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South Dakota e-Labor Bulletin

October 2022

Why Separation Data Is Important when Looking at Occupational Demand

Last month’s article covered occupational employment growth projected through 2030 and focused on those occupations projected to grow the fastest. However, growth is only one portion of the demand for workers in each occupation. In fact, when considering future workforce needs, employment growth is a relatively minor factor in the number of workers who will be needed. The second component of demand is created when workers leave one occupation for a job in another occupation (known as transfer) or leave the workforce entirely (called exit). The separation component of occupational demand combines both transfers and exits. In this article we will examine total annual demand for workers, including the separation components.

The table below shows the occupations projected to have the greatest demand for workers in South Dakota each year, on average, through 2030. As you can see, annual demand (for workers) due to employment growth accounts for a relatively small portion of the total annual demand for workers.

The methodology used for employment projections at the national level and by all state agencies like South Dakota’s is developed by the U.S. Bureau of Labor Statistics (BLS). Use of the BLS methodology ensures not only statistically sound, reliable data, but also allows for comparability of the data among geographic areas.

National employment projections for 2020 to 2030 based on the new methodology were released in September 2021; state projections were rolled out in June 2022.

The methodology used is known as separations methodology and was designed by BLS to better understand and project what will happen within the dynamic economy in which workers will likely have multiple occupations in a lifetime. This methodology incorporates past data, patterns and trends to general employment projections and captures two types of separations:

1. Workers who leave the labor force entirely (shown in the table above as “Annual Demand Due to Labor Force Exits”).
2. Workers who leave one major occupational group for another one (shown in the table above as “Annual Demand Due to Occupational Transfers”).

Every person’s career journey varies, but certain trends are common.

• Transfers between major occupational groups are more common at younger ages, as workers explore possible careers.
• Transfers between occupations also tend to be more common in occupations often considered “entry level,” where working conditions such as work schedules and the offering of employee benefits are less desirable.
• Movements out of the labor force, known as exits, happen at any age, but are more common at older ages, when workers retire.

How occupational transfers and exits impact South Dakota’s projected occupational outlook

As the pie graph below illustrates, nearly all of South Dakota’s annual demand for workers during the 2020-2030 projections decade will be due to separations, which include occupational transfers and labor force exits: 56% and 37%, respectively. About 7% of the state’s annual openings are projected to be new growth. South Dakota’s percentage breakout of annual demand virtually mirrors that of the nation for the 2020-2030 projections period. Nationally, transfers (57%) and exits (37%) will make up the lion’s share of the nation’s annual demand for occupations, with 6% being caused by growth.

Labor Force Exits

In 2020, 49.2% of South Dakota’s civilian noninstitutionalized population age 55 and over were in the state’s labor force. In 2018, 48.6% of South Dakota’s civilian noninstitutionalized population age 55 and over were in the state’s labor force. This is a slight increase in the labor force participation rate for this age cohort from 2018 to 2020. This indicates workers exited the labor force at about the same pace in 2020 as they did in 2018. It is anticipated as this population continues to age over the 10-year projection period, workers will continue to retire, thereby exiting the labor force.

Retirement is only one reason workers cite for exiting the labor force. Many workers are in the labor force on a temporary basis. People enter the labor force temporarily for a variety of reasons and once those reasons have been met, they will exit the labor force, causing a demand for the opening they have left behind.

Reasons vary for entering an occupation for a limited amount of time. For some, it might be a necessity because family events bring a lifestyle change. Events such as a family member losing a job or becoming unable to work, a divorce or perhaps the death of a loved one sometimes create the need for a temporary cash flow. Therefore, people not normally involved in the labor force will enter it for a while and then exit again once the situation is resolved.

There are also workers who have always been in the labor force but either leave out of necessity or because they choose to for a variety of reasons. During the first part of the 2020-2030 projections decade, some workers chose to exit the labor force because of the pandemic. Whether it was to remain home to care for ill relatives, because of fear of getting COVID-19 or spreading the disease to family members at high risk, or to stay home to attend to children who were schooling at home during the pandemic, workers who had previously been in the labor force chose to step out of the labor force for a time. Many employees may have initially not worked for a short time while their employer formulated a plan of return to work which kept them safe. While most returned to work others reevaluated what was most important to them. This evaluation may have led some workers to retire earlier then they had planned, while others chose to remain out of the labor force in order to continue to care for aged or ill relatives. Others chose to remain out of the labor force to continue home schooling youngsters.

Regardless of the reasons, there were some workers who had been in the labor force when the pandemic hit who are currently no longer participating in the labor force. Eventually, they may return but some will remain out for the projection decade we are discussing. Others may never return to the labor force.

It is important to remember, not everyone who decided to exit the labor force during this projection-decade based their decision on the pandemic. In fact, for many South Dakotans the pandemic likely had little to no impact on their decision to leave the labor force. Some may just have wanted to be home while their children are little or chose to do home schooling; for others, perhaps taking care of an aging or chronically ill relative was a priority.

Another reason workers exit the labor force which in turn creates openings, is the pursuit of education. The types of occupations experiencing the highest exit rates in South Dakota are a perfect fit for these labor force hoppers. Many will work while school is not in session and then drop out when they start their educational pursuit again.

As is evident by the labor force exit table, job opportunities in many of these occupations are readily available because not only are they found in some of the state’s largest industries, but they are also labor-intensive occupations. Food services, retail sales and health care industries account for the bulk of occupations on this list. Other reasons the occupations in the table below are popular with those workers jumping in and out of the labor force are because many of them don’t require any special skill and jobs are readily available. In addition, workers easily find hours which work well with their lifestyle. Part-time, evening, overnight or weekend workers are highly sought for many of these occupations and work well for many temporary labor force participants.

Registered nurses and nursing assistants are among the occupations with some of the highest annual demand due to exits. Many times, workers involved in the care for others are not just working in a career they chose but are working in a career that chose them. They do it because it is who they are. They are nurturers and care givers. The value of their employment  runs deep for these workers and is the very essence of who they are as human beings. They are invested in carrying for and helping others and will generally work in these occupations most of their working lives.

However, the pandemic was hard on these workers. Long hours, being away from family during a difficult and scary time and watching many patients die without their loved ones near took a tremendous toll on them. Some, who would have remained in the labor force for a while longer, chose to retire or exit the labor force sooner than they had planned. Some exited or retired because they were burned out, some left to care for family members in need, and others simply left for personal reasons.

Occupational Transfers

With the new methodology which went into effect in 2016, another portion of the demand for workers in occupations comes from occupational transfers. This important separations component of occupational demand hinges on a worker’s attachment to, or perhaps a better way to put it is a lack thereof, to an occupation. Not too many years ago, when a worker entered the labor force they worked in their vocation until they retired. But in recent years, workers are more likely than ever before to move from one major occupational group to another. In the following narrative we will take a closer look at those South Dakota occupations with high transfer rates and explore reasons for these high transfer rates, which in turn create many openings.

The South Dakota occupations with the highest projected demand due to occupational transfers are all large occupations with many workers. Simple logic tells us a large occupation with many workers will also have more openings when compared to an occupation with less employment to begin. However, the occupations in the table above have something more in common than just a lot of openings. What they have in common is many openings because many workers have transferred out of them to pursue employment in other occupations.

Many of the occupations with high occupational transfers also lean toward either part-time, seasonal and/or flexible scheduling, which makes them the perfect job for workers more loosely tied to the labor force (i.e. young workers who are likely obtaining additional education and older workers who are easing into retirement and/or those working part time). Many of these occupations also tend to require a minimal amount of training and less extensive skills than other occupations.

With a few exceptions, most of the occupations with the greatest demand due to occupational transfers are transitory in nature. By transitory, we mean these occupations tend to work well as a steppingstone for employees who plan to be in the occupation for a brief time, want or need part-time work, or simply need basic work experience before accepting employment in another occupation in a different major occupational group.

Young or new labor force entrants create many openings when they transfer from one occupation to another occupation in a different vocation. These workers tend to accept employment in many of the occupations in the table above to gain work experience and begin creating a resume. Most employers who hire these workers know it is unlikely they will retain these workers, but they are also aware they are helping grow the labor force. When a special worker comes along, if possible, they make room in their business to retain their skills. However, most of the time, if this happens, even if they are working for the same employer, they advance in the ranks and move into a different occupation with the same employer. If this occurs, it is still an opening created by an occupational transfer.

For example, Olivia is attending a university to become an information security analyst. To help supplement her income while attending classes, she takes a job as a customer service representative at a local cable, internet and cell phone service company. She works full time between attending in-person and online classes. Olivia demonstrates great people skills and is gifted with the temperament and patience needed to walk people through technical difficulties they experience while trying to utilize the company’s cable equipment as well as modems, Wi-Fi and other computer equipment. She often goes the extra mile to ensure customer issues have been satisfied. The company’s customers love her, as do her teammates who often turn to her for advice when they aren’t sure how to help a customer. Her employer is very impressed with Olivia. She fits into the company well and shares the company’s vision for the future. Her computer knowledge, skills and ability to communicate well are just what the company needs.

While Olivia was busy working as a customer service representative and getting her bachelor’s degree in information security networking, the company had been growing its security department. Her mentor at the company was promoted and went from a computer network architect to information technology manager.

About the same time her mentor was promoted, Olivia had obtained her degree as an information security analyst. Her mentor’s position was changed up a little to include more security responsibilities, and Olivia was encouraged to apply for the new position. She applied and was hired as a security information analyst. Olivia has just filled an opening which was created by her mentor when she accepted more responsibility and transferred into a completely different position as a manager. Olivia’s position as a customer services representative was opened when she transferred to a completely different position as an information systems analyst.

Because the company decided to open a new division, there were two different transfers within the company to two completely different occupations. Olivia’s mentor moved from a computer network architect to an information technology manager. And Olivia left her position as a customer service technician to become the company’s new information security analyst.

Finally, in the example above, a third opening was created when the company decided to grow their customer service department and opened not only the customer service position Olivia had left but also advertised an additional customer service representative position. So, in total, the company filled a new manager position (which was a transfer by one of the current employees into a promotional position), the transfer Olivia took to become an information security analyst, and two customer service openings (one of which was new to the company and thus, became a growth opening for the company).

Most of the occupations on the top 10 transfer list fit well with transferability reasoning already discussed in this article. Occupations such as fast food and counter workers, retail salespersons, cashiers and waiters and waitresses are all occupations with many employees, and they work well for first-time workers because the skills and knowledge needed are easily learned on the job. These positions also work well for those who are not new to the labor force but instead are seeking part-time or flexible work schedules, evening shifts or weekend shifts. Many of these occupations are also popular with those who are slowly phasing out of the labor force but are not ready to completely retire.

Other occupations on the list which are popular with those looking to partially retire are stockers and order fillers and janitors and cleaners. These occupations work well for those semi-retirees who don’t mind working very early mornings or late nights and/or weekends. These workers tend to prefer being a little more independent while they work.

There are a couple of occupations with projected high demand due to occupational transfers which, for one reason or another, don’t seem to fit the mold we’ve mentioned so far. Customer service representatives is one.

Customer service representatives provide information in response to customer inquiries about products and services, and handle and resolve their complaints. This occupation pays well, and health and profit-sharing packages are good, which leads many people to remain employed in these types of occupations for many years. However, these workers must be available when customers need assistance, therefore, many work nights, weekends and holidays. These hours can be a double-edged sword for this occupation. On one hand, like Olivia in the example above, the non-traditional work hours offer flexibility allowing workers to meet other obligations, like attending classes on and offline. But over time these same hours often lead current workers to find other occupations which offer holidays, nights and/or weekends off. In addition, workers in these occupations tend to advance to higher positions—often within the same company. And, finally, people who work as customer service representatives experience “burn out” because dealing with unhappy customers can be stressful.

Bookkeeping, accounting and auditing clerks may also seem like an unlikely occupation to wind up on the top 10 list of occupations with the highest annual demand due to occupational transfers. But, perhaps after further investigation and analysis this is really not too surprising.

First, this occupation is found in many industries, so it is a large occupation. And, although the training time for this occupation is longer and does require a specific set of skills compared to many other occupations on the top 10 list, there are some reasons for it to make the list. It is a good part-time or first real career. There are many openings, and candidates are often able to work a flexible schedule. Some of these workers may also work from home. Many workers start out in this occupation and work part time while pursuing additional education. This education, in addition to the work experience, however, often opens the door for these workers to move into other major occupational groups where they continue their career path as accountants and/or auditors or as a manager in a wide variety of management positions. And, like other occupations on the transfer list, this is an occupation those involved in other careers may transition to as they start looking at retirement.

The other unique occupation on the top 10 occupational transfers list is heavy and tractor-trailer truck drivers. While it is a large occupation, the other reasons for this occupation having a high level of occupational transfers are different than most of the other occupations we’ve discussed. First, this occupation does not necessarily accommodate workers who are in the more transient portion of the workforce (the young, the older or part-time workers). In addition, this occupation requires a commercial driver’s license, which does involve training and a cost to obtain.

So, why does this occupation have such a high degree of worker transfer? Perhaps the foremost reason is the work schedule. These truck drivers travel great distances, often being gone several days on end, including weekends and holidays. This occupation is also stressful. Not only do truckers travel unfamiliar roads in sometimes heavy traffic and adverse weather conditions, but they also are required to maintain travel logs, ensure weight of their vehicles comply with state and federal regulations, and ensure their product is delivered on schedule. Occupational “burn-out” for heavy tractor-trailer truck drivers is high, which leads many workers to move on to other occupations.

This is also one occupation impacted by the pandemic. Initially, much trucking was shut down due to out of state travel restrictions and lack of goods to transport. Once the restrictions were lifted, this was one of the occupations workers tended to transfer out of. Often these workers had to find different employment during the pandemic. Reasons for this job hop varied, but some of the businesses they were employed with, or owned, failed during the pandemic. Others were simply tired of waiting for work to pick back up when travel restrictions were lifted.

Others decided to retire a little earlier than they had initially planned. Although heavy truck drivers didn’t make the top 10 list for exits, this occupation did make the top 10 list for annual occupational openings, with exits accounting for 330 of those openings, 546 transfers and 69 openings due to employment growth.

Where to find more information on South Dakota’s projected occupational demand

The projected occupational demand information to 2030 recently completed for 521 detailed occupations in South Dakota is available on the South Dakota Department of Labor and Regulation (DLR) website. Please visit the LMIC website's Employment Projections by Occupation menu page for links to and tips on using the virtual site, plus links for related occupational descriptions and technical notes about the projections.