Employment Projections Methods

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Employment ProjectionsMethods

• Alexander Roubinchtein, Ph.D.,Economist
• Labor Market and Economic Analysis Branch

Employment Security Department Washington State
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Two Main Steps in Occupational Projections

• 1. Develop employment projections by industry
• 2. Convert industry projections to occupation
  based on industry's staffing pattern
  (occupation/industry ratios)

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The Main Steps for Employment Projections
OFM, OFC- the major state indicators
Aggregated covered employment time series from
1990Q1 to 2005Q2
Global Insight model, regression and auto
regression models
Draft of Statewide Projections
Adjustment with OFM, OFC and other agencies
Statewide projections base
Regression and auto regression models. Stability
controls and other adjustments.
County level aggregated industry projections
Statewide and WDA detailed industry control totals
Occupational / Industries ratios (staffing
patterns)
Occupational projections for the State and WDA
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Current Methodology

• In industry projections the best possible
  historical trend is projected to future periods.
• This approach produces good results for
  industries, areas, and occupations with smooth
  patterns of development.
• Structural changes in employment should be
  predicted outside the system and then
  incorporated through leading indicators.

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Hypothetical Example
Source Employment Security Department/LMEA,
Projections
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Main Observed Problems

• Applying the ongoing trends
• Using wishes rather than expectations
• Ignoring the possible effects of actions based on
  projections results

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National Employment for Software Publisher
Annual Average Growth Rates
Source Employment Security Department/LMEA,
Projections
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Statewide Results Annual Average Growth Rates
Source Employment Security Department/LMEA,
Projections
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Lesser of Two Evils

• Missing turning points
• Non-consistent forecasts
• Shorter, but more reliable NAICS time series
• More automation with less control

• False warning signals
• Larger forecast error
• Longer, but less reliable converted series
• Less automation with more control

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Goals and Priorities for Projections

• Adaptive control
• Develop fast corrective actions
• Up-to-date data take priority over consistency

• Strategy of economic development
• Education needs
• Carrier development
• Consistency takes priority in these cases

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LEVEL OF DEPENDENCIES BETWEEN NATIONAL AND STATE
EMPLOYMENT

• Very High
• Accommodation Food Services
• Educational Services
• Finance Insurance
• Health Care Social Assistance
• Motor Vehicles Parts Stores
• Other Professional Support Services
• Other Retail
• Professional, Scientific Technical Services
• Real Estate, Rental Leasing
• State Local Government
• Transportation Warehousing
• Wholesale Trade

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Indicators Used for Smoothing Projections

• Variance of employment share
• Variance from statewide projections
• Variance between historical and projected
  dynamics
• Variance between previous and current projections

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ESTIMATED AND PROJECTED STATEWIDE AND NATIONAL
STRUCTURE OF INDUSTRY EMPLOYMENT
Source Employment Security Department/LMEA,
Projections
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EMPLOYMENT AND WAGES BY EDUCATION LEVELS
Source Employment Security Department/LMEA,
Projections
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• Occupational Projections
• estimate the annual number of job openings
• estimate anticipated changes in employment
• annual changes eliminate impact of seasonality

• Job Vacancy Survey
• snapshot of vacancies at one point in time
• job vacancies from JVS do not necessarily
  translate to hiring
• high impact of seasonal variations

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REGIONAL STRUCTURE OF JOB OPENINGS
Source Employment Security Department/LMEA,
Projections
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Projections Results

• Use
• career planning and curriculum development
• training benefits list
• step in assessing the local job market

• Misuse
• ignoring limits of imbalances
• sensations (hot potatoes)
• putting big emphasis in small numbers

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THANK YOU

• To get data
• http//www.workforceexplorer.com/cgi/dataanalysis/
  ?PAGEID94SUBID149
• Methodology
• http//www.workforceexplorer.com/admin/uploadedPub
  lications/7164_ProjectionsAug_06.pdf
• Contacts
• Alex Roubinchtein
• aroubinchtein_at_esd.wa.gov
• 360 438-4764
• or
• Jami Mills
• jmills_at_esd.wa.gov
• 360 438-3233