December 2012 - Minnesota State Colleges and Universities ...
Supply and Demand Conditions for ElectriciansA Labor Market Update andElectrician Program DataDecember 2012Prepared by:Mohamed MourssiResearch Analyst(651) 259-7416Mohamed.mourssi@state.mn.usLabor market InformationMN Department of Employment & Economic Development (DEED)In collaboration with:Office of the ChancellorMinnesota State Colleges and UniversitiesContents TOC \o "1-4" \h \z \u PURPOSE PAGEREF _Toc354405908 \h 3BACKGROUND PAGEREF _Toc354405909 \h 3Enrollment Caps PAGEREF _Toc354405910 \h 3EXECUTIVE SUMMARY PAGEREF _Toc354405911 \h 4DEMAND PAGEREF _Toc354405912 \h 4SUPPLY PAGEREF _Toc354405913 \h 4SUPPLY-DEMAND COMPARISON PAGEREF _Toc354405914 \h 4HISTORY PAGEREF _Toc354405915 \h 5Enrollment Caps PAGEREF _Toc354405916 \h 5Enrollment and Graduate Data Sources PAGEREF _Toc354405917 \h 5Related Report PAGEREF _Toc354405918 \h 5DEMAND PAGEREF _Toc354405919 \h 6Industry Employment Trends PAGEREF _Toc354405920 \h 6Job Vacancies PAGEREF _Toc354405921 \h 11Short-term Projections PAGEREF _Toc354405922 \h 12Long-term Projections PAGEREF _Toc354405923 \h 13SUPPLY PAGEREF _Toc354405924 \h 14Trends in Unemployment PAGEREF _Toc354405925 \h 14Program Graduates PAGEREF _Toc354405926 \h 16Apprenticeship Completers PAGEREF _Toc354405927 \h 17Program Enrollment PAGEREF _Toc354405928 \h 18WAGES PAGEREF _Toc354405929 \h 20RELATED EMPLOYMENT RATE PAGEREF _Toc354405930 \h 21SUPPLY-DEMAND COMPARISON PAGEREF _Toc354405931 \h 23SUMMARY PAGEREF _Toc354405932 \h 24PURPOSEThe purpose of this report is to provide a current regional analysis of the labor market for electricians in the state of Minnesota. This report presents regional information on demand, supply, wages, and net supply-demand.BACKGROUNDOn March 15, 2007 a memo was sent to Presidents and Chief Academic Officers at the 13 Minnesota State Colleges and Universities with electrician programs that prohibited the addition of new electrician programs and directed that fiscal year 2008 enrollment be limited to the fiscal year 2007 level. This decision was based primarily on an analysis of statewide labor market data on electricians, including trends in electrical contractor industry employment, Unemployment Insurance claims, long-term occupational employment projections, job vacancies, and the number of electrician program completers from all Minnesota post-secondary institutions. Subsequently in April 2007 regional estimates of the supply/demand conditions for electricians were produced. The March 15th, 2007 memo indicated that the decision to cap electrician enrollment would be re-reassessed in October of subsequent years using both internal and external inputs. This report references labor market activity through the first half of 2012.Enrollment CapsBased on an analysis of regional supply and demand conditions for electricians, enrollment caps were issued for colleges that have electrician programs. These caps have remained in effect for all colleges, except for Minnesota West Community and Technical College, whose enrollment cap was lifted in a June 4, 2009 memo and reinstated in a November 4, 2009 memo (p. PAGEREF MN_West \h 7). Based on this report, enrollment caps will be reconsidered. Changes, if any, will be communicated to colleges.EXECUTIVE SUMMARYOverall, statewide indicators show that the recovery from the 2007-2009 recession continues to impact the electrician labor market. There remains a surplus of electricians in Minnesota; however that surplus has been declining and is less than it was estimated one year ago. DEMANDEmployment in the construction industry, where most electricians are employed, is up by 2,780 jobs or 2.7 percent from a year ago (p. PAGEREF a_2780 \h 7), and short-term industry employment is projected to slightly improve into the first half of 2013 (p. PAGEREF Short_Term \h 12). Over the next 10 years, the number of employed electricians is projected to grow by 3,558 or 35 percent. An additional 2,700 opening will result from replacement needs (p. PAGEREF Long_Term \h 13).SUPPLYThere were 586 electricians receiving regular Unemployment Insurance benefits in October 2012–a decline of 20.4 percent from a year ago, or 150 fewer individuals (p. PAGEREF UI \h 14). The number of graduates from Minnesota electrician programs (284) in 2012 was down by 91 from 2010 academic year and down 58 from the 2011 academic year (p. PAGEREF Graduates \h 16). Minnesota electrician program enrollment in the fall of 2012 is 813, a decrease of 223 or about 22 percent from 2010 academic year’s level, and a decrease of 55 or about 6.3 percent from 2011 academic year’s enrollment level (p. PAGEREF Enrollment \h 18).Wage trends for electricians in 2011 showed no upward pressure, indicating a more than sufficient supply (p. PAGEREF Wages \h 20).Graduate Follow-up Survey data showed increases in related-employment rates in 2011. Northeast is the only region that shows a decrease in the related employment rate by 5.6 percent, while the employment rate in southwest remained the same as 2010, 70.6 percent. All other regions show higher related employment rates than last year. Twin Cities employment rate increased to 84.4 percent from 80.2 percent in 2010 (p. PAGEREF Graduate_Followup \h 21).SUPPLY-DEMAND COMPARISONIn 2012, Minnesota has a very small surplus of 36 electricians based on the supply-demand comparison using the most recent job projections, job vacancy survey, unemployment insurance, and 2012 program graduate data (p. PAGEREF Comparison \h 23).Labor market and economic indicators point to a tightening market for electricians over the next five years. The next several years will likely see a turning point in the supply and demand ratio for electricians. Data indicate that this turnaround may happen most quickly in the Central region.HISTORYElectrician Program Enrollment CapCollegeFall '06Enrollment CapAnoka149Dakota County74Hibbing77Lake Superior50Minneapolis53Minnesota State204Minnesota West87Northland71Northwest57Ridgewater55Riverland87Saint Cloud123Saint Paul104Total1,191RegionFall '06Enrollment CapNorthwest332Northeast127Central178Twin Cities380Southwest87Southeast87Total1,191Enrollment CapsColleges’ base enrollment caps, as listed in the table, have remained unchanged. These enrollment caps reflect program enrollment levels reported by colleges for fall 2006.Enrollment and Graduate Data SourcesBeginning with the December 2011 report, the source for annual enrollment and program graduate data has changed. Previously, colleges were asked to provide these data. Now, this report reflects data acquired from the system warehouse for current and prior years. Legislative Audit ReportIn testimony before legislative committees during 2007 and 2008, the International Brotherhood of Electrical Workers Local 292 questioned whether, during a time of high unemployment, the Minnesota State Colleges and Universities system should continue enrolling students in electrician programs at the same pace as in previous years. Interested by this and broader questions, the Legislative Audit Commission directed the Office of the Legislative Auditor to evaluate MnSCU’s occupational programs. In March 2009 the State of Minnesota Office of the Legislative Auditor – Program Evaluation Division issued its report titled: MnSCU Occupational Programs. The report, which studied all occupational programs, recommended that “When reviewing its cap on enrollments for construction electrician programs, MnSCU’s Office of the Chancellor should take local economic conditions into greater account.” In response to this recommendation, annual studies of the electricians labor market has been analyzed by planning region rather than just statewide, as had been the prior practice.DEMANDIndustry Employment Trends In Minnesota, approximately 80 percent of all electricians are employed in the construction industry. Based on national staffing patterns within the construction industry itself, 93 percent of electricians are employed by electrical contractor firms. Chart 1 below shows the seasonally-adjusted employment trend in statewide construction industry employment. The total number of construction industry jobs in Minnesota grew until about February 2006. The total number of construction jobs in October 2012 was 94,000. This is down 38,000 or 28.8 percent from the high reached in February 2006, but up by a seasonally adjusted 3,700 jobs or 4.1 percent from a year ago.A more detailed breakdown of construction industry employment trends is not available on a seasonally-adjusted basis. Instead, Table 1.1 shows the comparison of employment to the same month a year ago. It should be noted that electrical contractors are found in the building equipment contractors industry.In October 2012 the construction industry added jobs year over year for the second year in a row after more than five years of year over year job losses. As Table 1.1 shows, the industry expanded by adding 2,780 jobs, an over-the-year growth rate of 2.7 percent. Job growth was led by the construction of buildings sector. Employment in the residential building construction subsector has slightly decreased by 0.3 percent. Related to the slight loss in residential building is the employment loss in foundation, structure and building exterior contractors, the specialty trade subcontractors involved in the first phases of the building project down 296 jobs or 2.2 percent from a year ago. The heavy and civil engineering sector added 137 jobs over-the-year, a small gain of 0.8 percent. As shown in table 1.2, during the third quarter of 2012, the number of housing units authorized by building permits in Minnesota is 82.12 percent above the number authorized during the third quarter of 2011; and is 90.47 percent above the number of permits authorized during the third quarter of 2010. This brings the number of authorized units in third quarter 2012 above the level in third quarter 2008 for the first time since the recession.The Quarterly Census of Employment and Wages is based on employer-submitted reports on payroll employment and wages for the Minnesota Unemployment Insurance Tax. It shows the most detailed breakdown of industry employment by industry category and geographic region. However, there is a six-month lag in time from the end of the quarter for which employment is reported and when it becomes available. Chart 2 shows that while total specialty trades construction industry employment grew from 2001 through mid-2006; total electrical contractor employment is down since 2001. The demand for non-residential electrical contracting work weakened after 2001, leveled off from 2004 to 2007, but dropped sharply again from 2008 through 2010. The slowdown in residential construction has had a pronounced impact on residential electrical contracting employment since 2005. However, employment in most sectors began to level off in 2010 and expand slightly in 2011 with continued expansion in the first quarter of 2012.Chart 3 shows that the Twin Cities region had 59 percent of the total electrical contractor industry jobs in Minnesota in 2011. Over 77 percent of the state’s job loss in the electrical contractor industry since 2001 has occurred in the Twin Cities region, a decline of 4,360 jobs or 41.0 percent. Most regions in Greater Minnesota have experienced smaller changes over the time period, ranging from a 4.4 percent decrease in the Northeast region to a 26.9 percent decrease in the Southeast region. Numerically, the job loss ranges from 28 jobs lost in the Northeast region to 387 jobs lost in the Southeast region. Between 2009 and 2011, there were job declines in the electrical contractor industry in all regions of Minnesota. Job losses in the Electrical Contractor industry began to turn around in 2011 with over the year employment growth statewide in 2011 and third quarter 2012. Five out of six regions saw over the year job growth in this industry in 2011 and three out of six regions saw over the year job growth in third quarter 2012: Twin Cities, Northwest and Central Minnesota. Job Vacancies Twice each year the Department of Employment and Economic Development’s Labor Market Information Office (DEED-LMI) conducts a survey of job openings in Minnesota. Chart 4 shows that the statewide number of vacancies for electricians during the second quarter of 2012 decreased to almost half (54) from the same quarter in the previous year (106). The job vacancy rate for electricians in the second quarter of 2012 was estimated to be 0.5 percent, or 0.5 job openings for every 100 electrician positions in the state. This is less than both the overall job vacancy rate for the major construction and extraction occupational group (1.9%), and the overall job vacancy rate (2.5%).Short-term Projections Short-term industry and occupation employment projections are produced quarterly by DEED-LMI. The most recent figures available are shown in Table 2 below. The number of employed electricians is projected to grow by 256, or 2.5 percent over the next year. Additionally, electricians will be needed to take jobs left vacant as individuals retire or otherwise leave the profession. An additional 240 electrician openings will result from projected replacement openings.Long-term Projections Table 3 shows the electrician employment and job openings projections for Minnesota and the six planning regions for 2010-2020 from DEED-LMI long-term projections. According to Table 3, there is a projected average annual demand of 626 electrician job openings each year from 2010 to 2020 in Minnesota. Job openings in the seven-county Twin Cities region are projected to account for 2,970 or 47.4 percent of the total openings for electricians in Minnesota. Net replacement demand, including retirements, is also a big part of the long-term projections figures. About 43.1 of every 100 projected openings are due to replacement demand. SUPPLYTrends in Unemployment Monthly data on electricians who have been receiving Unemployment Insurance (UI) benefits provide the best available information on the number of unemployed electricians, both union and non-union members. However, it will not capture all of the unemployed due to eligibility requirements and the fact that some individuals may have exhausted benefits. The chart below shows the comparable trend for only those individuals receiving regular UI benefits over the past seven years. It does not include an additional number of unemployed workers who received Federal Emergency Unemployment Compensation (EUC) benefits. The EUC benefits were first paid in July 2008 and have been extended several times since then.The impact of the 2007 to 2009 recession on top of the earlier slowdown in residential construction is dramatically reflected in the increase in unemployment insurance claims beginning in the fourth quarter of 2007 and accelerating in 2009. As shown in Chart 5, the number of people receiving Unemployment Insurance in October 2012 was 586, down by 150 or 20.4 percent from a year ago. The twelve-month moving average in October 2012 was 869, down by 97 or 10.05 percent from a year ago. Recent numbers of UI recipients have declined to pre-recessionary levels. It should be noted that the number of electricians who exhausted their UI benefits reached a peak of 1,732 in calendar year 2010. Chart 6 shows the 12-month moving average of electrician Unemployment Insurance (UI) recipients by the six sub-state planning regions. The increase in claims during the 2007-2009 recession was felt by all regions of the State. Declines in the 12-month moving average of electrician UI recipients began to decline in mid-2010.In October 2012, the 12-month average number of electrician Unemployment Insurance recipients was 871, down by 95 or 9.8 percent from a year ago, with the Twin Cities region registering 10 fewer claims, a decline of 2.7 percent. While having smaller numerical declines, unemployment has declined most rapidly in the central region (down 50 claims or 22.7 percent) and in the northwest region (down 39 claims or 31.9 percent).Program Graduates The number of students completing electrician programs in Minnesota in 2012 was 91 fewer than in 2010, a decline of 24.3 percent, and was 58 fewer graduates than in 2011, a decline of 17.3 percent. There were small regional variations in the number of electrician program graduates in Greater Minnesota. The sharpest relative drop occurred in the Twin Cities region, which had 57 fewer total graduates in 2012 compared to the number of graduates in the 2010 academic year. Programs in the Northwest region registered 29 fewer graduates, Northeast registered three fewer graduates, and six fewer students graduated from the Saint Cloud program in the Central region. Two regions–Southwest (1) and Southeast (3)–registered more graduates in 2012 than in 2010.Apprenticeship Completers Another source of supply for electricians is formal apprenticeship programs. As table 5 shows, the number of electrician apprenticeship completions in fiscal year 2011 slightly increased by 26, or about 21 percent, from the previous year. The number of apprentices was slightly higher than the level in 2007, at the start of the economic recession. However, it was 156 or 51 percent below the peak number in 2003.Program Enrollment As shown in table 6, the number of students enrolled in electrician programs was down by 223 or 21.5 percent in the fall of 2012 compared to the 2010 school year, and was down 55 or 6.3 percent from the number of students enrolled in the fall of 2011. This suggests that the total number of graduates will decrease in FY 2013. Note: These tables reflect some minor corrections to the numbers of graduates and enrollment levels published in previous reports. Chart 7 displays the trend in electrician program enrollment at the 13 colleges in the Minnesota State Colleges and Universities system and Dunwoody College over the past six fall survey periods. The number of graduates in 2012 is very likely going to be fewer than in 2010 and 2011 due to the more moderate drop in the number of students with a declared major in an electrician program.WAGESAnother way to determine if there is a shortage or surplus of workers is to track the rate and direction of change in wages. If there is a shortage, the wage level should increase at a faster than average rate to attract workers to move to the area or to persuade them to enter the field. If there is not a shortage, wage levels will increase at a slower than average rate or even decline.Chart 8 shows both non-inflation-adjusted average weekly wages (actual) and inflation-adjusted (real) average weekly wages. The 2011 actual average weekly wage level for electricians in Minnesota, $1,100.00, is considerably higher than the average weekly wage for all occupations, $920.00. Total all industry wages have grown faster over the 2000 to 2007 period and have decreased less over the 2008 to 2011 period than electricians’ wages. This indicates that there is still a surplus of electricians because wage growth is not keeping pace with economy wide gains. Average weekly wages for electricians increased slightly in 2011 after declining for two consecutive years. By way of comparison, overall average weekly wages grew at nearly the same rate as inflation as measured by the Consumer Price Index for All Urban Consumers (CPI-U) until 2008. The increase in the average weekly real wages between 2006 and 2008 may be evidence of the least senior people getting laid off, leaving the highest paid workers in the market during the recession. The 2009 and 2010 bump down is probably evidence of the market’s coming back into alignment and some newer workers coming in at lower wages and possibly also a realignment of wages overall. Despite the faster rate of inflation in 2011 (3.6%) the overall real average weekly wages showed a slight gain of 1.00 percent. However, the trend is a bit unclear because there were increases in wages during the recession but that could be due to the lowest paid, least senior people losing their jobs.Chart 9 below compares actual average weekly wages paid to all workers in the electrical contractor industry statewide and in six planning regions. All regions experienced an increase in actual wages in 2011 ranging from 1.8 percent to 4.1 percent. Twin Cities wages, after showing declines over two consecutive years, 2009 and 2010, grew in 2011, up $50.00 or 4.1 percent. Actual wages in the northeast region have shown the greatest gain over the 2007 to 2010 period, increasing by almost 16 percent, with continued growth, up 4.1 percent or $43.00 in 2011. Northwest shows the second largest gain in actual average weekly wages with a nearly seven percent growth over the 2007 to 2010 period, and continued growth in 2011.RELATED EMPLOYMENT RATEData collected from the Minnesota State Colleges and Universities Graduate Follow-up Survey provides another indicator of the supply and demand conditions for electricians. Table 7 on the following page generally reaffirms other data presented throughout this report that show that labor market conditions have begun to improve for electricians. . The statewide related employment rate increased from a low of 62.1 percent in 2009 to 81.7 percent in 2010 and 85.5 percent in 2011. The data also show that employment rates in the Twin Cities are slightly higher than in Greater Minnesota, as the rate for Twin Cities’ graduates, 84.4 percent, was about 1.0 percentage point higher than the average rate for graduates from programs in Greater Minnesota, 83.8 percent. In 2011, the overall related employment rate improved at two of the four Twin Cities programs, while it slightly declined at the other two programs. The related employment rate for programs at Minneapolis Community and Technical College (97.4%) and Anoka Technical College (78.9%) were noticeably higher in 2011 than they were in 2010, while the programs in Dakota County Technical College (57.1%) and St. Paul (66.7%) showed declines.While the Greater Minnesota program graduates generally fared better than they did a year earlier, the 2011 graduates of electrician programs in southwest and southeast Minnesota had a somewhat harder time finding related employment compared to their counterparts in other Greater Minnesota regions. The related employment rate for 2011 graduates from Minnesota West College remained the same as 2010 with the rate of 70.6 percent. Riverland’s electrician program graduates fared somewhat better in finding work in the year after graduation as the related employment rate increased from 70.0 percent in 2010 to 80.0 percent in 2011. However, it is still below the overall average for graduates in Greater Minnesota. The related employment rate for 2011 graduates of the three programs in the northwest region (Minnesota State, Northland and Northwest) was 84.1 percent. This is very good, and it shows a 6.6 percent increase over the previous year’s rate of 77.5 percent. Despite the huge improvement achieved in 2010, the 2011 data shows that related employment rates for northeast region graduates (Hibbing and Lake Superior) declined by 5.6 percent in 2011. The related employment rate for 2011 graduates of Hibbing decreased 10.0 percent in 2011, while the employment rate for graduates of Lake Superior showed a decrease of 3.3 percent. This means that the job market for graduates in the northeast has significantly improved since the recession but remains challenging and is unstable.SUPPLY-DEMAND COMPARISONThe initial study of supply/demand conditions for electricians done in the spring of 2007 showed an estimated surplus of 575 electricians. The report released in October 2007 estimated the surplus at 428; a surplus of over 1,400 electricians in 2009; a surplus of 660 in 2010; and a surplus of 450 in 2011. Table 8 below shows a surplus of 36 electricians in the state based on the supply-demand comparison using the most recent job opening projections, job vacancy survey, unemployment insurance, and 2011 program graduate data collected via a survey of colleges. The overall surplus has dramatically declined in all regions in 2012; however, the degree of surplus varies from one region to another. The central region has the largest estimated surplus, at 72, down from 171 last year, and the highest ratio of supply to demand, at 1.8. Two regions are experiencing a shortage of electricians; the Twin Cities has a small shortage of 14 electricians moving from a surplus of 83 last year, while the southwest region’s estimate shows a surprisingly high shortage of 49. The northeast region’s estimate shows the smallest numeric surplus, at 7. The surplus in the northwest, northeast, and southeast regions have the same ratio of supply to demand, at 1.2. SUMMARY This paper has reviewed available labor market indicators of supply and demand for electricians in Minnesota and its sub-state regions as of the third quarter of 2012. Data presented in the report shows that electricians’ employment conditions are improving at a rapid rate and that all evidence points to the fact that this trend will continue into the future. However, labor market conditions for electricians are not yet back to their levels prior to the recession. There are still flashing yellow lights indicating some level of uncertainty in relation to employment levels at both statewide and regional levels as the Minnesota economy continues to recover from the worst recession in the past 70 years. While the surplus is much less than what it was a year ago, the overall supply of electricians continues to be higher than demand. Employment rates for electrician graduates from Minnesota state colleges has improved enormously in 2010 and 2011, but there is still about 50 recent graduates who have not found work. Data about 2012 employment rates is not available yet. Short-term employment projections for electricians indicate steady over the year growth of 2.5 percent into the second quarter of 2013.On the supply side, unemployment insurance claims continue to fall, which may be a sign of improving conditions. However, the number of electricians who’ve exhausted their benefits peaked at over 1,730 in calendar year 2010. The number of students enrolled in electrician programs continues to contract in response to demand and the number of graduates is likely to decline again next spring. Real wages have been flat since 2000. This lack of wage growth indicates that there is no undersupply of electricians at this time. However, there was a very small increase between 2010 and 2011. While it is too early to indicate a positive wage trend, it may be a good sign for the occupation.By region, Central seems to be closest to a turnaround in demand conditions, based on employment growth, projected employment growth and the related employment rate. However, wages in Central show no upward pressure at this point. Overall, the data do not indicate the need for a greater supply of electricians in this region at this time.A March 15, 2007 memo, sent to 13 Presidents and Chief Academic Officers of colleges that have electrician programs, prohibited the addition of new electrician programs and limited enrollment for existing programs based on an analysis of regional supply and demand conditions for electricians. These caps have remained in effect for all colleges, except for Minnesota West Community and Technical College, whose enrollment cap was lifted in a June 4, 2009 memo and reinstated in a November 4, 2009 memo. Each year enrollment caps are reconsidered. ................
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