Service sector has reason to smile

Posted: Friday, October 08, 2004

Service sector jobs are expected to dominate Alaska's employment opportunities through at least 2012, while the goods-producing sector made up of mining, construction, manufacturing and logging is expected to hold its own despite declines over the past decade, according to a study by the Alaska Department of Labor and Workforce Development.

In an article published in the October issue of Alaska Economic Trends, economists Paul Olson and Brynn Keith provided a 10-year occupational forecast for the state's job market through 2012. The study period extends from 2002 to 2012.

An estimated 43,000 jobs may be created between those dates, pushing the state's work force to more than 356,000, the economists said. Their study looked at 700 wage, salary and self-employed occupations and divided the economy into service-providing and goods-producing jobs.

According to the authors, the share of the overall job market held by mining, construction, manufacturing and logging fell during the past 10 years, while the service sector, which includes healthcare, food services, transportation and trade, experienced rapid growth. By 2002, service sector jobs accounted for 87 percent of employment within the state.

Service jobs are expected to continue their rapid growth.

Meanwhile, "buoyed by a resurgence in metal mining and projected natural gas pipeline construction, the goods-producing sector, with the steep declines in manufacturing largely in the past, will be likely to contribute positive growth nearly apace with the economy overall," Olson and Keith said.

"In doing so, it should maintain its 13-percent share of employment through 2012." That is, they will hold their own, the authors predicted.

While the service sector is expected to continue growing, even robustly for some industries, the rate of that growth likely will slow, except for federal government employment.

Olson and Keith cautioned that their deductions are subject to changing conditions.

"As with any set of projections, the assumptions and conclusions inherent in this forecast are fallible," they said. "Any number of events -- including changes in the natural gas pipeline timeframe, Arctic National Wildlife Refuge policy, or migration and population trends -- could significantly alter the actual outcomes."

Formal education will remain essential, but for most new positions, workers will be trained on the job. Nearly 56 percent will require up to 12 months of on-the-job training, and another 7.8 percent better than a year, the authors estimated. Another 7 percent will require experience in a related occupation.

About 10.3 percent will require an associate degree or "significant postsecondary vocational training," and 19 percent will need a bachelor's degree or better.

While service sector jobs are expected to dominate employment growth figures, those jobs tend to offer smaller paychecks. Collectively, the service sector median wage is about $12.20 per hour, as compared, for example, with professional jobs paying a median wage of $24.88.

The median is as low as it is in part because one in four service sector workers holds a job in food preparation and serving. Those are, by and large, entry-level positions requiring no postsecondary education and only short-term on-the-job training.

The number of healthcare support jobs is expected to grow quickly. But Olson and Keith said attempts to keep the cost of medical care down and stricter Medicare and Medicaid reimbursement rules, "will necessitate the use of relatively low paid health care labor -- medical and dental assistants, nursing and home health aides -- that make up this group of occupations."

Healthcare practitioners and technical occupations are expected to contribute better than four out of every 10 new jobs to the so-called "professional and related' occupations cluster through 2012.

"Demand for nurses and other healthcare support staff, medical record personnel and social services workers will continue to outpace the economy, in spite of increasing efforts at cost control," Olson and Keith said.

Of Alaska's 20 fastest growing occupations, 13 are associated with health services, they said.

The most jobs to be added over the forecast period will be in retail sales, already Alaska's single largest occupation. By 2012, some 11,053 will be employed there, including 2,577 new jobs to be created over the decade.

Olson and Keith noted that Alaska's 40 "top jobs" (those with higher average wages and good job prospects) were concentrated under the higher education and training categories, and better than half of those would require an associate degree or higher.

Dominating the list of top jobs requiring a bachelor's degree or better were those in health and social services.

The growth in service jobs is clearly apparent, and the work force is likely to provide a flood of applicants for occupation needing only on-the-job training, such as truck driving if the pipeline project takes off.

But for those requiring some postsecondary education -- especially those in healthcare -- a big question looms. Where will those workers come from and where will they be trained?

"We don't attempt to look at the supply side," Olson said in an interview Monday. "We are saying we will need that many. In reality, will we have that many?"

Nationwide, there is a distinct shortage of healthcare workers, he noted.

"Anecdotally, we hear of nurses being offered bonuses," Olson said. "That's a good indication the demand is outstripping supply."

One of the reasons for the 10-year forecast, he said, was to "get the conversation rolling" about whether Alaska has the infrastructure in place to train people to fill those new jobs.

He noted that the University of Alaska Anchorage is moving to increase the number of graduates from its healthcare programs.

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