1-year Review of 2018 Employment Industry Forecast Louisiana Workforce Commission Division of Economic Development Louisiana State University

Methodology 1.Baseline statistical model from historical data using the MicroMatrix software (846 regional industry forecasts) 2.Review statistical forecasts by industry –Economic causes of trends –Input from Louisiana driver firms –Economic development projects and major announcements 3.Staffing patterns are applied to convert industry projections to occupations 4.Replacement rates are applied to create total demand 5.In-demand occupations are identified

Mid-cycle Review Input from driver firms Major economic events –Economic Development Projects –BP Oil Spill –Health Care Reform Staffing Patterns Replacement Rates

Louisiana Driver Firms Number of firms150 Direct Employment218,947 Total LA Jobs Created613,967 Direct Wages$3.2 billion Total LA Sales Created$46.4 billion Driver Firms

Region 1 (New Orleans) NAICS 331: Primary Metal Manufacturing

Region 1 (New Orleans) NAICS 333: Machinery Manufacturing

Region 1 (New Orleans) NAICS 336: Transportation Equipment Manufacturing

Northrop Grumman Update Northrop Grumman plans shipbuilding unit spin-off Defense contractor Northrop Grumman Corp. says its board has approved the expected spin-off of its shipbuilding business to stockholders, following nearly a year of mulling alternatives for the struggling unit. Under terms approved by the board, Northrop Grumman stockholders will receive one share of the shipping business, Huntington Ingalls Industries Inc., for every six shares of Northrop Grumman stock they hold on March 30. Shares of the shipbuilding business will begin trading under the symbol "HII" the next day. The unit has struggled from a slowdown in Navy shipbuilding contracts and increased competition from rivals such as General Dynamics. Northrop and other defense contractors have also been under pressure from the Pentagon to cut costs, forcing them to shrink. When Northrop said in July it would explore strategic alternatives for the unit, it also announced the planned closure of its main Louisiana shipyard. The Avondale facility in Louisiana is slated to close by 2013.

Region 1 (New Orleans) NAICS 721: Accommodation

Region 2 (Baton Rouge) NAICS 321: Wood Product Manufacturing

Region 2 (Baton Rouge) NAICS 524: Insurance Carriers and Related Activities

Region 2 (Baton Rouge) NAICS 920: State Government

Region 5 (Lake Charles) NAICS 336: Transportation Equipment Manufacturing

Region 5 (Lake Charles) NAICS 721: Support Activities for Transportation

Region 7 (Shreveport) NAICS 333: Machinery Manufacturing

Region 7 (Shreveport) NAICS 336: Transportation Equipment Manufacturing

Region 8 (Monroe) NAICS 336: Transportation Equipment Manufacturing

Region 8 (Monroe) NAICS 325: Chemical Manufacturing

Oil Spill Significant short-term impact to industries that depend on the Gulf of Mexico: –Fishing, Shrimping, Oystering, Crabbing –Tourism –Oil and Gas Extraction and Support Activities Long term impacts remain uncertain (much more clarity after one year passes)

Health Reform Significant Expansion of Insurance Coverage –16 million uninsured would purchase insurance through exchanges by 2019 –16 million additional people on Medicaid or CHIP by 2019 –Expansions alone would add $164 billion to the federal deficit in 2018 –Per capita, uninsured individuals spend 60% less than insured individuals. For the group that would gain coverage, per capita spending would rise by percent (bringing their per capita spending to 75-90% of those already insured) Significant reduction in reimbursements –Changes to federal spending (including reduced reimbursements) alone would reduce the federal deficit by $116 billion

Net Effect of Health Reform? The big negative and big positive effects are likely of similar magnitude Care within Medicare population may decrease while care will increase for the newly insured Downward cost pressure of reduced reimbursements will likely change the mix of workers needed

Summary Overall effect of recommended changes is an increase in 2018 forecast for statewide employment of 2,422. New Orleans, Shreveport, and Lake Charles RLMAs had increases in overall forecasted employment relative to the current 2018 forecast. Baton Rouge, Alexandria, and Monroe RLMAs had modest decreases to the 2018 forecast resulting from this year’s review. Total forecasted 2018 employment for the Lafayette and Houma RLMAs remained unchanged after review. Changes recommended to staffing patterns