LA County Workforce Snapshot and Trends
In the past few weeks, LAEDC‘s new Center for a Competitive Workforce published its inaugural report LA & Orange County Community Colleges: Powering Economic Opportunity and the Orange County Business Council released its annual Workforce Indicators Report for 2017-2018. Together, these publications provide an updated snapshot of the workforce in Southern California and identify future trends shaping employment.
While both reports are worth a more detailed read, a high level summary is below.
To start with the good news: the unemployment rate in LA County remains low while the labor force continues to grow. As of September 2017, the seasonally adjusted unemployment rate was 4.9%, compared to 5.2% last year and 4.2% nationally. Out of a total population of 10 million, the labor force, defined as the number employed plus the number actively seeking employment, stands at under 5.2 million, up 2.5% from one year ago.
LA County continues to be more ethnically and culturally diverse than the rest of the country. Latinos and Hispanics, accounting for nearly half of the population, are the region’s largest ethnic group. The percentage of residents 25 years and over holding only a high school degree or less is shrinking, a positive sign as future jobs are expected to require more higher education. That figure dropped 8% from 46.2% in 2012 to 42.5% 2016. By contrast, 56.5% of residents have completed at least some higher education, with 31.5% holding a Bachelor’s degree or higher and 26% completing an Associate’s or some college.
At the same time, key metrics that indicate trouble ahead in the workforce pipeline have not budged. Recently released standardized tests for 2017 demonstrate that only 30% of LAUSD students met or surpassed math standards (38% statewide) and 40% met or surpassed English language arts standards (49% statewide). These results are essentially flat year over year. Between the years 2010 and 2060, the population 64 and under is projected to decline while the percentage over 65 is expected to grow dramatically. Specifically, working age adults (25-64) are expected to decline by 4% while young retirees (65-74) will grow by 117%. Taken together, these measures indicate that without a change in current trends, the pool of eligible working age adults in the decades to come will shrink as the gap between the increasingly advanced skills employers require and the skills the labor force has to offer grows.
While earnings are starting to rise, they still fall short for many when compared to the high cost of living. In 2016, median earnings in the LA Basin were $36,700. As a point of comparison, the MIT living wage calculator indicates that a living wage for a family of 3 with 1 working adult is $53k. Furthermore, LAEDC continues to project that two-thirds of job openings over the next 5 years will be low wage and low skill, requiring only a high school degree or less.
Still, jobs that pay higher wages may go unfilled because of a lack of trained talent. By examining six regionally-concentrated industries in which the LA Basin has a competitive advantage over other economic regions, LAEDC identified 20 middle-skill occupations as promising targets for existing community college programs. These 20 occupations are projected to post 67,450 job openings over the next five years. However, the latest community college data from the academic year 2014-15 shows fewer than 27,000 career education award earners in the greater Los Angeles Basin community colleges. Only about 7,800 of those awards were conferred in programs relevant to the 20 target occupations.
Registered Nurses are the top growing middle skill occupational category with 18,500 openings projected in the next five years. Other top middle skill occupations with a high number of projected openings include bookkeepers, accounting and auditing clerks, computer user support specialists, production and planning clerks, electricians, and nursing assistants.
Future Trends in Employment
In terms of trends shaping the future of employment, the usual suspect, automation, was called out in both reports. While it can’t be seen in the current low unemployment rate, it is still widely expected that automation will eliminate occupational categories in the future. Technology will continue to dramatically alter the nature of work across industries and occupational categories, requiring workers to develop a lifelong learning mindset and workforce development institutions to adapt accordingly.
Both LAEDC and OCBC cite a lack of affordable housing as a key trend negatively impacting the availability of skilled talent in the region. The housing market in LA is one of the most expensive in the country. If left unaddressed, lack of housing can lead to brain drain as more young professionals move to more affordable areas. While the region’s concentrated industry clusters pay higher than average salaries, it could become increasingly difficult for employers to hire talent for key middle skill positions with more limited wage potential.