Minnesota Job Outlook to 2019

by Dave Senf
July 2010

Overview

Employment in Minnesota is projected to increase by 246,000 jobs between 2009 and 2019 reaching a total of almost 3.1 million jobs by 2019, according to recently released 2009-2019 Minnesota employment projections.[1]  The projected increase is a reversal of the previous 10 years (1999-2009) when the state lost 11,000 net jobs as the state’s economy was hammered by two national recessions including the most severe recession in six decades. Minnesota’s job picture is projected to rebound gradually in 2010 as the state emerges from the deep 2008-09 recession and begins to regain some of the 124,000 jobs lost during 2009 alone.

Job growth over the next decade will average 0.8 percent a year, a pace similar to job growth experienced between 2004 and 2007 just before the Great Recession. Even if the economy manages to avoid a recession over the next 10 years, slower labor force growth related to the ongoing retirement of the baby boom generation will restrain job growth in Minnesota and nationally. These retirement-related positions will need to be filled, but they represent replacement jobs, not job growth. After adding roughly 54,000 jobs per year in the 1990s, then losing 1,000 jobs per year on average during the 2000s, the state will add on average 25,000 new jobs annually over the next decade. This is over and above replacement jobs.

Background

Minnesota’s long-term employment projections, a 10-year time frame, normally cover the same years as national projections produced by the Bureau of Labor Statistics (BLS), since Minnesota projections are to a large degree based on national projections.[2] But the most recent BLS projections, covering 2008-2018, were finalized during the middle of 2009 before the steepness of job loss during 2009 was fully known. The 2009-2019 Minnesota projections still rely on the national projections, but national 2018 industry projections have to be adjusted to reflect 2009 job declines.

The key assumptions of the 2008-2018 national projections are:

1. GDP (Gross Domestic Product) growth will average 2.4 percent annually during the 10-year period, down from the 2.5 percent average annual increase realized during the 1998-2008 period.

2. Productivity growth will slow from 2.6 annually over the previous 10 years to 1.8 percent annually during the projection period.

3. Labor force growth will slip to 0.8 percent annually from 1.1 percent achieved between 1998 and 2008.

4. Unemployment will average 5.1 percent in 2018, down from the 2008 annual average of 5.9 percent and the 9.3 percent annual average
   in 2009.

Minnesota, along with all the other states, customizes national projections to reflect its unique industrial, occupational, and demographic mix. Historical employment trends for 290 industries in Minnesota are compared to corresponding national industry employment trends using statistical models -time-series and regression models. The models are used along with BLS’s projections of national industry employment to produce industry projections for Minnesota.

Projected industry employment is converted into occupational employment projections based on industry staffing patterns, the distribution of industry employment across occupations. Staffing patterns for Minnesota industries are developed from estimates of occupational employment collected by the Occupational Employment Survey, which is a product of the Occupational Employment Statistics (OES) program.[3] Projections on 10-year changes in industry staffing patterns are provided by the BLS projections research team.

The main goal of employment projections is to provide details on projected job growth and employment prospects for approximately 790 occupations in Minnesota. Projections of future job growth at the national, state, and substate level are widely used in career guidance, education and training programs, and workforce development efforts.

Effects of Change

Changes in the demand for goods and services, productivity advances, technological innovations, and shifts in business practices combine to alter occupational employment demand and job prospects.

 The expected expansion of health care services over the next 10 years is a prime example of how changes in the demand for goods and services fuel demand for particular occupations. As the baby boom generation enters its senior years demand for health care services will increase steadily. Increasing health care service expenditures will in turn boost the demand for workers in health care jobs like registered nurses, pharmacists, dental assistants, and home health aides both nationally and in Minnesota.

The number of cashiers is expected to increase only slightly over the next 10 years as demand for cashiers will be tempered by advancing technology in self-service checkout systems. Many industries, like grocery stores, building material and supplies dealers, and gaming operations will continue to push the use of self-checkout and cashless slot machines, moderating cashier staffing needs.

Offshoring (the practice of U.S. firms sending service-related work overseas) is another trend that will affect job opportunities in a number of occupations in the future. Occupations that are most likely to be at risk from offshoring have been identified by the BLS. Projected job growth rates for occupations likely to be offshored, such as telemarketers, have been scaled back from previous projection rounds.

Occupational Projections

Decreases

While most occupations in Minnesota will experience varying rates of employment growth over the next 10 years, 24 percent of occupations, 192 out of 788 occupations, are projected to decline. Declining occupations are concentrated in the office and administrative support and in the production occupational groups and to a lesser extent in transportation and material moving occupations. Occupations expected to see the most job decline over the next 10 years are:

• Shipping and traffic clerks
• Order clerks
• Miscellaneous office and administrative support workers
• Postal service mail sorters
• General and operations managers
• Telemarketers

Production occupations are concentrated in Minnesota’s manufacturing sector which is expected, over the next few years, to regain only some of the 47,000 jobs lost since 2005 and will experience job loss over the long term. The number of factory jobs is projected to drop by 22,000 over the next decade, an improvement over the 94,000 factory jobs lost between 1999 and 2009.

Increases

Minnesota’s total employment is projected to increase 8.7 percent over the 2009-19 period, compared to the 10.1 percent projected for U.S. employment between 2008 and 2018. Minnesota’s employment dropped less than the nation’s during the last recession but trailed national growth during the 2002-2007 period, expanding 4 percent while nationally the number of jobs increased by 5.6 percent.

All major occupational groups, except for the production group, are expected to add jobs between 2009 and 2019. The two largest major occupational groups in Minnesota — professional and related occupations and service occupations — will increase the fastest and add the most jobs in Minnesota from 2009 to 2019 (see Table 1). These two major occupational groups, which tend to have occupations at the opposite ends of the educational attainment and earnings range, are projected to account for almost 70 percent of all employment growth over the next 10 years.

Employment in construction and extraction occupations is also projected to grow faster than overall employment growth as construction activity in Minnesota gradually returns to nearly normal levels. The five-year home building collapse has pushed construction employment down by nearly 30 percent from its record high in 2005. The gradual home building rebound will increase construction employment over the next 10 years but not to the level of the housing-bubble years of the mid-2000s.

Half of office and administrative support occupations are expected to see employment numbers shrink over the next 10 years, but the other occupations within the group are employed across most industries and will increase in numbers as the economy grows. The expected increase in office and administrative support occupations is nearly half that of overall job growth but nearly 19,000 more jobs in office and administrative support occupations are projected by 2019.

Roughly 40 percent of the projected increase in sales and related occupations is expected to be new retail salesperson jobs. Occupations in installation, maintenance and repair, transportation and material moving, and farming, forestry, and fishing will increase over the next 10 years but at a rate below overall job growth.

Job growth is predicted to be concentrated in the 371 occupations that are projected to grow faster than overall employment. These fast-growing occupations are anticipated to account for roughly four out of every five new jobs. The rest of the employment expansion will occur in the other 210 occupations that are expected to add workers during the next 10 years but at a slower pace than the projected average of 8.7 percent. Roughly 32,000 positions are expected to be lost across 192 occupations. The declining occupations accounted for 478,000 jobs or roughly 17 percent of 2009 employment. These occupations are anticipated to account for 14 percent of all jobs by 2019.

Occupations with High Numbers

The top 50 occupations, in terms of the number of workers, accounted for approximately 50 percent of all employment in Minnesota in 2009. The largest occupations range from retail salespersons, 74,900 jobs, to sales representatives of services, 12,800. Employment growth in these large occupations will account for slightly more than half of the new jobs. Six of the largest occupations, however, are expected to see their workforce numbers shrink:

• Farmers and ranchers
• Shipping, receiving, and traffic clerks
• Hand packers and packagers
• First-line supervisors of production and operating workers
• Hand freight, stock, and material movers
• General and operations managers

The top 50 fastest-growing occupations among occupations with employment of more than 500 workers in 2009 combined for less than 10 percent of the 2009 employment base but are anticipated to account for nearly 33 percent of jobs created over the next 10 years.

Percent Change vs. Numeric Change

As presented above, projected employment growth can be viewed from two perspectives — percent change and numerical change. Some occupations with a large number of workers in 2009 are projected to grow more slowly than overall employment growth but will add a large number of workers by 2019. Other occupations with a relatively small number of workers in 2009 are projected to grow rapidly over the next 10 years but will add relatively few new jobs. The distinction between occupations with fast employment growth and occupations expected to add the most jobs is apparent when the 50 fastest-growing occupations (Table 2) are compared to the 50 occupations expected to add the most jobs (Table 3). Only 15 occupations make both lists,
such as:

• Personal and home health care aides
• Computer software application engineers
• Home health aides
• Medical assistants

Fast-growing occupations tend to be in health care, education, and information technology. Occupations adding the most jobs tend to be occupations that are spread across most industries, have a relatively large base of employees in 2009, and are projected to experience average employment growth over the next 10 years.

Net Replacement Openings

Job opportunities tend to be better in occupations that are growing, but new openings created by employment growth are only part of the future job-opportunity picture. The chance of scoring a job in a particular occupation also depends on how many workers are leaving the occupation and how many job seekers are looking to enter that occupation.

In 2009 an estimated 74,900 workers were employed in Minnesota’s largest occupation, retail salespersons. By 2019 the state is expected to have nearly 80,200 retail salespersons. The 5,300 new retail salesperson jobs expected over the next 10 years will represent 7 percent of all retail salesperson jobs in 2019. The other 93 percent of retail salesperson jobs already exist.

Many of the 74,900 individuals working as retail salespersons in 2009, however, will not be working as retail salespersons in 2019. Workers will switch occupations, retire, or leave the labor force for other reasons thereby creating retail salesperson job openings. An estimated 20,900 net replacement openings for retail salespersons will develop during the next 10 years as current retail salespersons leave the occupation. For most occupations, the number of job openings arising from the need to replace workers, net replacement openings, is projected to be higher than job openings from employment growth.

Even occupations that are expected to decline in numbers over the next 10 years will have replacement openings. Fewer telemarketers are projected to be employed in Minnesota in 2019 than in 2009, 3,700 vs. 4,700, but many of those working as telemarketers in 2019 will have been hired over the prior 10 years filling telemarketer jobs that opened as workers moved to other occupations or left the workforce. More than 1,000 net replacement telemarketer job openings will need to be filled over the next 10 years.

Because of the importance of replacement needs, estimates of net replacement openings for each occupation over the next 10 years are included in the 2009-2019 employment projections for Minnesota. Net replacement openings are based on nationwide census data, which track the entrants and separations of an occupation by age cohorts. The net replacement opening estimates understate the total number of job openings in an occupation but are the best available estimates.

In addition to the 246,000 job openings projected to be created through employment growth over the next 10 years, 640,000 net replacement openings are projected. Occupations with a high number of net replacement openings tend to be occupations with large employment bases in 2009 and high turnover rates (see Table 4). About 70 percent of the occupations are projected to have more net replacement openings than openings from employment growth. Net replacement openings should be considered when exploring the future prospects of any occupation. The need to fill replacement openings will only increase over the next decade as the first wave of baby boomers retire.

[1] Detailed 2009 – 2019 occupational and industry employment projections for Minnesota can be found at www.PositivelyMinnesota.com/eo .

[2]The BLS’s main projection website is www.bls.gov/emp/home.htm .

[3]Information on the Occupational Employment Survey is available at
www.PositivelyMinnesota.com/oes

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