Occupational Employment Projections Methodology
Occupational employment projections ("projections") estimate the changes in occupational employment over time resulting from industry growth, technological changes, and other factors. Industry growth exists when the demand for goods and services increases, resulting in an increased demand for workers to produce these goods and services. Technological changes can raise the demand for some skills while eliminating the demand for others. Projections are produced using methods and tools provided by the Projections Managing Partnership (PMP). The PMP is a national consortium of state labor market information offices funded by the U.S. Employment & Training Administration that maintains the national infrastructure for the production of projections to insure consistent outcomes across the nation.
The state and local area long-term projections are for a 10-year period. The projections are revised every two years to incorporate economic changes that occur in the state and local areas. Statewide short-term employment projections are for a two-year period and are revised annually.
- Using Occupational Employment Projections Data
- Projections of Employment
- Occupational Employment Projections
- Economic Assumptions
- Other Considerations
Using Occupational Employment Projections Data
Projections are a source of information to estimate job opportunities by occupation and can be used for:
- Career Decisions & Guidance
- Strategic Planning
- Economic Development
- Policy Making
- Training & Education
- Workforce Investment Planning
When using projections data, users should keep in mind:
- These data are estimates. Projections are developed based on the assumption that historical trends will continue into the future. However, events that are impossible to predict may occur during the projection period. Events such as major business closures or openings and natural disasters can all have a major impact on employment levels.
- Projections are one source of information. It is recommended to supplement the projection data with other sources of economic data. This information may be found in other documents such as those published by the EDD's Labor Market Information Division (LMID), local and regional newspapers, local chambers of commerce, or local economic development agencies.
- Short-Term Projections
Short-term (2 year) projections are based on quarterly average employment levels by industry for the base and target quarters. These averages may reflect seasonality in some occupations.
- Long-Term Projections
Long-term (10 year) projections are based on annual average employment levels by industry for the base and target years. Keep in mind that the annual average employment levels for seasonal occupations employed in agriculture, construction, retail sales, or recreation could vary significantly from the seasonal peak period for these types of occupations.
- Projections are estimates of the expected demand for individual occupations. However, the supply of individuals qualified for these occupations will affect the amount of competition that exists for these openings.
- General changes in the workplace affect some occupations. Jobs may be created, eliminated, or consolidated because of restructuring, technology, or a change in regulations affecting the requirements for the job. New ways of doing business, such as self-service, outsourcing, or 24-hour operations can also affect demand for workers.
- Some occupations may not appear in published tables due to confidentiality or because of the minimal number of workers in an occupation.
Projections of Employment
Changes in occupational employment over time are a result of changes in staffing patterns and industry growth. Following is a description of the principal data sources and the projection process.
Principal Data Sources
The Occupational Employment Statistics (OES) survey is a semiannual survey that measures occupational employment and occupational wage rates for wage and salary workers in nonfarm establishments, by industry. The survey samples about 37,000 establishments per year, taking 3 years to fully collect the sample of approximately 113,000 establishments in California. The OES program uses the Standard Occupational Classification (SOC) definitions to collect the survey data, which covers over 800 occupations.
- Industry Employment Projections
The industry employment projections are a primary data source used to project changes in occupational employment. A forecast of employment level is created for each industry using historical data and current information about the economy. The industry projections include the base year and target year of the projection cycle. A description of the industry projections process can be found in Industry Employment Projections Methodology.
- Occupational Staffing Patterns
The OES survey responses are summarized by industry and matched to the North American Industry Classification System (NAICS) code for the state and local areas. Statewide responses or another area's responses are substituted in cases where local OES responses are not available. The survey data are expanded to the annual average employment for each occupation within each industry. The results are staffing patterns by industries for the base year.
The PMP Projections Suite software lies at the core of the projections process. This software provides the tools and national information necessary for states to produce their projections. For the state and local areas, the analyst will:
- Match the base year industry employment with the OES staffing patterns to produce occupational base year employment by industry sector.
- Apply change factors to produce the target year staffing patterns. Change factors reflect projected shifts in occupational usage within particular industries. The U.S. Bureau of Labor Statistics (BLS) conducts special studies to produce the change factors.
- Match target year industry employment to the target year staffing patterns to produce occupational employment projections by industry sector. Reconcile target year staffing patterns to the target year industry total.
- Sum data by occupation across all industries for the base and target year occupational estimates.
- Calculate replacement needs for each occupation. Replacement needs estimate the number of job openings created when workers retire or permanently leave an occupation and need to be replaced. The BLS develops replacement rates using occupational employment data from the Current Population Survey (CPS).
- Apply the BLS ratios to each occupation to calculate self-employed employment.
- Calculate the difference between the base year occupational estimates and the target year projections. The difference represents the new jobs resulting from industry growth and from changes in staffing patterns.
- Review the projections.
- Consult with the LMID's local labor market consultants to review local area projections. The consultants use their knowledge of the local economy, and solicit the input from local experts to recommend adjustments to the projections.
- Incorporate recommended changes as appropriate and finalize the projections for public dissemination.
NOTE: The BLS has implemented a new Separations methodology to supersede the replacement methodology. This method captures a more accurate picture of the workforce by differentiating between workers who are leaving the labor force entirely and those who are changing jobs. California will implement the new methodology beginning with the short-term 2017-2019 projections. For more information about the Separations methodology, visit: www.bls.gov/emp/ep_separations.htm.
Occupational Employment Projections
The projections located in the EDD Data Library provide a list of occupations by SOC Code. The following information is available for each occupation:
- Employment is displayed for the base and projected years.
- Employment Change is displayed in "Numeric Change" and "Percentage Change". Numeric change is the net difference between the base and projected year employment and reflects job growth. Percentage change measures the projected rate of change of employment in an occupation.
- Job Openings are categorized by the following:
- New jobs are only openings due to growth and do not include job declines. If an occupation's employment change is negative, there is no job growth and new jobs are set to zero. New jobs may not equal numeric change.
- Replacement needs estimate the number of job opportunities created when workers retire or permanently leave an occupation and need to be replaced. Replacement needs do not count workers who change jobs but remain in the same occupation. In most occupations, replacement needs provide more employment opportunities than job growth.
- Total job openings are the sum of new jobs (growth) and replacement needs.
- Exits are the projected number of workers leaving an occupation and exiting the labor force entirely. Labor force exits are more common at older ages as workers retire, but can occur at any age. Labor force exits are not necessarily permanent exits from the labor force; for example, some workers exit the labor force to pursue additional education with the intention of returning to the labor force. They do represent permanent separations from an occupation.
- Transfers are the projected number of workers leaving an occupation and transferring to a different occupation. Transfers represent permanent separations from an occupation, not temporary movements where the worker is expected to return to the same occupation in the future.
- Numeric change measures the projected number of job gains or losses in an occupation for the projection period.
- Total job openings are the sum of exits, transfers, and numeric change.
- Wages are displayed in median hourly and annual wages at the estimated 50th percentile of the distribution of wages; 50 percent of workers in an occupation earn wages below, and 50 percent earn wages above the median wage.
- Education and training levels are derived from the BLS training level definitions.
NOTE: The BLS has implemented a new Separations methodology to supersede the replacement methodology. Under the new method, openings will be categorized by the following:
The projections are based on the following assumptions:
- The institutional framework of the U.S. economy will not change radically.
- Recent technological and scientific trends will continue.
- The long-term employment patterns will continue in most industries.
- Federal, state, and local government agencies are expected to operate under budgetary constraints.
- No major events will occur that will significantly alter the industrial structure of the economy, the occupational staffing patterns, or the rate of long-term growth.
- Population growth rates and age distributions will not differ significantly from California's Department of Finance projections presently available.
- Attitudes toward work, education, income, and leisure will not change significantly.
The occupational movements within an industry are controlled by industry-occupational change factors, which are developed by the BLS. Individual occupational employment may not increase or decrease at the same rate as the entire industry. In fact, there may be a number of occupations whose employment moves in the opposite direction of the entire industry.
Because the occupational data are based on a survey, it is important that the following points be considered:
- There is inherent statistical error as a result of both the sampling process and the level of employer response to the OES survey.
- The OES staffing patterns may contain errors because employers may have difficulty completing the survey.
- The employer's response to the survey may reflect conditions that are uncommon. The employer may have a temporary shutdown, seasonal high or low employment, or temporary increase in demand for product or service.
For additional information on economic conditions in a particular region, contact the LMID's local labor market consultants.
Revised: April 2018