A few weeks ago economists and other trackers of the economy received an early Christmas present. Business forecasters at the federal government released their job projections for the next decade. The forecasts contained an amazing amount of detail about what kinds of jobs will be created, in what industries, what training they will require, and what they will pay.
But are these job forecasts, wrapped as a present, a diamond ring or a lump of coal?
To answer this question, let’s slice the job pie in a couple of ways. First, let’s look at the type of companies offering the jobs — economists call this the industry job outlook. Here, one trend is evident. The shift away from manufacturing employment to service jobs will continue. Employment in factories is expected to drop by 5 percent in the next 10 years. Still, this is better than the 16 percent decline of the past decade.
However, employment in North Carolina’s traditional manufacturing industries of textiles, apparel, tobacco, and furniture is projected to continue dropping at the rate of the last decade. If the government’s forecasts are accurate, North Carolina’s employment in these sectors will be down to 100,000 in 2014, compared to 160,000 today.
Prospects are mixed for North Carolina’s new manufacturing industries. The number of jobs in pharmaceutical firms, transportation-parts factories, and food-processing industries is expected to increase, but technology and communication equipment manufacturing jobs will continue to slide, according to the government’s crystal ball.
Yet there is some good news in the forecasts for manufacturing. Even though the number of factory jobs will fall, factory output will rise. Production in all of North Carolina’s “new” manufacturing industries — pharmaceuticals, technology and communications, transportation parts, and food processing — as well as in furniture and selected textile products is expected to increase. Factories will be able to make more with fewer workers by improving the technology and equipment on the factory floor.
But the big employment opportunities will clearly be in the service sector, in industries such as professional services, education, health care, and entertainment. Does this mean that future workers are doomed to lower salaries? Not at all! In today’s economy, it’s a worker’s occupation — that is, what a worker actually does — rather than the industry in which the worker is employed, that is the biggest determinant of pay.
By slicing the employment pie by occupation, there’s some fairly good news in the government’s job forecasts. The fastest-growing occupations will be in professional jobs, in fields such as health care, education, the sciences and engineering, and computer design and programming. The number of positions in professional occupations is expected to increase by more than 21 percent in the next decade, significantly faster than the 13 percent rise in total jobs. Professional occupations pay the highest salaries, but they also require the most education.
This is not to imply there won’t be many lower-paying jobs in the future — there certainly will be. The second-fastest growing occupational group over the next decade will be lower-paying jobs in food services, health-care support, building and grounds maintenance, and security.
In fact, of the top four occupational groups with the greatest number of projected new jobs, the government forecasts an almost exact 50/50 split between high-paying and low-paying positions.
So the message from the government’s new jobs outlook is clear. Job growth in the next 10 years will continue at about the same pace as in the last decade. The new jobs will be fairly equally split between the upper pay scale and lower pay scale. To be in the better-paying positions, workers will need more education, more training, and more marketable skills. So is this outlook a shiny diamond or a dull lump of coal? Maybe a brass key is a better fit.
Michael L. Walden is a William Neal Reynolds distinguished professor at North Carolina State University and an adjunct scholar of the John Locke Foundation.