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Proposed Changes to BLS Replacement Rate Methodology

Proposed Changes to BLS Replacement Rate Methodology. Michael Wolf Employment Projections Program PMP Summit June 3, 2014. Overview. Proposed Methodology Advantages of New M ethod Analysis of Results Issues and Future Considerations. Proposed Methodology. Proposed Method.

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Proposed Changes to BLS Replacement Rate Methodology

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

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

  3. Proposed Methodology

  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

  5. Labor Force Exits • 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 • 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 • 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 • If

  8. Occupational Transfers • 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 • If

  9. Occupational Transfers • 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 • If

  10. Comparison – data use • 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 • If

  11. Comparison – concepts • 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 • If

  12. Advantages of New Method

  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

  14. Differentiation of leavers • 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

  16. Robust methods • Projections incorporated consistently • Old: • New:

  17. More reliable results • Method works for new SOC occupations • Fewer proxies for small occupations • All together, data available for 118 additional occupations

  18. More reliable results • Consistency year to year • 130 occupations had rates that changed by at least 10 percentage points

  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

  20. Analysis of Results

  21. Total Job Openings • 2012 employment of 145 million projected to increase to 161 million by 2022. • Projected job openings, 2012-22: • 16 million openings due to growth • 155 million separations • 65 million labor force leavers • 90 million occupational transfers • 171 million openings in total

  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 2003-2012 • BLS projects 35 million labor force entrants from 2012-2022

  23. Example - Teachers

  24. Example - Lawyers • ABA reports 29,000 law school graduates find employment in positions requiring bar passage on average from 2011-2013

  25. Example – Registered Nurses • NCSBN reports an average of 211,000 newly licensed registered nurses per year, 2009-2011

  26. Issues and Future Considerations

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

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

  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 2015

  30. Michael WolfBranch ChiefEmployment Projections Programwww.bls.gov/emp202-691-5714wolf.michael@bls.gov

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