Will the Job Outlook be Great Again? (Part 2: Energy Extraction)

In my previous blog, I discussed the likely impact of the Trump administration on manufacturing jobs and concluded that he is unlikely to deliver on his promise of a renaissance in low-skill manufacturing jobs. Although in his campaign Trump gave the greatest emphasis to manufacturing, he also assured voters that he would boost employment in other industrial sectors. This blog is about another sector.

Energy Extraction. The government has considerable powers to regulate the energy-extractive industries: coal mining and petroleum. The majority of lawmakers in Donald Trump’s party have been saying for some time that global warming either does not exist or is not caused by human activities, and in doing so they have positioned themselves as champions of this industry sector. Although at times Trump has made vague concessions that there may be human causes, most of the time he hews to the more extreme version of the party line. He even tweeted that human causation is a myth concocted by the Chinese, although later he denied having said so.

 For both Trump and the Republican Congressional majority, two main policy recommendations result from this denial of the scientific evidence: (1) increased oil drilling and coal mining (“Drill, baby, drill!”); and (2) reduction or elimination of limits placed on carbon-releasing industrial activity (“Burn, baby, burn!”). Another result is encouragement of oil-pipeline construction, which has frequently been blocked by environmentalists.

Among the existing laws, regulations, and treaties that bind the United States to reducing carbon output, some will easier than others Trump and Congress to reverse. Trump has said he will “cancel” the Paris agreement, in which nations have promised to cut their output of greenhouse gases, and he can back out of this agreement by one of several ways. On the other hand, it will be difficult for him to roll back the regulations that make up the EPA’s Clean Power Plan and the fuel-efficiency standards for cars and trucks. To do so, he will need to propose alternative regulations and will face litigation from environmentalist groups that could delay or even block any changes. Any changes Congress wants to make will face possible filibustering from Democrats. If Trump and the Republican Congress succeed at rolling back regulations, it is possible that states will take a more active role. For example, California already has more stringent standards for vehicle emissions than the nation as a whole, and other states can adopt the California standards.

Market forces are already promoting the transition from dirty energy sources to cleaner sources. As cheaper natural gas has become available, power plants have been switching from coal to gas. The Energy Department found this transition the chief reason why carbon dioxide emissions in the first half of 2016 reached the lowest levels since 1991. During that period, in which the weather was relatively mild, consumption of coal fell by 18%, while consumption of natural gas fell by only 1%. Energy from renewable sources increased by 9% during that same period. Meanwhile, the cost of alternative-energy sources has continued to fall, and energy-saving consumer goods, including hybrid and electric cars, have become more affordable. If you haven’t shopped for LED light bulbs lately, you may be surprised at how cheap they have become.

Even if the government managed to walk away from the anti-carbon policies of the past few years, it is questionable whether market forces would allow the petroleum-extraction industry to expand and create jobs on a large scale. Employment in this sector was at 538,000 in October 2014 but is now at about 175,000 workers. Anti-carbon policies had very little to do with this slump. Instead, the main culprit was the glut of capacity that was created by America’s widespread adoption of fracking technologies, together with the development of new oilfields in other countries, such as Brazil. Opening up new areas (such as national parks and sensitive offshore ecosystems) for drilling will not produce a cornucopia of jobs as long as the glut of cheap oil and gas continues to make it uneconomical to set up new drilling rigs and pipelines.

Coal-mining jobs face a similar hurdle. Employment in 2015 reached the lowest levels since the Energy Information Administration began collecting data in 1978, and the number of mines decreased in all three major coal-producing regions.  The EIA reports (PDF) that between 2014 and 2015, “the average total number of employees at underground mines and surface mines  declined  by  13.6%  and  9.3%,  respectively.” More significantly, “the   average production per employee-hour increased by 5.4% to 6.3 short tons per employee hour.” Like the manufacturing sector, coal mining has increased its use of automation and other technologies for extracting coal more easily.  Coal is now extracted mainly by excavation from the surface (including mountaintop removal), using colossal machines operated by relatively few workers. In 2015, all of the top 10 coal-producing operations were surface extractions. The industry is vastly different from the labor-intensive days when Loretta Lynn’s father went to work with a pick and shovel down in a tunnel .

So the policies advocated by Trump (most of the time) and by the Republicans in Congress are unlikely to create a boom in employment in the energy-extractive industries. That’s not to mention the damage that these policies will do to the alternative-energy industries, to the extent that solar and wind power are still being subsidized.

There is one more wild card that may influence the energy-extraction policies of the new administration: Trump’s relationship with Russia. Oil and natural gas are Russia’s major exports, accounting for 68% of total export revenues in 2013. For reasons that are not entirely clear, Trump has made good relations with Russia a high priority. So although removing the barriers to petroleum output in the United States might create a limited number of jobs here, it would depress worldwide prices for petroleum and thus inflict a blow to Russia’s economy. Perhaps Congress will be less eager than President Trump to prop up Vladimir Putin.

Of course, unemployment in the oil patch and especially in the coal belt is no trivial matter that either party can afford to ignore. But the answer is not to turn back the clock on energy policy as if the energy markets and extractive technologies have not changed since the 1970s energy crises. Wayne Gretzky used to say that you skate to where the puck is going, not to where it’s been. As was true for manufacturing, the answer is to retrain displaced workers and train young people for the changed economy. But, as I pointed out in the previous blog, Trump and the Republicans are not advocating policies that will expand the availability of low-cost, high-skill training.

Will the Job Outlook be Great Again? (Part 1)

As a new presidential administration approaches, you may be wondering about the impact that the change in leadership will have on job prospects in the United States. I don’t claim to have a crystal ball, but I believe I can glean useful insights from what economists are saying and from past employment trends. And, in fact, I have a record of forecasting trends brought in by a previous sea change.

Eight years ago, when a major recession was looming and I was working for JIST Publishing, my editor—Susan Pines—assigned me to write a book that eventually was called 150 Best Recession-Proof Jobs. The book came out just as the full force of the Great Recession came crashing down on the U.S. economy. Thanks to this good timing, the book was so newsworthy that I was being interviewed on television approximately once a week for a month and more. (A lot of credit goes to JIST’s crackerjack publicist at the time, Selena Dehne.)

I selected the occupations that I featured as “recession-proof” by mathematically comparing the past ups and downs in the gross domestic product with the ups and downs in the workforce size of each occupation. Thus I was able to identify occupations that were least impacted by past downturns. The main limitation of this approach is that each recession is different from previous recessions. For example, the Great Recession was caused by a sudden drop in the value of real estate after a long bubble of overbuilding, so certain industries related to real estate—especially construction—suffered more than they did in previous downturns. Nevertheless, over the following several years my predictions were more often confirmed than disconfirmed.

The pending change in administrations presents a similar problem for those who would forecast employment trends. It might seem sensible to look at the employment effects of past transitions when a Democrat was succeeded by a Republican. However, each such transition, like each recession, is different in many ways. The year 2017 can’t be expected to repeat 2001 precisely. For example, while the last part of Barack Obama’s administration has seen a long streak of growth, it is not comparable to the technology bubble that ended Bill Clinton’s second term. And Donald J. Trump is not as conventional a Republican as George W. Bush.

In fact, it’s difficult to tell what kind of Republican—indeed, what kind of politician—Trump is. His policy pronouncements tend to lack specifics and frequently change depending on his audience. Some of the policy goals he has stated at various times run counter to the stated goals of Congressional leaders of his own party, raising the question of who will prevail if he tries to bend Congress to his will.

Because of these uncertainties, I am basing my forecasts on Trump’s general goals, plus an analysis of possible policies that he might or might not employ in pursuit of these goals. And I am organizing my forecasts by industries. In this blog, Part 1, I discuss only manufacturing.

Manufacturing Jobs. One of Trump’s most consistent messages has been his desire to bring manufacturing jobs back to the United States. What’s often overlooked in his rhetoric is that manufacturing output in the United States is now at nearly an all-time high. The kind of manufacturing that is now done here uses highly automated processes and employs a comparatively small workforce of highly skilled technicians. (Since recovering from the Great Recession by 2015, the number of employees has leveled off at about 12.3 million.) Most low-skill manufacturing tasks are performed either here by robots or overseas by low-paid workers, such as the ones who are making the garments branded with Trump’s name and his daughter’s.

That leaves the next president with these policy choices:

·         He might impose high tariffs that make it uneconomical for offshore manufacturers (whether American-owned or otherwise) to export to the U.S.  market—a policy that Trump has explicitly endorsed at times. But the policy could backfire. To the extent that imposing or raising tariffs is feasible under existing trade agreements, it would encourage other nations to retaliate with their own tariffs, reducing exports of our own manufactured goods and increasing the costs of the supply chain—imported parts and raw materials that U.S. manufacturers use. Also, once American manufacturers are protected from foreign competition and start hiring low-skill American workers, they will not be able to pay the rock-bottom wages that third-world workers earn. So, although many jobs will open in manufacturing, consumers will find American-made manufactured goods costing a lot more than the cheap foreign-made goods that now fill the shelves at Walmart. In summary, this policy would hurt high-skill manufacturing workers and create an economy where the low-skill manufacturing workers might have no more purchasing power than is now possible from work in service industries. And, finally, almost all Republican lawmakers, as well as many Democrats, are committed to tariff-free trade (although Republican voters have become more hostile to it), so this policy stands little chance of getting through Congress.

·          

·         He might mandate that American-made products and components be used when federal funds are expended. He hinted at this policy at the third presidential debate with Hillary Clinton when he said that he had used Chinese steel in one of his building projects because Congress had done nothing to stop him. It seems unlikely, however, that Congress would go along with this policy. Congressional leadership has not changed since House Republicans defeated an amendment to impose just such a mandate on infrastructure projects for the nation’s waterways.

·          

·         He might offer tax breaks to American manufacturers so that their operations here are more profitable. Trump actually tried this approach in October when he persuaded Indiana to give tax breaks to the Carrier division of United Technologies as a way of preventing jobs from being shifted to Mexico. However, Carrier has indicated that it intends to use the resulting savings to increase the company’s use of automation—thus subsequently cutting more low-skill manufacturing jobs. Cutting labor costs produces savings that are more dependable than easily-reversible tax breaks. So tax cuts seem unlikely to be an effective solution.

·          

·         He might reduce federal regulations on manufacturers that add to the costs of doing business in the United States. (I am not saying I favor this policy, but it is one that is sometimes proposed.) For example, it has been argued that the main reason Carrier wanted to relocate jobs to Mexico was regulations, not wages, and Trump is in agreement with Republican leadership in Congress on the need to reduce regulations on industry. It is not clear that Trump can get enough cooperation from Congress to make sufficient reductions in regulations to bring a true renaissance of manufacturing. And for some regulations (e.g., on the formaldehyde levels in plywood), the way to reduce competition by offshore manufacturers is to apply the same regulations to imports that are imposed on goods manufactured here, rather than rolling back regulations.

·          

·         He might accept the reality that low-skill manufacturing jobs are gone for good and instead focus on preparing (or retraining) workers for high-skill jobs in the industry. One way to accomplish this is to make community college as free of charge as high school. This is what President Obama proposed and that became the America’s College Promise Act of 2015, but Congress sent the bill to die in committee. I have been unable to find any statement from Trump himself about this proposal, but Trump’s campaign co-chair Sam Clovis, in an article in Inside Higher Education, stated that the campaign rejected the call for free community college.

·          

·         A related policy to encourage manufacturing would be to find a way to increase the number of manufacturing engineers working here. According to Walter Isaacson’s biography of Steve Jobs, the Apple  CEO once told President Obama that Apple’s suppliers in China are able to employ 700,000 factory workers because they have ”30,000 engineers on-site to support those workers. ‘You can’t find that many in America to hire.’” The skill level that Jobs was referring to seems to have been closer to engineering technicians than to what we normally think of as engineers. So, again, increased funding of community colleges and technology schools would be a way to achieve this goal, but that was not a priority of the Trump campaign. Alternatively (or additionally), a reformed immigration system might welcome engineers and engineering technicians trained abroad or coming from abroad for training here. Trump has both welcomed and rejected immigration of high-skill workers at various times. Congressional leadership has generally favored it despite the reluctance of many Republicans and therefore has sometimes had to find underhanded ways to encourage it. Therefore, it is difficult to predict whether or not this policy will be pursued in the coming administration.

·          

·         Yet another way to create a high-skilled manufacturing workforce is to encourage unions to partner with manufacturers on forming apprenticeship programs. Although Trump starred in a TV series called “The Apprentice,” I have not been able to find any statements from his campaign about his attitude toward actual apprenticeships, with the meaningless exception of a tweet he issued in October: “Did Hillary just say she wants more Apprenticeships? I created The Apprentice!” Judging by Trump’s past record as an employer, his attacks on an Indiana union leader, and his appointment of a foe of unions for Labor Secretary, he seems no friend of unions, and Congress certainly has not encouraged them, so this last outcome seems unlikely.

·          

In conclusion, then, I do not expect the Trump administration to deliver on its promise of a renaissance in low-skill manufacturing jobs. I expect employment in these jobs to remain at its current low level—or worsen if there is an economic downturn.

Which Industries Are Recession-Proof?

Everyone knows that the nation is now recovering from the worst recession since the Great Depression. But not every industry sank into recession or recovered from it on the same schedule. In fact, some did not sink at all, and some have not yet recovered. I thought it would be interesting to look at employment in the major industries and see how their experiences varied over the course of the years from 2007 to 2013.

I obtained figures from the Occupational Employment Survey of the Bureau of Labor Statistics and graphed them. (Note that for the second and third graphs below, the y axis starts at a number greater than zero. I used scales that would emphasize vertical shifts. If you find the graphs below rather small to read, just click on the links that pull up larger versions.)

The most important lesson to take away from all three graphs is that the low-tide mark of employment in most industries did not happen right after the financial crisis of 2008, but rather two years later, in 2010. When recession first strikes, employers generally try to hold onto skilled workers and hope for a quick turnaround to better times. They may have a cushion of resources that enables them to postpone layoffs

But when the economic slump drags on and the rainy-day funds are expended, employers start to shed workers. And as unemployed people draw down their own rainy-day funds cut back on their own expenditures, the slackening demand adds to the woes of employers. This is the recessionary spiral that can take a few years to hit bottom. Europe, which chose the path of austerity rather than stimulus, seems stuck in a valley, but the American economy, as a whole, started to turn upward after 2010.

But different industries have followed different paths. Let's start by looking at the first chart below. (Larger image here.)

Of these seven industries, only three follow the classic U-shaped curve of loss and recovery: the purple line, Mining, the pale blue line, Real Estate and Rental and Leasing, and the orange line, Arts, Entertainment, and Recreation. It's not surprising that Real Estate follows this U curve, because a dramatic loss of real estate value is what precipitated the financial crisis. (Note that, like property values in most locales, employment in this industry has not recovered the pre-recession level.) It's also to be expected that the Arts would lose business during recession, although the downward dip of the curve is really quite shallow. These jobs seem to be less sensitive than you might expect. Mining, on the other hand, actually owes its dramatic uptick in recent years not as much to the economic recovery as to the developing technology of fracking.

Management of Companies and Enterprises, the turquoise line, hardly declined at all during the recession and more recently  has been making impressive gains. Everyone knows managers who lost their jobs in that downturn, but apparently jobs in management are less sensitive than those of rank-and-file workers.

The two lines at the bottom--for Utilities (green) and Agriculture, Forestry, Fishing, and Hunting (dark red) are almost level rather than curving. People need electricity, water, and other utilities no matter how the economy is doing, and a cutback in volume (for example, less use of electricity for manufacturing) has little effect on the number of people needed to work at the utility plant. Agriculture sometimes suffers from downturns in prices because of overproduction, but the rapidly rising world population and some diversion of crops to biofuel production seem have kept employment steady in recent years.

The really dismal story here is what happened to the Information industry--which consists mostly of the media, not computer technology. Like Mining, this industry has been affected mostly by technology, but not in a good way. As more and more media content migrates to the Internet and media companies consolidate, the need for workers has reached a permanently lower level than before the recession.

Now, let's look at the second chart. (Larger image here.) All of these medium-sized industries follow the classic U-shaped curve, although there are two interesting variants on the U shape: Construction (pale blue, second from the top) dropped off very steeply after the housing bubble popped and is still a very long way from recovering to its pre-recession level. Professional, Scientific, and Technical Services (orange, at the top), by contrast, has already recouped all the lost jobs and is reaching new heights. This industry includes America's premier field, high tech.

The third chart (larger image here) shows the largest industries. Here, the most dramatic curve is the light red line at the top, Health Care and Social Assistance. As I predicted in my 2008 book 150 Best Recession-Proof Jobs, this industry was unfazed by the recession because it is vital to life and has been gaining in demand because of the aging Baby Boomers. Expect this upward path to continue.

Educational Services (turquoise) is actually an upside-down U, peaking when other industries bottomed out and falling slightly thereafter, although this curve is very shallow. This is another industry that I predicted would be recession-proof, because people seek additional education during an economic downturn--displaced workers retooling for new jobs or young people postponing their entry to the workforce. The slight downturn in more recent years is largely explained by cuts in public education budgets, a consequence of the political movement to lower taxes, and by the increasing use of adjunct teachers in postsecondary education.

The orange curve for Manufacturing resembles the path taken by Construction in the previous chart: a steep decline into recession, followed by a slow and inadequate recovery. In dollar terms, Manufacturing has actually bounced back, but employers in this industry rely more heavily on automation than they did a decade ago, so fewer human workers are needed.

The path for Retail Trade (pale blue) is a much shallower version of this same curve. As consumers have opened their wallets, retail purchases have returned, but automation--especially the large amount of buying that gets done on websites--has reduced the number of workers.

The takeaway from this set of charts is that it is possible to ride out a downturn with minimal risk of job loss, provided you establish a career in a recession-proof industry. But it also shows that technology can cause long-term, perhaps permanent changes in the need for workers in some industries. As technology advances, it may increasingly affect employment in industries that previously have not felt its impact, such as education, health care, and professional services. One of the best ways to find job security is to work with technology in any field at a high level of skill.

Careers in the Era of Cheap Oil, Part 2

In last week’s blog, I discussed some of the career-related effects of the current rapid declines in the price of petroleum. I mentioned that low-skilled workers in the oil patch will see job losses, and that the advantages that manufacturing will enjoy from low energy costs will be offset in some sectors by diminishing demand from the petroleum-extraction industry and from overseas buyers whose currency is losing ground to the dollar. This week I’m starting to wonder whether I was over-optimistic about the continuing outlook for green energy careers.

In the transportation industry, the large purchasers of energy (such as many airlines) are committed to hedging arrangements that prevent them of them from rapidly taking advantage of downward swings in price. But other airlines have reduced their hedging or have used the strategy of call options that don’t have to be exercised. This is also true for large truck fleets. And, of course, the current low prices will allow these transportation companies to lock in rates that will be advantageous when the price rebounds (although that may take some time). So the low price of oil has improved the long-term outlook for work in these industries.

Small trucking operations, those least likely to use hedging, can immediately profit from cheap diesel fuel, which will create opportunities for drivers and other workers at businesses that use these trucks. In fact, even before the price of oil plummeted, the long-distance trucking industry was expecting to face a shortage of drivers. A year ago, the Bureau of Labor Statistics was already saying (after now-obsolete comments on the rising price of diesel fuel), “Job prospects for heavy and tractor-trailer truck drivers with the proper training are projected to be favorable. Because of truck drivers’ difficult lifestyle and time spent away from home, many companies have trouble finding and retaining qualified long-haul drivers.”

The outlook is not good for state workers in the oil patch. As extraction slows down, states that depend on severance taxes (that is, taxes on the extraction of nonrenewable resources) will have less revenue to spend on road repair, aid to education, and other state budget items. In 2003, Alaska obtained 78 percent of its tax revenues from severance taxes; North Dakota, 46 percent; Texas, 9 percent. Other states, however, will have more tax revenue to spend as consumers increase their purchases in response to their low gas-pump expenditures and the general uptick in employment. Moody’s Analytics estimates about 5 percent growth in state tax receipts for the fiscal year ending June 30.

As I mentioned last week, the biggest concern now is a macroeconomic issue: How much of the declining price of oil is caused not by increased production but rather by decreased demand resulting from an economic slowdown in most of the world (with the United States a noteworthy exception)? One indicator pointing toward the latter explanation is the decline in prices of many commodities other than petroleum. The price of copper, for example, dipped sharply this week. A global recession would hurt job prospects even in the United States because of diminished demand for American products and services. The European Central Bank just got the go-ahead to take measures to stimulate the Eurozone economy in much the same way that our Federal Reserve did in response to the Great Recession. It remains to be seen exactly what the bank’s strategy will be, so it’s unclear whether it will be aggressive enough to provide sufficient stimulus.

Careers in the Era of Cheap Oil

One of the biggest trends in the American economy right now is the low price of oil. As the price per barrel approaches and sometimes dips below $50, you can expect some changes in the job outlook for various occupations. But these are not necessarily easy to predict, and it is important to remember that the price of oil has a long history of ups and downs. The boom in domestic production was triggered by the development of fracking technology, but the continuing plunge in prices owes a large share to the decisions of Saudi Arabia, which often are based on political rather than market considerations.

The obvious first place to look for career consequences is the oil industry itself. The total number of operating rigs in the United States stands at 1,811, down 6 percent from its peak in the autumn of 2014. According to The New York Times, “Each rig represents about 100 jobs, from roughneck field hands to maintenance workers.” The Times article quotes one analyst as saying, “Exploration and production budgets are down anywhere from 30 to 40 percent and the cuts are happening faster than we thought.” He also predicts that the big three drilling companies are “likely to cut approximately 15,000 jobs out of the 50,000 people they currently employ.”

The author of the article notes that “large-scale layoffs across the industry are not expected, at least not immediately. Producers contract their rigs for as long as three to four years, and many companies have hedges that lock in higher prices than the going market rates. In addition, producers often need to drill simply to retain their leases or keep their revenue up.” The more highly skilled workers have the most security, because drilling companies anticipate that prices will rebound as global demand increases in coming years. For that reason, I expect the long-term job outlook to remain excellent for petroleum engineers, who commanded the highest salaries among college graduates in last year’s survey by the National Association of Colleges and Employers. The short-term prospects for newly minted petroleum engineers may not be quite as rosy, however.

Industries that are heavy consumers of energy can be expected to be the next place where career effects are felt. However, understand that bulk energy purchasers also use a hedging strategy to lock in stable prices over several years, so they do not benefit from oil price dips as quickly as you and I do at our local filling station. For example, this is true for the highly competitive airline industry. Manufacturing is feeling mixed impacts. Low prices at the gas pumps are helping automobile manufacturers to sell more of their highly profitable SUVs. The steel industry, on the other hand, is experiencing cutbacks in pipe and tube sales as demand from oil drillers slackens. Domestic steel is also being crowded out by imports, lured here by the current strength of the dollar. Manufacturers who depend on exports are finding that the strong dollar makes their products less attractive overseas.

The shift to green energy does not seem likely to be slowed much by cheap energy, so prospects are still good for job openings for engineers and technicians specializing in solar and wind energy production. The main drivers for this shift are improving technologies and continuing tax credits. An analysis by Deutsche Bank predicts that solar electricity will be competitive with grid-based prices in 47 states in 2016, assuming that the 30 percent tax credit continues. Even if the tax credit drops to 10 percent when the current law expires that year, solar electricity will be competitive in 36 states.

The darkest cloud on the horizon is the question of the economies of Europe and China. The low price of oil is partly the result of lack of increasing demand from these quarters. If Europe goes into a third round of recession and Chinese growth continues to cool, diminished world trade is likely to have an adverse effect across our economy. We can be proud of our strong dollar when we shop on the Champs Élysées, but eventually a stagnant world economy will hurt us, too.

Employment Projections, Then and Now

Last month, the Employment Projections office of the Bureau of Labor Statistics released their projections for the period from 2012 to 2022, and I was interested to note how these projections differ from those that BLS made two years ago, for the period 2010 to 2020. Overall, the outlook is a little less rosy than it was in the last round of projections. The workforce as a whole is projected to grow by 10.8 percent; two years ago, the projection was 14.3 percent.

Two years ago, the nation was just starting to climb out of its worst economic downturn since the Great Depression. Apparently, the high hopes of that time have been scaled back somewhat.

Here is a table showing the changes in the outlook for the major groups of industries:

Industry Group	Projection   2010-20 Percent)	Projection   2012-22 (Percent)	Difference
Agriculture, forestry,      fishing, and hunting	-3.6	-1.9	1.7
Mining, quarrying, and      oil and gas extraction	3.8	15.1	11.3
Utilities	-6.5	-10.2	-3.7
Construction	33.3	28.8	-4.5
Wholesale trade	13.6	8.3	-5.3
Information	5.2	-2.4	-7.6
Finance and insurance	8.9	8.6	-0.3
Real estate and      rental and leasing	14.2	12.8	-1.4
Professional, scientific,      and technical services	28.7	23.1	-5.6
Management of companies      and enterprises	5.5	2.6	-2.9
Administrative and      support and waste      management and remediation	21.3	20	-1.3
Educational services;      State, local, and private	13.6	9.4	-4.2
Health care and      social assistance	32.7	27.8	-4.9
Arts, entertainment,      and recreation	17.8	11.1	-6.7
Accommodation and food      services	9	9.1	0.1
Other services (except      public administration)	13.5	10.5	-3
Government	1.6	-0.8	-2.4
Federal government	-12.5	-14.5	-2

The industry with the biggest change in outlook is Mining, Quarrying, and Oil and Gas Extraction. It is expected to do much better than thought previously, thanks to the boom in oil and gas extraction. But it is the only industry with a major upward revision. Two other industries (Agriculture, Forestry, Fishing, and Hunting; and Accommodation and Food Services) have had very minor upward revisions to their projections.

All the other projections in this set have been revised downward. Of these, the most severe change is to the outlook for Information. Understand that this does not primarily mean information technology; rather, it refers to what is more commonly known as “the media”: publishing (including software publishing), news, and telecommunications. As someone working in the information industry, I can assure you that many jobs are being lost. Your local newspaper is much thinner these days than it was a decade ago, and this slimming-down is reflected in its staff roster.

The only other industry that actually went from positive to negative territory—that is, it was expected to expand modestly but now is expected to shrink—is Government. Keep this in mind the next time you hear a politician or commentator bloviating about how our government is growing too rapidly.

If you want to read about the revised forecasts for specific occupations, you are in luck: Tomorrow, the BLS will release the newest edition of the Occupational Outlook Handbook on the Web. Over the next few days, I will be working intensively to repurpose this Web content as a printed reference for JIST Publishing, replacing the previous edition on the shelves of libraries and career counselors. (The print edition will include some bonus chapters that you can’t find on the Web.) Some new occupations that you’ll find in this forthcoming edition are Solar Photovoltaic Installers; Wind Turbine Technicians; Phlebotomists; and Fundraisers.

I have surveyed the career information publications of other countries, and I can attest that we are very lucky to have a resource as excellent as the OOH. Government is shrinking, and it gets a lot of bad press in certain quarters, but it still does some things very well.

The Prison-Industrial Complex Is Losing Luster

The Department of Labor will release a new set of employment projections in only a couple of weeks from now, but I’m going to jump the gun and predict that the outlook for correctional officers and jailers will continue to be poor. The projection for the 2010–2020 period was for only 5 percent growth, compared to the average of 14 percent across all occupations. But isn’t the prison industry booming? If so, why such a lackluster outlook for the guards?

It’s true that the prison industry is currently doing very well. Nationwide, there are approximately 2.3 million inmates in state, federal, and private prisons. This is roughly double the number behind bars in 1990 and exceeds the number of prisoners in any other country.

However, there is a huge cost to this immense human inventory and to the infrastructure and labor force required to keep these prisoners behind bars. The federal government alone spends about $55 billion each year on its prisons. In the current climate of budget-cutting, even those who like to think of themselves as law-and-order crusaders are forced to question this expenditure.

Also, consider that violent crime is on a steady downward trend. To be sure, a very large fraction of those in prisons have either been convicted of nonviolent offenses, especially drug charges, or are being detained as undocumented aliens. But the state-by-state trend toward decriminalization of cannabis will result in fewer drug convictions. And the federal government has shifted its policy on drug offenders away from the harsh penalties enacted during heyday of the “war on drugs.” Finally, if—yes, it’s a big “if”—Congress can reform our immigration laws, we also should see a decline in those convicted of being here illegally.

Finally, the existence of a large workforce of correctional officers and jailers—an estimated 475,300 in 2010—creates public-health costs that are often overlooked but that are substantial. I am grateful to Caterina G. Spinaris, PhD, of Desert Waters Correctional Outreach for calling this to my attention, in response to a recent article in which I identified certain high-stress occupations. Research she participated in resulted in the estimate that 27% of corrections professionals suffer from post-traumatic stress disorder (PTSD). For security staff, the estimates were that 34.1% suffer from PTSD and 31.0% from depression. The Desert Waters research found significant, although lower, rates of PTSD and depression among other prison employees, such as clerical staff, chaplains, and maintenance workers.

These are all reasons to be hopeful that in the years ahead, prisons will not be the job-creators that they sometimes have touted as.

Another Take on Careers: Industries

In the 30-plus years that I have been writing about careers, I have focused mostly on occupations and, to a lesser extent, on college majors. But lately I have achieved a new appreciation for the value of considering careers from the viewpoint of industries. If you are thinking about a career move, you may want to think about industries and consult the sources I have found useful.

One reason that I have directed most of my attention to occupations is that this is where a great wealth of information is to be found. Resources such as the O*NET database, the Occupational Outlook Handbook, the Occupational Employment Statistics wage estimates, and the FedScope database of government jobs all present information in terms of occupations and offer valuable information about career options.

Of course, part of a career decision is learning how to prepare for a career move, and the preparation pathway to many occupations runs through a college degree. As a result, I have also researched college majors for many of my books. Not as many information resources are available for college majors as for occupations—I have relied on college catalogues and the National Survey of College Graduates—and these require a lot of analysis to yield useful facts.

By comparison, I have written very little about industries and done much less research in that field until this summer, when I undertook a project for Vault.com to write descriptions of 19 industries, such as Architecture, Animation, Elder Care, and Wholesale. If you have noticed that my blogs have been appearing less frequently of late, it was because my work schedule on this project has kept me very busy. But let me share some of what I have learned.

(If the following looks too tedious to you, go directly to Vault, where the most relevant of this information is distilled.)

One of the most valuable resources for learning about industries is the Census Bureau’s Industry Statistics Sampler pages. On the main page, click on an industry sector and drill down to the particular one that interests you. For example, if you’re interested in the software publishing industry, click the "More" arrow next to 51 Information. (The 51 is a classification number from the North American Industry Classification System [NAICS], the taxonomy that the government uses to classify all industries.) This takes you to the Industry Statistics Sampler for the Information industry. Like all two-digit industries in NAICS, it is a very large group, but you’ll find a tab called 2007 Census: Employers & Nonemployers. Click this, and you’ll see a table of information that covers not only the two-digit industry Information, but also all the three-digit, more-detailed industries within Information.

Click on 511 Publishing Industries (except Internet), and you’ll drill down to the Industry Statistics Sampler for that more-detailed industry. Once again, the tab called 2007 Census: Employers & Nonemployers will lead you to a table, this time covering all the four-digit industry sectors of the publishing industry. One of these is 5112 Software publishers. Click this, and you’ll finally get down to the Industry Statistics Sampler with the very specific level of detail for that industry sector. Click on the various tabs to retrieve tables with information such as the number of establishments, the dollar volume of sales, the payroll, the number of paid employees, and historical data on these topics. The last of these may be most interesting to you because it indicates trends. Try playing with the figures—for example, seeing whether the average number of workers per establishment has gone up or down.

The tab called 2007 Economic Census: Links to AFF (i.e., American Fact Finder) leads to links that can retrieve some very informative tables. For example, you can find where firms are clustered geographically or how business is divided among the various size firms—for example, whether industry sales are dominated by a few very big players.

The tab called 2007 Economic Census: Product Lines provides helpful information about the mix of products the industry outputs, both as dollar figures and percentages.

Turning away from the Census pages, another very useful database of information about industries is the National Employment Matrix of the Bureau of Labor Statistics, which can tell you what growth is projected for the workforce of the industry. The figures tell not only what growth to expect for the industry as a whole but also for individual occupations within the industry. These occupational projections can differ markedly; for example, the outlook for Accountants and Auditors in nursing care facilities is 11.7 percent growth, compared to –21.7 percent in newspaper publishing.

Another database within BLS is the Occupational Employment Statistics survey, which despite the name does have figures for industries. Go to the May 2012 National Industry-Specific Occupational Employment and Wage Estimates page and drill down to the specific industry that interest you. This tells you not only what the wages are across the whole industry and for individual occupations within it, but also how many people from each occupation are employed in the industry.

Information like this might help you decide what specialization to pursue within an occupation. It might guide your selection of a minor in college or which employers you focus on in your job search.

My final recommendation for researching industries is to turn to industry associations. Search the Web for “[name of industry] association” and you are likely to uncover one or several groups that represent the field. Understand that these groups are in business mostly to promote the industry, and they usually are eager for you to become a dues-paying member or take one of their certification courses. In fact, some industry association websites do little else but offer these options. On the other hand, many industry association websites feature news and even career tips about the industry. Filter the information through your critical thinking skills, recognizing that the industry representatives may be projecting a biased viewpoint. If more than one group represents the industry, you probably should compare their differing takes on the industry and its environment.

The Chinese Skills Disconnect: An Opportunity for Us?

The New York Times headline read “Degrees, but No Guarantees.” However, the story was not about the students graduating from American universities this season. Instead, it was about Chinese grads. It seems that Chinese businesses are swamped by job applications from graduating students but have few jobs to offer. At the risk of seeming to express schadenfreude, I want to point out that as bad as our economy seems for our own grads, their prospects are better than China’s.

The problem is not just that growth of the Chinese economy has slowed from its fever pitch of the previous several years. More fundamental is the nature of that economy. Like the postwar United States economy, it is growing mainly from manufacturing. You only have to prowl the aisles of your local Walmart to see the fruits of that manufacturing prowess. However, in an economy that has a very large share of low-tech manufacturing, such as the plants that produce plastic toys, rubber tires, kitchen utensils, or even iPads and other high-tech devices that are assembled by hand, there is a limited need for college-educated workers.

In the postwar American economy, millions of workers with only a high school diploma or even less education were able to find low-tech work in manufacturing plants and earn middle-class incomes. But more and more young people are getting college degrees now, despite the fast-climbing expense, because those low-skill jobs have largely vanished, exported to China, and the low-skill service jobs that remain are very low-paying.

But consider the implications for China. Think of it this way: We have not only exported the 1950s-style manufacturing capability, but also the accompanying 1950s-style skill requirements. Chinese universities are capable of churning out hordes of graduates, having quadrupled the number of college students in the past decade. But at this point in its development, China’s economy does not particularly need these grads.

A survey released last winter of Chinese young people age 21 to 25 found 16 percent of the college grads unemployed, but only 4 percent unemployment among those with only an elementary school education. This is the reverse of what you’ll find in the United States, where the May 2013 unemployment rate was 11.1 percent for those with less than a high school diploma and only 3.8 percent for those with a bachelor’s degree or higher.

There certainly is a case to be made that China is preparing human capital for the economic transition that will occur as wages rise, as manufacturing shifts to still lower-paying countries, and as their economy starts looking more like ours does now rather than our 1950s model. But what will the young grads pouring out of the universities find to occupy themselves until that shift occurs? And if that shift is somehow accelerated—for example, if China’s government invests very heavily in research and development activity—what will happen to today’s huge cohort of low-skilled Chinese workers?

America’s “greatest generation,” which prospered during the postwar period, has already left the workforce. They had several decades in which to enjoy the match between their skills and their nation’s economy. Among the baby boomers, who got their start in that postwar economy, many now are suffering from the shifted economy but at least had many good years of opportunity. What about China? With worldwide economic development now moving so fast, will millions of Chinese factory workers have the rug pulled out from under them as their 1950’s-style economy disappears? Or will China find some way to slow this transition and continue to disappoint the college grads? Either of these alternatives promises to cause social unrest.

There is still one more possibility: that China will do what we did with community colleges in the 1970s, only on a much bigger scale—that is, invest heavily in adult education and retool the hordes of low-skill workers for the inevitable economic shift. Online courses, in particular, could facilitate a golden age of Chinese adult education in the next decade. But consider that the online lessons won’t need to be based in China. Thousands of Chinese students are now coming to brick-and-ivy universities in the United States because of our sterling reputation for higher education. We are now pioneering online education. If we play our cards right, perhaps Chinese-language online education can be one of our hottest export industries in the next decade.

The Divisive Election Reflects a Divided Economy

Last Sunday’s New York Times Magazine carried a story about how the Amtrak ride from New York City to Washington offers a microcosm of the new American economy: at either end of the trip, prosperous cities fueled by government and finance, and in between, struggling cities plagued by high unemployment. This portrait represents the challenge that confronts the second term of the Obama Administration.

The article correctly points out that the nostalgia for good-paying manufacturing jobs, expressed so often in campaign speeches during the previous months, overlooks the reality that “the dollar value of goods made in America is at an all-time high of $1.9 trillion, just about even with China. The catch is that the number of American workers needed to create all that value has dropped steadily. In the mid-1940s, more than half of the New Jersey work force was in factories; today around 7 percent [are].” Modern manufacturing facilities employ “a handful of highly trained workers guiding machines that return huge value to shareholders while all the time finding ways to produce more goods with fewer workers.”

The writer, Adam Davidson, notes that the train ride also offers views of shiny office buildings housing “law firms and engineering companies and I.T. firms.” He is mistaken when he identifies the workers in these buildings as having “nothing to do with manufacturing.” That is true for many of these office workers, certainly, but the nation’s high-dollar-value manufacturing industry depends on engineers and I.T. workers who apply new technologies, as well as lawyers who work out contracts and fight patent infringements, to keep their companies competitive.

It’s highly significant that General Motors has done a U-turn on its previous trend of outsourcing information technology jobs, according to an article in MIT’s Technology Review. When GM’s current chief information officer came on board in February, 90 percent of the company’s I.T. work was being done outside of GM. Now GM plans to open four software innovation centers around the United States and may hire as many as 10,000 workers to staff them. This shift recognizes the fact that as manufacturing—from the design process to the assembly floor—has become thoroughly computerized and automated, and as the automobiles themselves have integrated many computerized components, it is expertise in I.T. that gives American carmakers the competitive advantage over foreign firms.

Where Davidson is very much on point is his observation that these white-collar service jobs are not as easily obtained as the manufacturing jobs of the old economy: “For people with advanced training, the service sector means an above-average wage, a below-average risk of unemployment and days sitting at a desk. For those with only a high-school [diploma] or no degree at all, far fewer jobs are available, and the ones that are pay poorly and disappear quickly.”

During the presidential campaign that just ended, you probably heard a lot about policy differences between the two major parties. Many of these policies had implications for the new economy outlined in this article: for education that will equip workers with advanced skills, for innovations in technology that will keep us competitive, for health care that will keep us productive at costs that are not crippling, and for infrastructure that will allow industries to function efficiently. We voters have now chosen government leadership that is highly divided on which policies will achieve these ends. Let’s hope that our leaders can move past the gridlock of the past several years and find ways to keep our industries strong without leaving behind a large segment of the population.

Recession, Austerity, and a Clouded Crystal Ball

Every recession is caused by a different set of economic forces, and therefore every recession hurts a different set of workers. The collapse of the dot-com bubble at the beginning of the last decade resulted in many job cuts in computer occupations, whereas construction jobs mostly escaped mass layoffs. Conversely, when the housing bubble burst four years ago, construction jobs suffered much more than high-tech jobs. This is why identifying occupations with a lot of job security is a hazardous pursuit.

I was reminded of this hazard by two Yale economists who blogged today on The New York Times website. They start by asking, “Why is the recovery from this recession different from recoveries from past recessions?” The culprit, they find, is layoffs and reduced hiring by local governments: “Going back as long as the data have been collected (1955), with the one exception of the 1981 recession, local government employment continued to grow almost every month regardless of what the economy threw at it. But since the latest recession began, local government employment has fallen by 3 percent, and is still falling. In the equivalent period following the 1990 and 2001 recessions, local government employment grew 7.7 and 5.2 percent. Even following the 1981 recession, by this stage local government employment was up by 1.4 percent.” They note that state governments have also cut back on their workforces, but the effect is smaller because state government workforces were less than half the size of local government workforces to begin with.

The Yale economists estimate that if state and local governments were hiring as they did in the previous two recoveries, “they would have added 1.4 million to 1.9 million jobs and overall unemployment would be 7.0 to 7.3 percent instead of 8.2 percent.” The Yale economists use the term “hidden austerity program” to describe these job cuts by state and local governments, comparing them to the policies that European nations are pursuing—policies that are delaying Europe’s recovery and possibly propelling it toward a double-dip recession.

In the light of these comments, it’s interesting to note that last week the presidential candidate Mitt Romney said, “[President Obama] says we need more firemen, more policemen, more teachers. Did he not get the message in Wisconsin? American people did. It’s time for us to cut back on government and help the American people.” It’s difficult for me to understand how job cuts help the American people or why Europe is the model we should follow.

Politicians get to make policy (if they get elected); we who write about future job security in various careers have to deal with the consequences of those policies. In fairness to politicians, I should add that the cutbacks in state and local government jobs may not be entirely the work of Tea Party pressure on policy makers. The Yale economists speculate that the magnitude of the latest recession may have overwhelmed the ability of governments to save jobs as they have in the past through “creative accounting and shifting in capital expenditures.” Of course, the magnitude of this recession was also difficult to foresee.

When I wrote 150 Best Jobs for a Secure Future, I identified seven sectors of the economy that have a history of job security, and one of those was government. At the time, as the Yale economists point out, this seemed like a safe bet based on decades of economic history. Hindsight tells a different story.

Fortunately, most of the occupations with large public-sector workforces also find lots of employment in the private sector, so they remain promising career goals. For example, Registered Nurses, Financial Examiners, Computer Network Architects, and Management Analysts were among the top government-sector occupations that I recommended. They also have rosy outlooks in the private sector.

Fastest-Growing Industries, 2010-20

Last week, the Bureau of Labor Statistics published the latest round of employment projections, applying to the years 2010 through 2020. If you're looking for fields with lots of job opportunities, here is some information you will find helpful. This blog covers industries. My next blog will cover occupations.

  

Fastest-Growing Industries 2010-20
INDUSTRY TITLE	EMPL2010	EMPL2020	PCTCHG	EMPCHG
Social assistance	2,624,300	3,906,100	48.8%	1,281,800
Ambulatory health care services	5,975,900	8,633,200	44.5%	2,657,300
Wholesale electronic markets and agents and brokers	805,100	1,147,200	42.5%	342,100
Specialty trade contractors	3,465,400	4,695,200	35.5%	1,229,800
Lessors of nonfinancial intangible assets (except copyrighted works)	25,200	33,400	32.5%	8,200
Heavy and civil engineering construction	828,600	1,086,400	31.1%	257,800
Health and personal care stores	978,800	1,278,400	30.6%	299,600
Professional, scientific, and technical services	7,423,900	9,551,500	28.7%	2,127,600
Construction of buildings	1,231,600	1,583,500	28.6%	351,900
Funds, trusts, and other financial vehicles	86,900	110,600	27.3%	23,700
Couriers and messengers	527,100	669,300	27.0%	142,200
Scenic and sightseeing transportation	27,300	34,500	26.4%	7,200
Nursing and residential care facilities	3,129,000	3,951,000	26.3%	822,000
Warehousing and storage	628,300	793,600	26.3%	165,300
Furniture and home furnishings stores	436,400	550,200	26.1%	113,800
Water transportation	62,800	78,700	25.3%	15,900
Securities, commodity contracts, and other financial investments	800,900	1,002,300	25.1%	201,400