A fearless forecast: The employment report punditry will overlook the single most important analytic step -- something that is absolutely necessary to understand employment changes, and to fix the current problem.
If economic analysts took this step, they would provide better insight for their readers and viewers.
If political leaders took this step, they would be more successful in crafting effective programs.
The employment problem is best viewed as a two front war -- cutting job losses and stimulating job creation.
Let me explain.
The Employment report for May will be released tomorrow morning. After Wednesday's ADP projection of modest private employment gains, Street economists have been busily revising down their forecasts.
Whatever the actual result, it will not reach the level of net job gains needed to make real economic progress -- a pace of about 350,000 per month.
Is this a hopeless goal, or can it actually be achieved?
Defining the Problem
Despite the many hours of commentary on the jobs report, none of the pundits ever talks about the most important subject: The different contributions of job gains and job losses. Let us consider each in turn.
It is easy to monitor job losses. The initial employment claims series is accurate, timely and widely-followed. Large corporate layoffs get a lot of publicity. Lost jobs are highly visible and readily counted. Many economists use this series as a proxy for the employment situation and the overall economy.
Tracking job losses is important, but it is only half of the problem. Over 2 million jobs disappear every month. There is even higher labor turnover, since more people quit their jobs than are laid off or fired.
New jobs are much more difficult to monitor. New businesses are the source of many new jobs. These businesses do not find their way into official data for many months. The BLS estimates some of this aspect of job creation by measuring changes in continuing businesses and applying statistical trends.
We know from actual state employment data that the economy is creating new jobs at a pace of about 2.3 million per month. That is a fact that no one will mention tomorrow. If we could increase job creation by 10%, while holding job losses constant, we could solve the unemployment problem.
This 10% gain is not easily accomplished, of course, but thinking about the problem in this way is a constructive step. Policy makers can look at where job creation is occuring and think about targeted solutions. Much of the job creation is the natural consequence of changes in the economy and employment dynamics.
A 2010 paper by Dane Stangler and Paul Kedrosky of the Kauffman Foundation provides a strong theoretical basis as well as supporting data for the role of entrepreneurial activity and new firms in job creation.
A Starting Point
Skeptics often say that the good jobs are gone and new jobs are inferior. This is a failure of imagination. The data actually show that average earnings have held up pretty well.
Once again, the problem is that we all know people who have had to take lesser positions, if they can find work at all.
Let me stimulate your imagination by explaining where to find some of the good new jobs. The resource I recommend is called O*NET, the "nation's primary source of occupational information. O*NET maintains a job database and must regularly reclassify the positions. By watching the changes in various job categories, you can get a good feel for the new jobs.
It probably would not surprise you to learn that there are new jobs in green technology of various types, financial regulation (both regulators and the regulated), health (technology, information, and acute care), efficiency and cost containment of all types, international trade experts, and scientific specialists in various emerging fields.
The list of classifications at the end of this article includes both new and growing job classifications.
Acknowledgements and Sources
Thanks to Chris Manning and George Stamas of the BLS for their continuing help.
Download the latest O*NET guides and explanations from this location.
Check out Jeff's important employment facts from various reports in this article.
Kauffman Foundation Paper -- Stangler and Kedrosky
New Job Classifications from O*NET
|O*NET-SOC 2009 Code||O*NET-SOC 2009 Title|
|11-1011.03||Chief Sustainability Officers|
|11-3051.01||Quality Control Systems Managers|
|11-3051.02||Geothermal Production Managers|
|11-3051.03||Biofuels Production Managers|
|11-3051.04||Biomass Production Managers|
|11-3051.05||Methane/Landfill Gas Collection System Operators|
|11-3051.06||Hydroelectric Production Managers|
|11-9039.01||Distance Learning Coordinators|
|11-9039.02||Fitness and Wellness Coordinators|
|11-9041.01||Biofuels/Biodiesel Technology and Product Development Managers|
|11-9111.01||Clinical Nurse Specialists|
|11-9121.01||Clinical Research Coordinators|
|11-9121.02||Water Resource Specialists|
|11-9199.01||Regulatory Affairs Managers|
|11-9199.03||Investment Fund Managers|
|11-9199.04||Supply Chain Managers|
|11-9199.08||Loss Prevention Managers|
|11-9199.09||Wind Energy Operations Managers|
|11-9199.10||Wind Energy Project Managers|
|11-9199.11||Brownfield Redevelopment Specialists and Site Managers|
|13-1041.07||Regulatory Affairs Specialists|
|13-1199.02||Security Management Specialists|
|13-1199.04||Business Continuity Planners|
|13-2099.01||Financial Quantitative Analysts|
|13-2099.02||Risk Management Specialists|
|13-2099.04||Fraud Examiners, Investigators and Analysts|
|15-1051.01||Informatics Nurse Specialists|
|15-1099.01||Software Quality Assurance Engineers and Testers*|
|15-1099.02||Computer Systems Engineers/Architects*|
|15-1099.06||Geospatial Information Scientists and Technologists|
|15-1099.07||Geographic Information Systems Technicians|
|15-1099.09||Data Warehousing Specialists|
|15-1099.10||Business Intelligence Analysts|
|15-1099.11||Information Technology Project Managers|
|15-1099.12||Electronic Commerce Specialists|
|15-1099.13||Video Game Designers|
|15-1099.14||Document Management Specialists|
|15-2041.02||Clinical Data Managers|
|17-2072.01||Radio Frequency Identification Device Specialists|
|17-2112.01||Human Factors Engineers and Ergonomists|
|17-2141.01||Fuel Cell Engineers|
|17-2199.10||Wind Energy Engineers|
|17-2199.11||Solar Energy Systems Engineers|
|17-3027.01||Automotive Engineering Technicians|
|17-3029.01||Non-Destructive Testing Specialists|
|17-3029.02||Electrical Engineering Technologists|
|17-3029.03||Electromechanical Engineering Technologists|
|17-3029.04||Electronics Engineering Technologists|
|17-3029.05||Industrial Engineering Technologists|
|17-3029.06||Manufacturing Engineering Technologists|
|17-3029.07||Mechanical Engineering Technologists|
|17-3029.09||Manufacturing Production Technicians|
|17-3029.10||Fuel Cell Technicians|
|17-3029.11||Nanotechnology Engineering Technologists|
|17-3029.12||Nanotechnology Engineering Technicians|
|19-1029.02||Molecular and Cellular Biologists|
|19-2041.01||Climate Change Analysts|
|19-2041.02||Environmental Restoration Planners|
|19-2099.01||Remote Sensing Scientists and Technologists|
|19-3039.01||Neuropsychologists and Clinical Neuropsychologists|
|19-4099.01||Quality Control Analysts|
|19-4099.02||Precision Agriculture Technicians|
|19-4099.03||Remote Sensing Technicians|
|25-3099.01||Adaptive Physical Education Specialists|
|25-9031.01||Instructional Designers and Technologists|
|29-1069.01||Allergists and Immunologists|
|29-1069.05||Nuclear Medicine Physicians|
|29-1069.08||Physical Medicine and Rehabilitation Physicians|
|29-1069.09||Preventive Medicine Physicians|
|29-1069.11||Sports Medicine Physicians|
|29-1111.01||Acute Care Nurses|
|29-1111.02||Advanced Practice Psychiatric Nurses|
|29-1111.03||Critical Care Nurses|
|29-1122.01||Low Vision Therapists, Orientation and Mobility Specialists, and Vision Rehabilitation Therapists|
|29-2011.03||Histotechnologists and Histologic Technicians|
|29-2099.02||Hearing Aid Specialists|
|29-2099.03||Ophthalmic Medical Technologists and Technicians|
|31-9099.01||Speech-Language Pathology Assistants|
|33-9099.01||Transportation Security Officers*|
|33-9099.02||Loss Prevention Specialists|
|41-3031.03||Securities and Commodities Traders|
|41-4011.07||Solar Sales Representatives and Assessors|
|47-1011.03||Solar Energy Installation Managers|
|47-4099.01||Solar Photovoltaic Installers|
|47-4099.02||Solar Thermal Installers and Technicians|
|47-4099.03||Weatherization Installers and Technicians|
|49-9099.02||Wind Turbine Service Technicians|
|51-8099.01||Biofuels Processing Technicians|
|51-8099.02||Methane/Landfill Gas Generation System Technicians|
|51-8099.03||Biomass Plant Technicians|
|51-8099.04||Hydroelectric Plant Technicians|
|51-9199.01||Recycling and Reclamation Workers|