Wednesday, March 28, 2012

What the New Wage Figures Say About Skills

Yesterday, the Bureau of Labor Statistics released the wage estimates of the Occupational Employment Statistics (OES) survey representing May 2011. These figures came out unusually early this year. In previous years, we have had to wait until May for the figures applying to the previous May.

Although these figures are the basis for my rankings in the Best Jobs books, it’s important not to place excessive credence in their accuracy. For example, the latest figures for Makeup Artists, Theatrical and Performance, claim a 39 percent increase in earnings: from $38,130 to $53,090. This occupation numbers only about 2,000 workers nationwide, so it’s understandable that wage estimates are going to be imprecise. Most of the occupations that showed the greatest increases or decreases in estimated wages are small-workforce occupations like this one.

These small-sample problems disappear when we look at the average wage differences for all workers in all occupations. The median wage across this whole universe of workers increased by 1.8 percent. But what interested me in particular was contrasting the extremes of the distribution. The wages of the 10th and 25th percentiles increased by 1.8 and 1.0 percent; the wages of the 75th and 90th percentiles increased by 2.2 and 2.6 percent. Another way of looking at this is to compare the occupations that normally require a doctoral or professional degree (2.6 percent increase) with those that normally require less than a high school diploma (1.1 percent). What this tells me is that today’s economy is giving greater rewards to high-skill workers, while low-skill workers are experiencing wage stagnation.

Of course, those 90-versus-10 and doctoral-versus-dropout differences are trivial compared to the differences between the spectacular earnings gains of the top 1 percent of earners versus the negligible gains of the bottom 99 percent. You’ve already seen these comparisons (based on all forms of earning, not just the wage earnings that are the basis of the OES survey), so I’m not going to rehash them here.

But even if few of us can realistically aspire to breaking into the 1 percent--and the present trend toward decreased class mobility is making this harder than ever--opportunities for increasing skills exist for all of us. Yes, the cost of college tuition keeps climbing. But there are more free, high-quality courses on the Web now than ever before. An article in today’s New York Times identifies several free and low-cost online providers of courses that teach high-tech skills. For many other kinds of skills, volunteer work is a learning method that requires only time and commitment.

In today’s economy, increasing skills is a matter of survival. Those who allow their skills to stagnate are being left behind.

Wednesday, March 21, 2012

The Indispensable Reference Gets an Update

Next week, the a new edition of the Occupational Outlook Handbook will be posted on the Web. It used to be the best-selling publication of the U.S. government. Now that JIST publishes it (based on the Web text, with some additional material), it’s JIST’s best-selling book. I am deeply grateful to the Bureau of Labor Statistics for providing this indispensable reference work. The OOH is one of the few well-researched sources we have for occupational information that is written in prose, rather than presented as tables of numerical ratings. The writing style is usually just right for a very broad readership that includes students in high school as well as adult workers.

This year, the venerable publication will have a new format. On the Web, it will appear in a tabbed interface rather than as one long page. You don’t have to wait till next week to see what this will look like. A prototype description of Electricians is already viewable on BLS’s Beta Labs site.

Besides the tabbed interface, the new format has some valuable new features that will be incorporated in JIST’s print edition of OOH. The first tab has a “Summary” table that includes the most essential facts about the occupation: the earnings, the level of education, the current workforce size, projected percentage of growth, and projected job openings. I’d like to think that this table was inspired by the quick facts that I put at the head of every job description in my Best Jobs books.

Another new feature is a pair of bar charts that compare the earnings and outlook for the occupation with the earnings and outlook of other occupations. There’s also a table of “Similar Occupations” that shows, for each one, a very brief statement of the job duties, the level of education usually required, and the annual earnings. On the Web, you can sort this table by clicking on the head of any column, although I can’t think of a reason you’d want to sort them by putting the job duties in alphabetical order.

I’m happy to point out that the new edition of OOH will fix one of the few problems that I’ve criticized in the past: the level of aggregation used to group occupations as subjects of separate articles (or, as the OOH calls them, “statements”). In the past, the OOH taxonomy was considerably less fine-grained than the Standard Occupational Classification, not to mention the O*NET-SOC classification. For example, SOC itemizes 18 kinds of engineers, but the previous edition of OOH furnished just one article called “Engineers.” This new edition, however, will have articles about 16 different kinds of engineers. In fact, it will cover about 345 occupations, compared to about 270 in previous editions.

Just this morning I learned that the Department of Labor has decided not to issue a print version of OOH. Starting with this edition, Labor will make the OOH a Web-only publication as they did with the Career Guide to Industries a few years ago. But fear not: JIST will continue to publish a print version of OOH--with the updated content--in both hard and soft covers. Next week, when the new content hits the Web, I’ll repackage it as a manuscript, and the finished book will come out this summer.

The JIST edition of OOH will have these additional exclusive features that you won’t find on the Web:
  • A section on emerging green occupations
  • The Personality-Career Quiz, a quick assessment to help you identify occupations that may suit you
  • An article on how teachers can use the book in the classroom
  • For the first time, a listing of the 100 best jobs in the OOH, created by the same sorting procedure that I use in books such as Best Jobs for the 21st Century and 50 Best Jobs for Your Personality.

Wednesday, March 14, 2012

Skills with the Most Job Openings in High-Skill Occupations

Last week, I wrote a blog entry about the relationship between skills and income, based on research is did for the second edition of 150 Best Jobs for Your Skills. Here’s another list from this book, looking at job openings instead of earnings.

In 150 Best Jobs for Your Skills, I simplified the O*NET taxonomy of skills by collapsing skills with highly correlated ratings of occupations. That is, if two skills say almost the exact same thing for the full range of O*NET occupations, I can collapse those two skills. I ended up with only 9 skills and used these throughout the book.

To investigate the skills-openings connection, I started with the 750 SOC occupations for which skills data is available. For the 9 skills that I use in the book, I divided the range of ratings into five equal zones and divided the 750 occupations according to which zone they belong in. (I discuss this process in greater detail in last week’s blog.)

Then I computed the average number of annual job openings projected for the occupations in the two highest zones for each skill, using data from the Bureau of Labor Statistics. Finally, I ranked the nine skills by their average number of openings, in descending order. If availability of jobs is important to you, you should think about developing the skills highest on the list.

Bear in mind that figures for job openings don’t tell you how much competition you may expect for those openings. Not many people qualify for jobs that demand very high levels of Mathematics Skills and Science Skills, so even though openings for these jobs are relatively scarce, the jobs may be easier for appropriately educated people to enter than jobs using other skills.

Average Job Openings for Occupations with the Highest Levels of Skill, from Highest to Lowest

    Skill    Average Annual Job Openings in High-Skill Occupations

    1.    Social Skills    8,107
    2.    Management Skills    7,417
    3.    Technology/Programming Skills    6,418
    4.    Thought-Processing Skills    6,288
    5.    Communication Skills    5,707
    6.    Installation Skills    4,846
    7.    Mathematics Skills    3,498
    8.    Equipment Use/Maintenance Skills    3,289
    9.    Science Skills    2,103

Thursday, March 8, 2012

Skills with the Best Payoff for Improvement

Last July, I wrote a blog entry about the relationship between skills and income, based on research done under the direction of the urban theorist Richard Florida. At the time, I was working on the second edition of 150 Best Jobs for Your Skills. Now that this book is published, I want to share what my own research indicates about the skill-income connection.

In 150 Best Jobs for Your Skills, I simplify the O*NET taxonomy of skills by collapsing skills with highly correlated ratings of occupations. That is, if two skills say almost the exact same thing for the full range of O*NET occupations, I can collapse those two skills. I ended up with only 9 skills and used these throughout the book.

To investigate the skills-income connection, I started with the 750 SOC occupations for which skills data is available. For the 9 skills that I use in the book, I looked at the range of ratings that are given to these 750 jobs. For example, the scores for Thought-Processing Skills range from a low of -0.50 (for Tank Car, Truck, and Ship Loaders) to a high of 1.98 (for Chief Executives). I divided this range into five equal zones and divided the 750 jobs according to which zone they belong in. The number of occupations in each zone varies greatly. For example, only two occupations (Chief Executives and Purchasing Managers) have scores that put them in the top zone for Management Skills, whereas 49 occupations (such as Electricians, Rail Car Repairers, and Avionics Technicians) have a top-zone level of Equipment Use/Maintenance Skills.

I computed the average annual income for the jobs in each zone (based on the OES survey) and then computed the average difference between the earnings in each zone and in the next-highest zone. This procedure indicated, for each skill, the average monetary difference (“payoff”) that is associated with a higher level (“improvement”) of skill. Finally, I ordered the 9 skills from highest to lowest average payoff to produce the following list. In other words, the skills nearest the top of the list have the highest payoff for higher mastery. If high income is important to you, you should think about developing these skills.

Note that I’m not looking at literal “improvements” or “payoffs.” I’m measuring differences between skill levels and between earnings. I’m not measuring the historical behavior of individuals or the rewards they’ve achieved by improving. For example, the average income difference between occupations at different levels of Management Skills is $32,002, but that doesn’t mean you should assume that every manager who improves his or her managerial abilities will automatically achieve that boost in earnings.

On the other hand, smart employers recognize and reward workers who improve their skills, often with promotions or raises. The lesson to take away is that you should aim for a high level of skill when you first prepare for career entry and continue to improve your skills as you work.

Average Payoffs for Improvement of Skill, from Highest to Lowest

Skill      Average Payoff for Skill Improvement

1. Management Skills $32,002
2. Social Skills $18,221
3. Thought-Processing Skills $16,278
4. Communication Skills $15,284
5. Mathematics Skills $14,123
6. Science Skills $13,061
7. Technology/Programming Skills $10,747
8. Installation Skills $1,059
9. Equipment Use/Maintenance Skills $367

Friday, March 2, 2012

We're Eating Our Seed Corn

The most troubling news article I have seen all week was on the front page of this morning’s New York Times, with the headline “Where the Jobs Are, the Training May Not Be.” The article notes, “As state funding has dwindled, public colleges have raised tuition and are now resorting to even more desperate measures--cutting training for jobs the economy needs most.” It’s a cruel irony that the hottest career skills--health care, high tech, and engineering--are also among the most expensive to teach, partly because of the nature of the equipment used, partly because the instructors need to be offered high salaries to lure them away from nonteaching jobs, and in some cases because of safety requirements.

Cash-strapped states are reducing their subsidies for higher education, forcing students to pay more and in many cases admitting only a small fraction of the students who want to enroll. “At one community college in North Carolina--a state with a severe nursing shortage--nursing program applicants so outnumber available slots that there is a waiting list just to get on the waiting list.”

States continue to cut college funding continue even though higher education is demonstrably one of the best investments a state can make. Google the phrase “every dollar a state invests in higher education,” and you will find research showing that California gets $3 of economic activity for every dollar invested and Texas gets more than $5. One study for the Federal Reserve Bank of Boston (PDF here) estimates a total return to government of $7.46.

So why is it politically acceptable to cut funding to higher education? At root is the implicit belief that (a) the people who get higher education are the ones who benefit from it, so (b) they should pay for it.

It’s important to recognize that this attitude has two parts, and that the second part depends on the accuracy of the first part. But it turns out that the first part of this belief is only half true. Yes, study after study has shown that higher education dramatically increases a person’s income and reduces the likelihood of unemployment. For example, see the Department of Labor’s “Education Pays” page. The recent recession has only amplified this trend.

However, it’s not true that the recipients of higher education are the only people who benefit. That $7.46 return on the dollar of investment is not coming solely from the increased tax payments of the college graduates. Demonstrably, the presence of educated people in the economy causes everybody to be more productive and thus earn more. A fascinating study by UCLA economist Enrico Moretti (PDF here) compared the wages of otherwise similar individuals who work in cities that have differing shares of college graduates. The research showed that “a percentage point increase in the supply of college graduates raises high school drop-outs’ wages by 1.9%, high school graduates’ wages by 1.6%, and college graduates wages by 0.4%.” In other words, everybody benefits from higher education, but it’s the least-educated people who benefit the most.

That’s why it’s so destructive when politicians argue against funding for higher education and whip up popular support by encouraging uneducated people to resent higher education. We saw that happen just this week as presidential candidate Rick Santorum branded President Obama a “snob” because “he wants everybody in America to go to college.” (As notes, the President actually advocates a full range of postsecondary education and training, including apprenticeships.)

In the present political climate, however, it’s not good enough to argue that everyone benefits from spending on higher education. Those who believe in a government small enough to drown in the bathtub don’t want any investments in the public sector that could be replaced by the private sector. In other words, the second half of the key belief--people should pay for higher education--is not based solely on the premise that education benefits only the people who receive it. It also draws on the premise that the private sector does everything best, so investments in higher education should come from the private sector. In practical terms, these investments consist of the loans that college students increasingly take out to pay for their education. Last year student debt passed the $1 trillion mark, exceeding America’s total credit card debt.

We hear increasing warnings that college debt is the next bubble threatening our economy, and sometimes the government itself is accused of inflating the bubble by making cheap college loans available. But consider that much less of this debt would be necessary if we had a well-funded system of public higher education. This is another example of what Thomas Friedman and Michael Mandelbaum refer to in the title of their book That Used to Be Us. We owe much of the post-World War II prosperity to the G.I. Bill and to well-funded state universities such as California used to have. But in the present political climate, it seems that education is too expensive, so we’re going to try ignorance instead.