Emsi’s 2017.3 data release, now available to subscribers of our labor market research tools, includes a new—and dramatically improved—method from the Bureau of Labor Statistics on how replacement jobs (or separations) are calculated by occupation.
This change in methodology results in much higher annual replacement rates for practically every occupation, and thus much higher estimated annual job openings (since Emsi calculates openings as new jobs plus replacement jobs).
What’s behind this change, and why is it important?
The Changing Nature of Work
For the last two decades, the BLS’s methodology for tracking workers who leave an occupation and need to be replaced (hence the term “replacement job”) hinged on the assumption that a worker stays in the same occupation for his or her career and is replaced by a younger worker in most cases.
“However true this may have been in the past,” the BLS wrote in an FAQ on its new method, “it does not apply to many workers today, and BLS determined that a newer, more robust and more statistically sound model was necessary.”
Many workers don’t follow a linear career pattern. They don’t stay at the same company for decades. They’re more likely to change professions mid-career. These shifts in the way people work weren’t being captured in the BLS’s previous approach, because it didn’t accurately count young leavers of an occupation or old entrants to an occupation.
Enter the new replacement model, what BLS now refers to as its “separations methodology.” It captures two types of separations: workers who leave the labor force entirely and workers who transfer to a different major occupation group (2-digit SOC). The BLS walks through why this is an improved approach in the above-cited FAQ (see here) and compares results between the old and new methodology here.
Why It’s Important to Capture Replacement Jobs
Replacement jobs outnumber—far outnumber, in many cases—new jobs for all but three of the 785 detailed occupations that Emsi has data on: wind turbine technicians, physical therapists, and optometrists. Employment in an occupation might not be growing, but because of the need for replacement workers that occupation can have hundreds or thousands of openings every year.
And using the BLS’s new approach, the number of replacement jobs and openings is three to five times higher in many occupations, and 10 to 20 times higher in others. (Note: The old and new replacement rates are only available at the national level.)
This has big implications for education, workforce, and HR practitioners and decisionmakers who use openings as a proxy—maybe one of several proxies but still an important one—for occupational demand. We’ve always stressed that openings is a conservative measure, and it still is in the sense that it’s not capturing all turnover. (This is especially true because it’s only looking at occupational transfers once a year, using the Current Population Survey’s Annual Social and Economic Supplement.)
The approach has changed, but the BLS is still aiming to capture workers who permanently leave an occupation and need to be replaced. As the BLS notes, “It is not a measure of all movement in and out of occupations…”
This is important to keep in mind as you use the replacements and openings data from Emsi—the numbers are far higher than they used to be, but they are still relevant for workforce training questions when compared to educational completions and other supply-side data.