CBER150_A

Labor Market Forecast: Region 5

Region 5 comprises the block of counties in the center of the state, including Marion County, all contiguous counties, and Madison County. The outlook for the Region 5 labor market for 2008 is neutral or very slightly pessimistic. Employment gains over the last ten years will not be lost, but the rate of growth of the Region 5 labor market is likely to hover near zero.

Consistent with slow growth in total employment, we expect other indicators of labor market activity to be somewhat below their extrapolated trend curves through 2008. We expect net job flows, job creation, and new hires to be flat or growing below their trend. Separations and turnover should remain at their current levels or decrease very slightly during the next year.

Average monthly earnings and average new hire earnings should continue to grow at about their long-term trends.

Employment
employment

Employment in Region 5 has grown steadily during the time period for which QWI data have been available. The trend curve in the graph, which was fitted only on actual employment figures, provides a good summary of the past. Based on the trend curve, employment in Region 5 was around 870,000 in 1998 and grew to around 905,000 in late 2006. The trend has been flattening in recent years.

We expect Region 5 employment to be flat through the 2008, not rising much beyond the level of 905,000 already attained in late 2006 except on a seasonal basis.

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Net Job Flows
netjobflows

While they fluctuate substantially, net job flows have trended down from around positive 10,000 toward zero. Our (rather uncertain) forecast leaves net job flows around zero or slightly negative through 2008. This forecast is slightly below the extrapolated trend curve. The forecast suggests that except for regular seasonal fluctuations, existing businesses will keep their workforces around current levels in 2008.

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Job Creation
jobcreation

Job creation exhibits a pattern of decline from 1998 until 2003-04, after which it begins increasing. Our forecast indicates that the extrapolated trend is a reasonable representation of the level of job creation through 2008. Taken in conjunction with the forecast for net job flows, this suggests that any employment growth through 2008 is more likely to arise through the creation of new businesses than through the expansion of existing ones.

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New Hires
newhires

This graph also exhibits the characteristics of the job creation graph. The level of new hires fell from 1998 to 2003-04, after which it began rising. We expect that while the number of new hires will increase through 2008, the increase will be less than the trend curve depicted in the graph. This forecast is consistent with the job creation forecast.

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Separations
separations

The graph for separations exhibits the same pattern of decline until 2003-04 followed by an increasing trend seen earlier for new hires and job creation. Our forecast indicates that separations will be below their trend through 2008. Declining growth in employment (predicted earlier) represents a dampening in general labor market activity. As employment remains about the same, there is less opportunity for worker mobility. Thus, workers are more likely to plan to keep their current jobs.

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Turnover
turnover

Turnover exhibits the already familiar pattern of decline through 2003-04 followed by increase. Turnover comprises both accessions and separations. Thus one should expect behavior fairly consistent with separations, and the graph confirms this expectation. We expect turnover to remain flat at around 12 percent, below what would be expected based on the trend curve.

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Average Monthly Earnings
avgmonthlyearning

Average earnings have been increasing over the entire time period for which we have data. Given that these earnings are not adjusted for inflation, this surely comes as no surprise. Although it is difficult to see in the graph, earnings have been trending upward at a very slightly increasing rate. Our forecast suggests that this trend will continue, or perhaps be slightly exceeded, through 2008.

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Average New Hire Earnings
avgnewhireearnings

This series has been flat at the $2,000 level over the time period for which we have data. Our forecast suggests that this will continue to be the case through 2008.

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Forecast Summary

This forecast suggests Region 5’s labor force will experience little or no growth through 2008. This forecast is consistent with national projections of economic activity. Using a new data series on employment dynamics we have selected the variables we believe are most telling of employment dynamics in the state.

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