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Employment Development Department
Employment Development Department

Industry Employment Projections Methodology

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Industry Employment Projections estimate changes within an industry over time. The projections are based on the State or local area's past industry employment trends and are refined by a review of current economic developments that affect employment within each industry. Base year data, the date for the beginning year of the projection period, are a "snap-shot" of employment at a point in time. Preliminary employment projections are produced using various economic models. The methods and economic models are provided to all state Labor Market Information programs to insure consistent methodology and outcomes across the nation. Using these methods, analysts review preliminary industry employment projection numbers and make adjustments based on local area and State economic developments that may occur during the projection period.

Each employer in California is classified by its primary economic activity using the North American Industry Classification System (NAICS) coding and the county where the employer is physically located. The Employment Development Department (EDD) uses the NAICS to organize and track employment by industry and geographic area and construct the historical employment data series used to develop industry projections.

The State and sub-state area Long-Term projections are for a 10-year period. The projections are revised every two years to maintain currency and incorporate economic changes that occur in the State and local areas. Statewide Short-Term projections are for a two-year period and are revised annually.

Using Industry Employment Projections Data

The Industry Employment Projection tables are an excellent source of information to estimate job opportunities by industry. Projections of Industry and Occupation employment can be used to assess the need for job training programs and gain an insight into future employment trends.

When using projections data, users should keep in mind:

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Projection Estimates Include:

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Projections of Employment

Projections of employment by industry are the first phase in the employment projection process. A projection of employment level is made for each industry using historical data and current information about the economy. These projections become a primary data source used to project changes in occupational employment. Following is a description of data sources and the industry employment projection process.

Principal Data Sources
The EDD collects payroll data from all private employers and government entities covered under the Unemployment Insurance, Disability Insurance, and Personal Income Tax programs.

The Process
Analysts follow a nationally specified methodical process to develop industry projections. For the State and each local area, the analyst will:

  1. Construct a historical industry series for each industry located in the area using the CES and/or QCEW employment data sources. The final year of the historical data becomes the Base Year of the projection period.

  2. Process the historical times series through BLS projections software that utilizes a variety of economic models to produce the initial Target Year projections by industry.

  3. Review the initial projection for each industry and select the best economic model's projection based on prior historical growth rates, knowledge of the economy, and comparisons to other forecasts.

  4. Consult with the experts. The LMID's economist reviews the State industry projections, as well as the state Department of Finance, and the LMID's local labor market consultants review local area projections. The labor market consultants use their knowledge of the local economy, as well as solicit the input of local experts and recommend adjustments to the projections where they think it is appropriate.

  5. Incorporate reviewers' recommended changes as appropriate and finalize the industry projections to publish on LMID's Web site.

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Economic Assumptions

The industry projections in this report are based on the following assumptions:

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Other Considerations

Identifying future industry trends helps economic development professionals foster compatible growth and promote State and local area strengths. Local government agencies, non-profit agencies, researchers, and other interested parties use future industry trends to formulate plans and proposals. Job seekers and professionals who provide counseling and/or job placement may use the industry projections to learn about employment opportunities in various industries. However, it is important to keep in mind that projections are just one planning tool and that the estimates are based on information available at the time the projections were made.

For additional information on economic conditions in a particular local area, contact the LMID's local labor market consultants who are located in the community. They are knowledgeable about the economic activities within the areas they serve. Other resources include the local EDD's Offices that provide job services and One-Stop locations that offer additional publications on labor market information.

Revised: July 2010

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