Estimating Occupational Replacement Needs

BLS used a cohort-component method for estimating job openings due to replacement needs from the 1991 through the 2014–24 projections. This method is no longer in use because BLS identified statistical and conceptual issues with the implementation of this method that compromised the accuracy and validity of the resulting estimates. BLS developed a new method that estimates this concept by measuring occupational separations. For more details on the separations method, first used with the 2016–26 projections, visit https://www.bls.gov/emp/ep_separations.htm.

Limitations of the replacements method

On the statistical side, the replacements method required using historical CPS data broken down by detailed occupation and by age cohort. Estimates derived from small sample sizes result in large margins of error, which contributed to the large observed variability of published estimates from projections cycle to projections cycle.

On the conceptual side, in order for the cohort-component method to accurately estimate replacement needs, it requires a strong assumption: that workers who need to be replaced are those who are replaced by workers from different (usually younger) cohorts. In a traditional conception of a worker's career, this assumption is valid: workers enter at a young age, work in their field until they are old, and then retire, creating opportunities for the next generation of young workers. In this framework, occupation is fixed throughout a worker's career. However, many workers do not remain in the same occupation throughout their career, and BLS determined that a newer, more robust and more statistically sound model was necessary.

Advantages of the separations method

More clarity about what is being measured
  • The separations method directly measures workers who leave an occupation, taking advantage of the longitudinal aspects of the CPS monthly survey and supplements. The replacements method indirectly measured leavers by measuring employment change by age group.
  • In addition to measuring total separations, the separations method provides discrete estimates of labor force leavers and occupational transfers for each occupation. The replacements method provided just a single, total, measure for each occupation.
More robust methods
  • The separations method uses a regression to model projected separations, while the replacements method extrapolated from historical trends. The regression approach allows the separations method to incorporate many different demographic characteristics, where the replacements method only accounts for age.
  • The separations method better accounts for future growth or declines by incorporating the results of the projections of employment change for occupations. The replacements method assumed historical patterns of growth or decline of occupations would continue.
More reliable results
  • The separations method allows for estimates for occupations newly added to classification systems, while the replacements method required 10 years of comparable historical data to create estimates for an occupation.
  • The separations method more accurately estimates replacement needs for small occupations, while the replacements method required proxies for many small occupations.
  • The replacements method generated results for some occupations that varied considerably from year to year, due to survey error. The regression approach used in the separations method reduces survey error resulting in more consistent results.

 

Last Modified Date: October 24, 2017