data is only dependently coded for months 2,3,4 and 6,7,8 – values a year apart are independently coded January supplement also asks about occupation from prior year, but is more seasonally affected, and also is only conducted biennially

9 Occupational Transfers 9 If If respondents were employed in a different SOC major group in the prior year, they are considered to have transferred from their prior occupation Major group transfers used because Major group coding is more reliable Eliminates transfers between comparable occupations, like retail salespersons and parts salespersons

10 Comparison – data use 10 If Cohort method takes difference between estimates of employment for a specific occupation by age cohort at two points in time Alternate method uses longitudinal aspects of CPS to directly measure workers who separate from the labor force or transfer occupations

11 Comparison – concepts 11 If Cohort method measures separations net of entrants for each cohort – some separations are not measured Labor force method measures leavers who are out of the labor force for a full 4 months Occupational transfers method measures workers who change SOC major occupational groups

12 Advantages of New Method 12

13 Direct Measure Longitudinal survey data identifies individual workers who leave an occupation Old method uses panel data and demographics to estimate the number of workers who leave 13

14 Differentiation of leavers 14 Clearer for users what is being measured Still cannot directly estimate retirements

15 Robust methods Regression uses more information Explanatory variables include:  Age  Sex  Educational attainment  Economic conditions 15

16 Robust methods Projections incorporated consistently  Old:  New: 16 Employment Change Replacement Needs Job Openings due to Growth and Replacement Needs 2,6003,8006,400 -5,8005,000 Employment Change Occupational Separations Openings due to Employment Change and Occupational Separations 2,40017,20019,600 -5,80019,40013,600

17 More reliable results Method works for new SOC occupations Fewer proxies for small occupations All together, data available for 118 additional occupations 17 Occupation TitleReplacement Rate Occupational Separation Rate Computer systems analysts15.7%54.5% Information security analysts15.7%54.1% Web developers15.7%63.7%

18 More reliable results Consistency year to year 130 occupations had rates that changed by at least 10 percentage points Replacement Rate Replacement Rate Actuaries Animal Trainers Budget Analysts Dredge Operators

19 State-based results Demographics of occupations vary state-to-state Regression coefficients must be based on national data Can be applied to state-based demographics 19

20 Analysis of Results 20

21 Total Job Openings 2012 employment of 145 million projected to increase to 161 million by Projected job openings, :  16 million openings due to growth  155 million separations – 65 million labor force leavers – 90 million occupational transfers  171 million openings in total 21

22 Total Job Openings What does 171 million openings mean?  Equivalent to every current worker either leaving the labor force or changing occupations once, on average, over the next 10 years  JOLTS shows 558 million hires, 553 million separations, from  BLS projects 35 million labor force entrants from

23 Example - Teachers NCES Projections 2012 Employment 2022 Employment Employment Change, New Hires, Elementary and Secondary teachers3,511,0003,931,000420,0004,201, BLS Projections 2012 Employment 2022 Employment Employment Change, Job Openings due to Growth and Replacement Needs, Openings due to Employment Change and Occupational Separations, Preschool, primary, secondary, and special education school teachers4,115,3004,544,700429,4001,401,2003,537,600

24 Example - Lawyers 24 Job Openings due to Growth and Replacement Needs, Openings due to Employment Change and Occupational Separations, Lawyers196,500414,600 ABA reports 29,000 law school graduates find employment in positions requiring bar passage on average from

25 Example – Registered Nurses 25 NCSBN reports an average of 211,000 newly licensed registered nurses per year, Job Openings due to Growth and Replacement Needs, Openings due to Employment Change and Occupational Separations, Registered nurses1,052,6001,853,700

26 Issues and Future Considerations 26

27 Issues Who will fill these openings?  Old/young  New/experienced  Education level/degree  Foreign/domestic 27

28 Issues Communications with data users  New methods  New terminology  Significantly different results 28

29 Next Steps Gather feedback through Summer 2014 Review and modify methods, if necessary Final decision by end of calendar 2014 Next projections published December

30 Contact Information Michael Wolf Branch Chief Employment Projections Program


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