Monday, February 23, 2015

IBO projections for mid-wage jobs in NYC, 2015-2018

The following is a guest post from Margaret Stix of Lookout Hill Public Policy Associates:

After seeing Jim Dwyer's recent column highlighting projections that "midlevel jobs that pay $50,000 to $100,000 a year are expected to account for 42 percent of the job growth in New York over the next four years," I caught up with the Independent Budget Office's fiscal outlook for 2015-2018 (PDF).

The findings of this report buttress the recommendations of JobFirstNYC's Unleashing the Economic Power of the 35 Percent, particularly the need to qualify young adults for mid-wage jobs. These jobs will significantly increase, at the same time that labor shortages will make them harder to fill.

On a positive note, job growth in New York City since the end of the Great Recession has been far more balanced than in the past.  The financial services and real estate sector, which accounted for accounted for 12 percent of all job growth as recently as 2003 to 2008, is now projected to grow by only 5.5 percent between 2014 and 2018. Reduced reliance on a specific industry is giving way to a wider diversity of available jobs.  

The jobs emerging today also pay more than in the past.  Between 2009 and 2014, the city's lowest-wage industries (hospitality and retail trade) accounted for 41.5 percent of overall job growth. The IBO now predicts that these sectors will only account for 20.7 percent of growth graphics by 2018.  Middle wage jobs are projected to be 42.2 percent of all new jobs during this period, a better than one/third increase.

Robust job growth has led to a 2 percent drop in the unemployment rate, to 6.4 percent in the past year. The rate is expected to decline by another 1 percent during 2015 with the addition of another 80,000 jobs (with 75,000 more predicted for 2016.) The IBO projects "exceptionally strong labor force growth" through 2017, followed by a marked slowdown caused by a shrinking cohort of younger people entering the labor force and a growing cohort of older workers retiring.

What does this mean for workforce development providers?  We will be leaving jobs "on the table" unless we expand training in industries expected to grow, particularly in the education, health services and professional and business services sectors.  Even the retail sector, a traditional entry into the labor market under severe strain around the country, is still projected to grow in New York City, albeit at a slower rate.  Retail in NYC is being driven by tourists and so online shopping is not having the impact that it might, although I do see more vacancies on some local shopping strips but that could be due to other factors, like rising commercial rents.

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