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ECONOMIC ANALYSIS: With growth at both ends, job spectrum requires skill

May 30, 2005

When you study economic statistics for a living, it's easy to lose perspective on a lot of things.

Take the labor market, for instance. In any given month, millions of American workers are hired and fired, promoted, demoted and transferred. Some drop out of the labor force to raise children or to go to school, while others retire altogether or begin new careers.

When the smoke clears after all those changes, the statisticians in Indiana and in Washington tally it up and tell us how many more people are working today than had jobs last month.

Those of us who keep tabs on the economy watch this jobs report like a hawk. Its importance as perhaps the most timely and comprehensive gauge of our aggregate economic performance is undeniable. Job growth fuels income growth, and with it the confidence that prosperity can continue.

Yet the monthly ritual of counting heads in America's business places and tallying the result misses so much of what is going on in the labor market as to be almost laughable. The kinds of things we do for a living, and the ways in which markets reward us for them, are changing before our eyes. And those who are preparing to enter the workplace for the first time should know it.

Much has been written and said in Indiana about the kinds of jobs that are disappearing in communities throughout the state. But much less is said, or understood, about the kinds of jobs that are taking their place.

The Bureau of Labor Statistics in Washington regularly projects employment and occupational demand for the national economy well into the future. According to the BLS statisticians, between the years 2002 and 2012, the U.S. economy will create 21.3 million net new jobs. What kind of jobs will they be?

The answer resembles a two-sided coin. On one side, we have the highly paid professional and related occupations, whose growth is the fastest of any occupational group. This includes engineers, lawyers, accountants, teachers and consultants. These are white-collar occupations with high skill and educational requirements. One out of every three new jobs will be in this category, according to the BLS.

The other side of the coin is the other end of the earnings spectrum-service occupations. Health care support, protective services and a wide range of lowerskilled personal services jobs will account for about one in every four net new jobs created in the economy of the next decade, the BLS projects.

What's largely left out are many of the middle-paying occupations, particularly in goods-producing industries. But the relative decline of production, transportation and material-handling occupations doesn't mean there won't be job openings there in the future. Many manufacturing and construction employers are wondering where the next generation of skilled diemakers, bricklayers and millwrights will come from when their aging work force retires, and it's easy to understand why.

But the big message coming out of the labor market is about the rewards to skill. Six of the 10 occupations adding the most jobs in the coming years will require an associate's or bachelor's degree. That's not surprising in an economy where nine of the 10 fastest-growing occupations are either health-care- or computer/information-technology-related.

The two-headed nature of job growth, where both the highest- and the lowestpaying jobs experience the fastest growth, may not be good for our political and social stability. But it's a reality that shouts a simple message every young person should hear: If you want to get ahead, you'd better get a skill.



Barkey is an economist and director of economic and policy studies at the Miller College of Business, Ball State University. His column appears weekly. He can be reached by e-mail at pbarkey@ibj.com.
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