A look at shifts in the jobs Americans perform and those they will carry out over the next decade can present useful investment ideas. That's because firms invest ever larger sums in goods and services to make their employees more productive. As the job descriptions of their workers change, what employers buy will change as well, creating growth in some of their supplier firms.
Every two years, the Bureau of Labor Statistics (BLS) produces 10-year projections of U.S. employment by occupation and industry. The latest figures, published in December 2001, show that the work force is getting older, increasingly female and more white-collar. In 1980, for example, half the work force was under the age of 35, and 42.5 percent were women. But the bureau predicts that by 2010, the median age of the labor force will be over 40 -- older than it has ever been. Also, by then, women will make up nearly half of the work force (48 percent), and they will be the majority (59 percent) of the new additions to the labor force between now and 2010.
From the point of view of purchasing goods and services, the important trend is the change in the type of work that people will be doing. Overall, more people will be in the office and fewer on the factory floor, meaning more knowledge work and less muscle work. For example, the BLS reports that out of a total of 145.6 million jobs today, 15.5 million are management, business or financial occupations and about 15.5 million are in sales or related occupations. Another 26.8 million are workers in other professions. Those 57.8 million workers are supported by nearly 24 million administrative assistants.
As a result, a majority of all workers -- 81.8 million or 56 percent of the work force -- is gathering, processing or using some type of information to conduct their work. There is no doubt that we have transitioned from a service economy to an information economy. Among all workers, the fastest growing category is professionals, a group expected to increase 26 percent during this decade, compared with the average 15 percent increase for all workers.
By 2010, 1 in 5 workers will be in a professional or related occupation. These employees will probably be the most information intensive workers and also among the most highly paid. The bureau reports that workers with a professional degree earn nearly three times as much as the average for all personnel. Employers of such highly paid staff are likely to spend considerable sums to make sure these expensive employees are as productive as possible.
It should come as no surprise then, that the bureau forecasts that more than 1 in 5 new jobs created in this decade (5 million of them) will be in the business services sector. Within that sector, New York City-based Veronis Suhler, a merchant bank dedicated to the media, communications and information industries, projects that by 2005, annual spending for business information services will reach $65.7 billion, double the amount spent in 1995. That may seem like a dramatic spending increase, but it's relative chump change next to the BLS projection that the business services sector will reap $1.3 trillion by 2010, a jump of nearly 80 percent over 2000. The bureau predicts that this industry will be the largest source of output growth in the economy by 2010.
Business services employs about 10 million people, up from less than 3 million in 1980. And this sector is expected to provide jobs for about 15 million workers by 2010. But this rise will likely come primarily from the 4.5 million managers or professionals who are expected to be hired in 2010, all in the service of other firms.
The biggest source of employment growth in the sector will be what the bureau calls personnel supply service firms, which provide contract employees and personnel screening facilities. These companies should add 1.9 million new jobs, as more and more firms choose to rent their employees rather than hire them. Nearly 6 million people are expected to work for one of these supply organizations by 2010.
Productivity is a big deal for business service workers, partly because they have so little job security compared with the full-time employees. This may explain why the bureau forecasts a 70 percent increase in teachers, instructors, trainers and librarians who work in the business services industry.
Increasing office worker productivity will also be important because the labor force will have so many older workers. These more experienced employees expect to be paid more, but their employers also need an increase in productivity to offset their higher pay. One important way to expand office productivity is to invest in the skills of these knowledgeable employees as well as to buy business-related information resources directly applicable to their jobs. Burlingame, Calif.-based Outsell Inc., has evaluated the business information industry since 1994. It has chronicled the changing nature of knowledge workers as well as the success and failure of quite a few firms that create new business information products and services. One of the company's more interesting findings is how reluctant most businesses are to pay for content on the Web. Outsell places part of the blame on content providers who have not done enough to establish that what they sell has more value than the free material available online.
The incentive for firms of all types to provide their workers with better knowledge-based tools may also arise from a BLS projection of a 2010 labor force of 157.7 million people, ages 16 or older. But the bureau also pegs the total number of jobs in 2010 at 167.8 million. Some of that 10 million or so gap between jobs and workers is due to the fact that some jobs are part-time. But today that gap is only 4.7 million workers. A difference that big between the size of the labor force and the number of jobs could mean a return to the labor shortages many firms experienced in the late 1990s.
21ST CENTURY WORKERS
The number of workers in the 55- to 64-age-range is expected to increase by 51.7 percent by 2010. Many will join the business services sector.
|BLS CATEGORY||2000 NUMBER (IN MILLIONS)||2010 NUMBER (IN MILLIONS)||GROWTH (IN MILLIONS)||PERCENT CHANGE|
|Civilian labor force, age 16+||140.9||157.7||16.8||12.0%|
|Men in labor force, age 16+||75.2||82.2||7.0||9.3%|
|Women in labor force, age 16+||65.6||75.5||9.9||15.1%|
|EMPLOYMENT BY OCCUPATION|
|Management, business & financial||15.5||17.6||2.1||13.6%|
|Office & administrative||23.8||26.1||2.2||9.1%|
|Production & all other||27.8||30.2||2.5||8.8%|
|Business services industry||9.9||14.9||5.0||51.4%|
|Source: Bureau of Labor Statistics|
Peter Francese is the founder of American Demographics. He can be reached at [email protected].