OVERVIEW OVERVIEW PROJECTIONS (2004-2014) AND FORECAST (2006-2009PROJECTIONS (2004-2014) AND FORECAST (2006-2009)

OF

INDUSTRY EMPLOYMENT, LABOR FORCE SUPPLY AND

OCCUPATIONAL DEMAND

STATEWIDE AND BY REGIONAL LABOR MARKET AREA

Prepared For the March 1, 2007

OCCUPATIONAL FORECASTING CONFERENCE

LOCAL REVIEW MEETING

DATA SOURCESDATA SOURCES

EMPLOYMENT DATAEMPLOYMENT DATA Louisiana Department of Labor

(ES-202 DATA(ES-202 DATA) 1990-2004

Bureau of Labor Statistics Current Employment Statistics Survey—Benchmark 2005Current Employment Statistics Survey—Benchmark 2005 (2005 and 2006) (2005 and 2006)

• Geography: State and Metropolitan Statistical Area

Quarterly Census of Employment and WagesQuarterly Census of Employment and Wages (up to second quarter of 2006)• Geography: parish and planning area

LABOR FORCE AND POPULATION DATALABOR FORCE AND POPULATION DATA U.S. Census Bureau IRS Statistical Unit Systems Solutions Consulting Bureau of Labor Statistics

PROJECTIONS AND FORECAST ASSUMPTIONSPROJECTIONS AND FORECAST ASSUMPTIONS

EMPLOYMENTEMPLOYMENT National AssumptionsNational Assumptions

Latest Bureau of Labor Statistics 2004-2014 long term assumptions about labor productivity, GDP growth, PCE

growth and industry growth by four-digit NAICS State AssumptionsState Assumptions

Short-term and long term trends in three and four-digit NAICS industries between 1990 and 2004.

Quarterly Census of Employment and Current Employment Statistics Survey for 2005 and 2006 for incremental changes in employment by two and three digit NAICS.

Year 2007 forecast heavily influenced by 2004-2006 monthly changes. 2008 and 2009 are forecasts influenced by assumptions about short-term events

Years 2008 and 2009 forecast reflects assumptions about recovery, national growth and 2000-2006 historical Louisiana industry growth

Years 2009-2014 industry employment projections equations reflect projected national growth rates and historical growth rates for selected industry.

PROJECTIONS AND FORECAST ASSUMPTIONSPROJECTIONS AND FORECAST ASSUMPTIONS

Regional Labor Market Area AssumptionsRegional Labor Market Area Assumptions

Years 1990-2004 growth rates by industry Monthly trends from Current Employment Statistics (CES) for period 1997 to

2006 to identify seasonal monthly employment trends—used to forecast Year 2007 only.

Quarterly Census of Employment and Wage data for 2005 and up to second quarter 2006 updated with CES data

For MSA’s Census data for trends in establishment births and deaths. For example in 2002-2003, in the Alexandria MSA there were 309 establishment births

and 266 establishment deaths. The establishment births added 1,796 jobs, but establishment deaths resulted in a loss

of 2,006 jobs. Regional industry short-term forecasts and long-term projections follow same

process as statewide employment forecasts and projections

PROJECTIONS AND FORECAST ASSUMPTIONSPROJECTIONS AND FORECAST ASSUMPTIONS

Population and Labor ForcePopulation and Labor Force Statewide PopulationStatewide Population

Pre-Hurricanes Katrina and Rita, Louisiana population growth continued to hemorrhage• Between 2000 and 2004, domestic out-migration exceeded in-migration by 75,000 individuals

Post-Hurricane Katrina and Rita, Louisiana’s July 1, 2006 population was estimated by the Census Bureau to be 182,000 lower than the 2000 Census.

Every Regional Labor Market in the State, except Baton Rouge, experienced a net out-migration between 2000 and 2005.

ASSUMPTIONS:ASSUMPTIONS:• Louisiana’s total population is not likely to recover to the 2000 Census level until 2010.

• Even though population growth is slow to recover, overall labor force participation rates will rise faster than the United States. In 2006, Louisiana’s labor force participation rate was 55.7%. The United States rate was estimated at 65%.

• The labor force assumption is an optimistic assumption because the percentage change in participation rates in Louisiana correlated above 90% with the percentage change in participation rates in the United States for the 1980, 1990 and 2000 Censuses.

PROJECTIONS AND FORECAST ASSUMPTIONSPROJECTIONS AND FORECAST ASSUMPTIONS

Population and Labor ForcePopulation and Labor Force Regional Labor Market AreasRegional Labor Market Areas

For all RLMA’s, except the New Orleans region, population and labor force projections follow pre-Hurricane Katrina and Rita trends within each region. These trends cover the period 1990 to 2005.

Historical statewide data for population and labor force and lagged by one-year labor force population are used independent variable to predict 2006-2014 labor force population. Pre-Hurricane statewide labor force population projections and the previous years projected labor force for planning area are used to predict future year labor force population.

Labor market participation rates are a function of the state’s historical and projected participation rates.

Louisiana OverviewLouisiana Overview

TOTAL LOUISIANA POPULATION (1990-2014)

4,000,000

4,100,000

4,200,000

4,300,000

4,400,000

4,500,000

4,600,000

4,700,000

Source: U.S. Census Bureau; Systems Solutions Consulting

Pop

ulat

ion

Pre-Katrina/Rita Post-Katrina /Rita

LOUISIANA'S LABOR FORCE

1,750,000

1,800,000

1,850,000

1,900,000

1,950,000

2,000,000

2,050,000

2,100,000

2,150,000

Year1990

1998 2000 2002 Year2004

2006 2009 Year2014

Source: Bureau of Labor Statistics; Systems Solutions Consulting, December 2006

Recession

Katrina/RitaKatrina/Rita

Louisiana OverviewLouisiana Overview

HISTORICAL AND PROJECTED WAGE AND SALARY EMPLOYMENT IN LOUISIANA

1,400,000

1,500,000

1,600,000

1,700,000

1,800,000

1,900,000

2,000,000

2,100,000

2,200,000

Source: Louisiana Department of Labor; Systems Solutions Consulting (December 2006)

Long-Term Trend Katrina/Rita Effect

Louisiana OverviewLouisiana Overview

RELATIVE HISTORICAL JOB GROWTH AMONG REGIONS IN LOUISIANA

100.0

105.0

110.0

115.0

120.0

125.0

130.0

135.0

140.0

Year1900

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Year2004

19

90

=1

00

RLMA 1 RLMA 2 RLMA 3 RLMA 4 RLMA 5

RLMA 6 RLMA 7 RLMA 8 United States

Louisiana OverviewLouisiana Overview

OCCUPATIONAL PROJECTIONSOCCUPATIONAL PROJECTIONS

Foundation For Occupational ProjectionsFoundation For Occupational Projections LDOL survey’s Louisiana firms on the occupational composition of their

workforce and wages for those occupations. The survey is called “Occupational Employment Statistics” Survey.

Occupational projections contain both industry employment projections and self-employed.

A random sample of 7,500 employers in the state, representing firms of all sizes, is the universe for occupational data.

Process of Projecting OccupationsProcess of Projecting Occupations Three data elements are included to determine total demand for an occupation

Total employment in the identified industries Self-employment Replacement or turn-over rates

OCCUPATIONAL PROJECTIONS

Process of Projecting OccupationsProcess of Projecting Occupations Example, if employment increases and for occupation- example --welderExample, if employment increases and for occupation- example --welder

Mining ServicesMining Services (Initial conditions)

• 2006 employment = 100• 2007 employment = 110• Total change in new growth = 10

Occupational Information• Welders = 10% of total workforce• Replacement rate of welders is 5% annually

Estimating Occupational Demand• 10 (growth) X 0.10 + 100 (base year employment) X 0.05 = total demand• (10 X 0.10 = 1 +100 X 0.05 = 5) = total demand (6) for welder occupation in 2007

What Have You Learned?• The majority of total demand in most industries comes from replacement demand, not growth.

ISSUESISSUES

Potential vs. Estimated Employment For Some Future Year.Potential vs. Estimated Employment For Some Future Year. This is an issue that is more or less an accounting problem, and has to deal with

establishment births and deaths. Recall this problem: For MSA’s Census data for trends in establishment births and deaths.

• For example in 2002-2003 and in the Alexandria MSA, there were 309 establishment births and 266 establishment deaths.

• The establishment births added 1,796 jobs, but establishment deaths resulted in a loss of 2,006 jobs

Labor Force and JobsLabor Force and Jobs Available labor force does overtime serve as a constraint in the potential vs. estimated

realized employment. Replacement RatesReplacement Rates

“The replacement of …… is low.” It is important to recognize that replacement rates are annualized. Therefore, it is possible that all of the individuals retiring could occur (in reality) in a compressed period of time. As an example, the replacement rate for “Chemical Plant and Systems Operators” is 3% per year over the time frame. This might seem low on first glance. However, if the projection period is for ten years, this implies that 30% of the entire Chemical Plant and Systems Operators will be retired or replaced within that time frame.

ISSUES

Annual Demand For New Jobs “ The annual demand for carpenters is low. We have a project that studies show will require

1,000 new construction jobs.” There are several response to this comment. First, the same issue of annualized demand applies to growth in occupational demand Second, annualized demand, by the virtue that it is annualized, removes peaks and valleys in

employment data. Labor is a constraint. As noted earlier, almost every region of the state has had negative migration

rate. Saying you “need” is very different from what you might get.