Is a Skills Shortage Coming? Review of BLS Occupational Projections. Draft.

The Bureau of Labor Statistics (BLS) projections of occupational employment growth have consistently underpredicted the growth of skilled occupations. BLS currently predicts that professional, technical, and managerial jobs will account for 40.9 percent of employment growth between 1990 and 2005. Forecasting regressions predict these occupations will account for 53 to 68 percent of employment growth through 2005. Between 1986 and 1991, these occupations accounted, in fact, for 64 percent of employment growth. The BLS's projections of the supply/demand balance for college graduates have also been off the mark--predicting a surplus for the 1980s, when, in fact, a shortage developed and relative wage ratios for college graduates rose to all time highs. A slowdown in the growth of college educated workers during the 1990s and a continuing escalation of wage premiums for college graduates are projected. The social returns to a college education are extremely high and are likely to go even higher. Public policy should not attempt to discourage the shift of students into engineering and business, since the market will be able to absorb even larger numbers of graduates in these areas without significant trouble. Public policy should facilitate this process by focusing special effort on improving mathematics, science, and economics instruction. In making occupational forecasts BLS should do the following: use data on trends in industry-specific occupational staffing ratios to extrapolate staffing pattern changes; be less judgmental in projecting staffing ratios; develop shorter (5-year) forecasts; and examine why forecasts were inaccurate. Presentation of projections should include the following: identification of methodological changes made; alternative scenarios; no listing of occupations with the largest forecasted growth; and information on growth in wages and employment in each occupation. (Contains 37 references.) (YLB)