Weekly Report – October 24, 2016
Earlier this month, Orange County Business Council hosted the Orange County Workforce Development Conference to discuss findings and takeaways from their annual Workforce Indicators Report with the region’s key stakeholders (http://www.ocbc.org/research/workforce-indicators-report/).
Orange County posted an unemployment rate of 4.1% in September and maintains status as one of the top 5 counties in the country with the largest percentage of college graduates. While these accomplishments were acknowledged, the focus was on trends such as rapid technological change that will otherwise threaten the region’s competitiveness.
Similar to the OC, employment data released by the California Employment Development Department this month demonstrated continued progress in Los Angeles County. As of September, the unemployment rate stands at 5%, placing it well ahead of the state unemployment rate of 5.5% and on par with the national rate.1 The County is well below the 6.2% unemployment rate reported a year ago and significantly below the peak of 12.5% during the recession.
The County’s labor force, or working age residents employed or actively looking for work, grew to 5.1 million in September 2016. That figure is up from just under 5 million a year ago, making it the largest it has been in a decade and a half. In fact, unemployment increased slightly from a decade low of 4.9% in August to 5% in September because 39,000 people entered the labor force looking for work, a sign of strength in the economy.
As of September, total employment in Los Angeles County is approximately 4.9 million. Non-farm employment rose by 69,700 jobs in the past year. The largest categories of job growth were in health care and social assistance (up 20,300 jobs), leisure and hospitality (up 17,300), and accommodation and food services (up 15,100). Manufacturing and construction were the only sectors posting significant job declines, shedding 8,500 and 2,500 jobs respectively.
While these statistics are positive in the near term, several emerging trends discussed at the Orange County Workforce Development Conference will impact Los Angeles County in the coming decades. Several are of particular note:
Technological Disruption: Traditional business processes are being transformed by cutting-edge information technology, automation, robotics, artificial intelligence, and machine learning. As an example of the potential impact on the workforce, a recent Oxford study found that roughly half of all jobs are at high risk for automation within the next 20 years. The Orange County
Workforce Indicators Report notes proactivity is necessary for the following disrupting forces in particular:
- The rise of the sharing economy, online platforms or marketplaces that connect workers or sellers directly to customers
- Cybersecurity and its potential ramifications
- The impact of robotics, automation, and artificial intelligence
To bring awareness and inspire solution driven conversations, Art Bilger’s organization WorkingNation launched the first of a 4-part series of short films called FutureWork this past week (http://time.com/4536986/future-of-work/). The series is directed by an Academy award winning documentarian and explores the future of work.
The Ageing Workforce: According to California Department of Finance projections, Los Angeles County will grow from 9.8 million residents in the baseline year 2010 to 10.9 million residents by 2030. The population age 65 years and older will double while working age residents (25-64 years) will grow by only 5%. College age residents (18-24 years) will decline by 16% while the population under 18 years will decline by 1%. In total, the population over 65 is projected to be 1.9 million by 2030 vs. 900K today while the population between 18 and 64 years will stay around 6.4 million. With a staggering number of people reaching retirement age and only a small change in working age residents, existing employers will be challenged to find qualified workers and prospective employers may find it difficult to locate here with a limited labor pool. Jobs associated with serving an older population, e.g. health care workers, will increase, as will the need to educate and train a pipeline of qualified workers.
Growing Importance of Postsecondary Education: Georgetown University’s Center on Education and the Workforce estimates that by 2020, 65% of jobs nationally will require some postsecondary education. Statistics demonstrate that postsecondary education improves an individual’s employment prospects. In 2014, for example, the unemployment rate in Los Angeles County was 9.4% for residents with a high school degree or equivalent, almost double the 5% rate for those with a bachelor’s degree or higher. Currently, almost 25% of Los Angeles County residents have less than a high school degree and another 20% have a high school degree or equivalent. Without further progress on these metrics, employers will continue to face critical skill shortages.
In the coming months, the Coalition will explore strategies and solutions to address these trends, featured in this weekly report.
1 All employment figures are seasonally adjusted.