May is Graduation Month

Employment is brighter for some graduating students than for others, depending on the degree earned. Registered nurses (RNs) top the list for most in demand in the nation over the next decade with an expected 1,110,841 openings. About 60% of the job openings are expected because RNs are either retiring or changing occupations (called replacement demand in the table). A bachelor’s degree is typically required to be an RN and it pays an entry wage of around $48,500. According to the latest data (fourth quarter of 2015), there are 2.9 million employed RNs in the nation. The annual average wage for all RNs is $69,800.

Other occupations in high demand over the next decade include general and operations managers, accountants and auditors, and computer systems analysts.

Top 10 Occupations in the Nation with Most Openings that Typically Require a Bachelor's Degree, 2015-2025
CurrentForecast
Four Quarters Ending with 2015q4 Over the Next 10 Years
OccupationEmployment Avg. Annual Wages(1) Total Replacement Demand Total Growth Demand Total Openings Entry-Level Wages(1)
Registered Nurses 2,855,420 $69,800 674,656 436,185 1,110,841 $48,500
General and Operations Managers 2,153,362 $117,200 578,853 160,090 738,943 $51,900
Managers, All Other 956,533 $110,200 581,923 69,310 651,233 $61,100
Accountants and Auditors 1,329,500 $73,700 395,893 157,410 553,303 $43,900
Elementary School Teachers, Except Special Education 1,304,861 $56,800 278,301 68,513 346,814 $38,200
Software Developers, Applications 761,466 $99,500 128,545 156,726 285,271 $61,700
Secondary School Teachers, Except Special and Career/Technical Education 915,675 $59,300 218,530 48,529 267,059 $39,700
Management Analysts 737,144 $90,900 136,669 108,926 245,595 $49,800
Computer Systems Analysts 572,220 $87,300 82,653 125,941 208,594 $54,900
Financial Managers 548,319 $130,200 141,656 39,332 180,988 $68,600
1. Occupation wages are as of 2014.
Source: JobsEQ

Preschool teachers top the list of in-demand occupations for jobs that typically require an associate’s degree. Openings in the nation are expected to total 151,181 over the next decade with entry-level wages of $20,000.

Entry-level wages for some jobs that require an associate’s degree pay better than those requiring a bachelor’s degree.  For example, the entry-level wage for the average dental hygienist in the nation is $52,600 and the education required is an associate’s degree compared to a registered nurse requiring a bachelor’s degree who has an entry wage of $48,500.

When determining a major for post-secondary degrees, the forecasted number of openings and entry-level wages is important to both the employer and the new hires coming out of the education pipeline.

Top 10 Occupations in the Nation with Most Openings that Typically Require an Associate's Degree, 2015-2025
CurrentForecast
Four Quarters Ending with 2015q4Over the Next 10 Years
OccupationEmployment Avg. Annual Wages(1) Total Replace-ment Demand Total Growth Demand Total Openings Entry-Level Wages(1)
Preschool Teachers, Except Special Education 427,081 $32,000 121,808 29,373 151,181 $20,000
Paralegals and Legal Assistants 268,735 $51,800 58,260 21,671 79,931 $32,500
Web Developers 154,910 $68,700 28,230 44,016 72,246 $37,500
Dental Hygienists 202,937 $72,000 32,322 37,769 70,091 $52,600
Medical and Clinical Laboratory Technicians 169,257 $40,800 38,609 29,661 68,270 $27,200
Physical Therapist Assistants 81,908 $54,300 26,249 33,001 59,250 $35,800
Radiologic Technologists 205,569 $57,500 36,532 17,181 53,713 $39,900
Respiratory Therapists 127,245 $58,500 29,213 14,499 43,712 $43,300
Life, Physical, and Social Science Technicians, All Other 69,799 $47,900 35,992 5,391 41,383 $28,300
Computer Network Support Specialists 180,776 $66,100 24,555 15,431 39,986 $39,000
1. Occupation wages are as of 2014.
Source: JobsEQ

Defense Contract Spending Declines $66 Billion from Fiscal Year 2009 to 2015

Department of Defense (DoD) contract spending grew at a strong pace in the first decade of the 21st century, but has been in decline since fiscal year (FY) 2010 based on Chmura’s proprietary FedSpendTOP data.[1],[2] Spending peaked at $336.7 billion in FY 2009 and has since fallen by 19.6% to $270.7 billion in FY 2015.[3] Contributing to the decline was the Budget Control Act of 2011 (sequestration took effect in 2013) and the drawdown of U.S. forces in both Iraq and Afghanistan.

U.S. Defense Contract Spending in Nominal DollarsU.S. Defense Contract Spending in Nominal Dollars

The impact of defense contract spending cuts has been and will continue to be uneven across regions and states. This analysis shows which metropolitan statistical areas (MSAs) have been most impacted by defense contract spending cuts. At the aggregate level, some of the largest MSAs have seen the most dramatic cuts from fiscal year 2009—the peak nationally of DoD contract spending—to fiscal year 2015, which is the most recent fiscal year of data available. On a per capita basis, however, the 10 largest declines in defense contract spending were experienced in MSAs with populations of less than 500,000.

While the Washington, D.C. MSA—home to the headquarters of several large defense contractors including Lockheed Martin, General Dynamics, and Northrop Grumman—experienced the largest drop in defense contract spending ($6.5 billion) from FY 2009 to 2015, on a per capita basis the decline was only $1,072; this was the 31st largest per capita decline in defense contract spending among the MSAs. Defense contract spending fell $2.3 billion in the New York metropolitan area from FY 2009 to 2015; this, however, only represented a loss of $116 on a per capita basis.

In contrast, a $2.3 billion decline in the Oshkosh MSA represented a loss of $13,378 per person, the largest per capita decline among all MSAs over this period. The Oshkosh MSA is home to the Oshkosh Corporation, a military vehicle manufacturer, which has reduced its workforce in response to declining defense contract spending.

From FY 2009 to 2015, defense contract spending decreased by $301.9 million or $2,891 per capita in the Lima, Ohio MSA; the Joint Systems Manufacturing Center, a government-owned, contractor-operated tank production facility in Lima operated by General Dynamics Land Systems, has experienced a production hiatus as the Army shifts production from the M1A2 Abrams fleet to the M1A3.      

The labor market impact of defense contract spending cuts can vary widely depending on the type and nature of the defense contract spending. Every industry in the area will have a different economic impact based on the size of its local supply chain and the spending spillover from its directly employed workers. It stands to reason, however, that these spending cuts, as steep as they are, can be a driving force to upset labor markets in many of the nation’s MSAs, both large and small.

Defense Contract Cuts by MSA, FY 2009 to 2015
MSA Total Defense Contract Cuts FY 2009 to 2015
Washington-Arlington-Alexandria, DC-VA-MD-WV MSA -$6,534,964,135
Phoenix-Mesa-Scottsdale, AZ MSA -$4,540,569,745
Los Angeles-Long Beach-Anaheim, CA MSA -$4,334,692,207
Detroit-Warren-Dearborn, MI MSA -$2,930,431,025
New York-Newark-Jersey City, NY-NJ-PA MSA -$2,338,177,154
Oshkosh-Neenah, WI MSA -$2,268,233,215
Chicago-Naperville-Elgin, IL-IN-WI MSA -$2,238,919,430
New Orleans-Metairie, LA MSA -$2,159,563,955
York-Hanover, PA MSA -$2,016,694,563
Boston-Cambridge-Newton, MA-NH MSA -$1,779,815,870
Louisville/Jefferson County, KY-IN MSA -$1,717,377,395
Cincinnati, OH-KY-IN MSA -$1,664,995,187
Memphis, TN-MS-AR MSA -$1,620,314,173
Houston-The Woodlands-Sugar Land, TX MSA -$1,488,712,685
San Antonio-New Braunfels, TX MSA -$1,391,688,781
Hartford-West Hartford-East Hartford, CT MSA -$1,359,347,332
South Bend-Mishawaka, IN-MI MSA -$1,140,970,964
El Paso, TX MSA -$1,112,974,753
Bellingham, WA MSA -$966,597,640
Charleston-North Charleston, SC MSA -$910,442,557

 

Defense Contract Cuts per Capita by MSA, FY 2009 to 2015
MSATotal Defense Contract Cuts FY 2009 to 2015$ Cut per Capita
Oshkosh-Neenah, WI MSA -$2,268,233,215 -$13,378
York-Hanover, PA MSA -$2,016,694,563 -$4,554
Bellingham, WA MSA -$966,597,640 -$4,553
South Bend-Mishawaka, IN-MI MSA -$1,140,970,964 -$3,564
Lima, OH MSA -$301,908,063 -$2,891
Crestview-Fort Walton Beach-Destin, FL MSA -$725,869,109 -$2,769
Watertown-Fort Drum, NY MSA -$300,052,222 -$2,551
Anniston-Oxford-Jacksonville, AL MSA -$287,665,595 -$2,488
Fort Wayne, IN MSA -$852,247,912 -$1,983
California-Lexington Park, MD MSA -$213,631,915 -$1,917
New Orleans-Metairie, LA MSA -$2,159,563,955 -$1,710
Anchorage, AK MSA -$591,040,245 -$1,478
Sioux City, IA-NE-SD MSA -$248,450,379 -$1,470
Roanoke, VA MSA -$450,132,483 -$1,431
Louisville/Jefferson County, KY-IN MSA -$1,717,377,395 -$1,343
El Paso, TX MSA -$1,112,974,753 -$1,327
Binghamton, NY MSA -$323,305,058 -$1,314
Columbus, GA-AL MSA -$410,919,789 -$1,310
Bangor, ME MSA -$192,447,838 -$1,260
Palm Bay-Melbourne-Titusville, FL MSA -$713,521,119 -$1,256

 

Defense Contract Gains by MSA, FY 2009 to 2015
MSA Total Defense Contract Gains FY 2009 to 2015
Minneapolis-St. Paul-Bloomington, MN-WI MSA $2,003,699,292
Seattle-Tacoma-Bellevue, WA MSA $1,713,789,488
Baltimore-Columbia-Towson, MD MSA $1,054,626,982
Bridgeport-Stamford-Norwalk, CT MSA $803,582,514
Pittsburgh, PA MSA $803,508,009
Norwich-New London, CT MSA $777,377,637
Mobile, AL MSA $679,625,713
Portland-South Portland, ME MSA $575,384,923
Amarillo, TX MSA $513,600,860
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA $415,749,550

 

Defense Contract Gains per Capita by MSA, FY 2009 to 2015
MSA Federal Contract Gains 2009 to 2015 $ Gains Per Capita
Norwich-New London, CT MSA $777,377,637 $2,859
Pittsfield, MA MSA $301,455,515 $2,358
Amarillo, TX MSA $513,600,860 $1,960
Mobile, AL MSA $679,625,713 $1,636
Lynchburg, VA MSA $326,223,707 $1,255
Portland-South Portland, ME MSA $575,384,923 $1,093
Pine Bluff, AR MSA $85,602,563 $914
Bridgeport-Stamford-Norwalk, CT MSA $803,582,514 $848
Idaho Falls, ID MSA $91,296,319 $653
Minneapolis-St. Paul-Bloomington, MN-WI MSA $2,003,699,292 $568
Source: Chmura Economics & Analytics and U.S. Census Bureau
Note: July 2015 population estimates used to calculate cuts and gains per capita.

 

The map below shows defense contract spending by MSA from FY 2000 to 2015. The circles are proportional (i.e., they are scaled to the value of defense contracts in that MSA). Beginning in FY 2001, the color of each circle indicates whether defense contract spending in the MSA declined (red) or increased (green) from a year earlier. The map can be manually advanced or will advance automatically when you click on “Play.”

The table below the map shows DoD contract spending in the top 100 MSAs and updates each time a new fiscal year is selected. The map informs the following question categories:

  •         Which MSAs are the largest recipients of DoD contract spending?
  •         In which regions is DoD contract spending concentrated?
  •         In which MSAs is DoD contract spending increasing/decreasing from the prior year?

For example, the map shows DoD contract spending surges in the Washington, D.C. MSA from FY 2000 to FY 2010 when spending climbed from $8.0 billion to $39.5 billion before declining beginning in FY 2011.

To learn more about Chmura’s expertise and research regarding defense spending and supply chain mapping, contact us here.

[1] The U.S. federal government’s fiscal year begins on October 1 of the previous calendar year and ends on September 30. For example, FY 2001 began October 1, 2000 and ended September 30, 2001.

[2] FedSpendTOP data are derived from USASpending.gov data but provide a more accurate picture of federal spending based on the time and place of performance when compared with published federal awards data. The data are adjusted for the length of the contract as well as for an associated subcontract’s place of performance (i.e., regional spending is based on place of performance with out-of-region awards subcontracted into the area added in and in region awards subcontracted out of the region subtracted out); FedSpendTOP data also include purchases by non-DoD agencies which end up in DoD products and have been corrected for errors identified during Chmura’s quality control process.

[3] In nominal dollars (i.e., not adjusted for inflation).

WIOA: Data-driven Directions

Now that the states' WIOA plans are completed, local Workforce Development Areas' key staff are in the throes of developing their local strategic plans. As we heard while attending the NAWB Forum 2016 conference, local areas need actionable labor market data and information. To this end, Chmura is working with several WDAs to provide labor data through our technology platform, JobsEQ. With JobsEQ, you have the data you need, when you need it. Investment outcomes are more manageable and predictable with reliable labor force data.

There are 19,703,061 residents in the nation that are living with some sort of disability according to the latest data available. This is about 10% of the population. An example of how this impacts local regions can be seen in the Southern Ohio nonmetropolitan area, which has 17% of its population living with disabilities compared to 11.6% for the State of Ohio.

Southern Ohio Non-Metro Area, Demographics: Disabled Age 18-64Southern Ohio Non-Metro Area, Demographics: Disabled Age 18-64

Why Railroads, Religious Organizations, and Self-Employed Are Not Included in Most Employment Estimates

The evolution of employment data collection in the United States has led to a few exceptions that can have an impact on your view of employment in a region.

To understand these missing data, a brief overview of a few employment data sources is helpful.

The Quarterly Census of Employment and Wages (QCEW), conducted by the Bureau of Labor Statistics with the cooperation of State Employment Security Agencies, collects employment data from nearly every employer in the nation—specifically, any employers that report to U.S. Unemployment Insurance programs. The program began in the 1930s as the ES-202 program, only adopting the QCEW name relatively recently in 2003. Due to the QCEW’s nearly comprehensive sample (about 97% of all employment), the quarterly data serve as a benchmark for other employment estimates such as the Current Employment Statistics (used in the monthly job reports often covered in the media).

This near census of employment information collected in the QCEW program is called “covered workers” and is subdivided into private, local government, state government, and federal government jobs. However, some groups are not covered:

  • Members of the armed forces
  • The self-employed
  • Proprietors
  • Domestic workers
  • Unpaid family workers
  • Railroad workers
  • Some religious organizations

Understandably, some of these non-covered workers would be difficult to track. But why are railroad workers and religious organizations not covered? Why not proprietors? It has to do with the fact that QCEW data are collected with the cooperation of state unemployment insurance agencies.

In the 1920s, the railroad industry’s private pension plans already faced a number of problems, which were then compounded by the Great Depression in the 1930s. There was a push for establishing a separate federal retirement program for railroad workers around the same time as the new Social Security system was being created. The initiatives continued under separate unemployment insurance laws, and today the Railroad Retirement Board administers the separate unemployment insurance for railroad workers. Due to this separate program, railroad workers are not “covered” in the QCEW.

Religious organizations have a more recent reason for not being covered. Under a 1981 Supreme Court ruling, schools affiliated with a religion are not required to be covered by Unemployment Insurance programs. Due to differences between state UI laws, certain types of nonprofit employers, including religious organizations, are given a choice of coverage or noncoverage. While there is an industry (NAICS) code for religious organizations, some employment is covered in NAICS 8131 but most is non-covered.

Finally, proprietors are generally not included in the QCEW data because, as sole proprietors or partners in a firm, they are not required to pay unemployment insurance for themselves, no matter how large the firm is.

Recognizing the need for a more complete view of local labor force, Chmura includes estimates of employment for railroads, religious organizations, and the self-employed to its JobsEQ® technology platform. “Total employment” is the default employment type in JobsEQ, representing the sum of these three data sets and covered employment.

Employment TypesEmployment Types

We are excited about these break-outs within JobsEQ and the insights they provide our users about their regional economies. If you are interested in seeing a demonstration, please contact us.

Research support provided by Patrick Clapp.

Recession on the Horizon?

Due in part to recent stock market volatility, fears of another recession have been growing. This despite a relatively healthy U.S. labor market and few indications that the economy is slowing with the exception of weakness in the manufacturing sector.

Nobel laureate Paul Samuelson famously said, “The stock market has called nine of the last five recessions.” That is, stock market declines often give us false positives.

The yield curve is one of the few predictors of recessions which does not send out false positives. An inverted yield curve (i.e., when short-term interest rates are higher than long-term interest rates) has preceded each of the last seven recessions.

The chart below shows the difference in basis points (i.e., one hundredth of a percentage point) between the yield on the 10-Year Treasury and the 3-Month Treasury going back to 1987. The spread turned negative before all three recessions over this period. Currently, the yield spread is 163 basis points.

Treasury Yield Spread: 10-Year Bond and 3-Month Bill (in basis points)Treasury Yield Spread: 10-Year Bond and 3-Month Bill (in basis points)

Chmura’s recession model uses the yield spread among other variables to forecast the probability of recession in the next six months. Based on January 2016 data, the model estimated the probability of recession at 10%, up from just 1% in December 2015; the increase was mainly due to the drop in the stock market. According to the most recent February data, the probability of recession is 6% through August 2016—suggesting the U.S economy will continue to expand.

Probability of Recession IndexProbability of Recession Index

To learn more about or subscribe to Chmura’s monthly Recession Monitor or Chmura’s other publications including the Weekly Economic Update, please visit http://www.chmuraecon.com/publications/.