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LMI Myth Busting Series

June 2018

LMI Myth Busting: Measuring Employment Change

Myth:

When looking at projected employment change, it’s best to use actual change because that is how growth is calculated.

Busted:

In terms of projections, we look at the employment level of workers in an industry or occupation. Actual change (sometimes referred to as absolute change) is the difference between the employment level in the base year and the projected year. An example: There are 100 workers in industry X in 2016 and 110 workers projected to be in industry X in 2026. The actual change is 10 workers. Industry X is projected to gain 10 workers over the next 10 years.

Percent change is another way of looking at growth in an industry or occupation. Percent change is the actual change divided by the base year employment and then multiplied by 100 to get the percentage. In the example above, we determined the actual change to be 10 workers. The percent change would be 10 divided by 100 workers, multiplied by 100, or 10 percent.

Which is best to use? It depends; both are important and used in different ways. When determining the fastest growth or fastest declining industries, we use percent change. Comparing percent changes helps put a larger industry with thousands of workers and a smaller industry with very few workers on a more even playing field for comparisons. Let’s say industry Y has 20,000 workers in 2016 and is projected to have 22,000 workers in 2026. The actual change is 2,000 workers, and the percent change is 10 percent. We can compare the rate of growth for the smaller industry X in the example above to the much larger industry Y and see they are projected to have the same rate of growth to 2026.

But as we can also see from this example, using percentage growth can be deceiving if used alone. Although both industries X and Y are projected to have 10 percent growth over the 10-year period, industry X will add just 10 workers to the state’s economy, while industry Y will add 2,000 workers.

The lesson from this myth buster: Actual change AND percentage change are important factors to consider when looking at projected employment levels.

If you need employment projections for industries or occupations, or help analyzing projected growth or decline, contact us today. We’re here to help.