U.S. DEPARTMENT OF LABOR

america’s dynamicworkforce

August

2006

america’s dynamic workforce: 2006 

 TABLE OF CONTENTS

SECRETARY’S MESSAGE......................................................III

ACKNOWLEDGEMENTS.........................................................V

INTRODUCTION................................................................... VII

CHAPTER 1. GROWING JOBS, OUTPUT AND EARNINGS.........1 

CHAPTER 2. STRONG INTERNATIONAL COMPETITIVENESS ....8 

CHAPTER 3. DYNAMIC LABOR MARKET STRUCTURE ..........12 

CHAPTER 4. EDUCATION PAYS ..........................................19 

CHAPTER 5. AMERICA’S FLEXIBLE LABOR MARKET ...........25 

CHAPTER 6. OPPORTUNITIES TO PROSPER ........................30 

END NOTES .......................................................................35 

U.S. DEPARTMENT OF LABOR i AUGUST 2006 
U.S. DEPARTMENT OF LABOR ii AUGUST 2006 
 america’s dynamic workforce: 2006 

 SECRETARY’S MESSAGE

By U.S. Secretary of Labor Elaine L. Chao 

The American

economy is strong 

and growing. It is a 

good time for 

American workers: 

Job opportunities are 

increasing, 

unemployment is 

low, and 

compensation is 

rising. During the 

past five years, 

through recession, 

terrorism, and natural disaster, the American 

economy has proven itself to be resilient. We 

have consistently bounced back from 

adversity and recorded growth that is the envy 

of other major industrial nations. 

In the first half of 2006 the unemployment 

rate averaged 4.7 percent. That’s lower than 

the 5.1 percent average of 2005 and a full 

point lower than the 5.7 percent average 

unemployment rate of the 1990s. For a 

comparison, look at France and Germany: 

They have persistent unemployment rates 

near double the U.S. rate. And their longterm unemployment of 12 months or more is 

nearly triple that of the United States. 

By June 2006, the latest month for which data 

for this report were available, the United 

States had enjoyed 34 months of 

uninterrupted job growth. More than 5.4 

million net new jobs have been created in the 

United States since August 2003. This level 

of job creation reflects the overall economic 

growth that our country has been 

experiencing. The U.S. economy grew at an 

average rate of 3.2 percent in 2005, and in the 

first half of 2006 real GDP gains averaged a 

4.1 percent annual rate. That’s the best record 

among the major G-7 industrialized nations, 

and it’s remarkable for a mature, industrialized 

nation. 

But even as our economy grows steadily, there 

are challenges. Our country is in the middle 

of a major economic transformation. 

Technology has accelerated the pace of 

change and our country is transitioning to a 

knowledge-based economy. 

Good jobs are still being created in large 

numbers. In fact, the majority of employment 

growth over the past five years was in 

occupations with above-average 

compensation. But there is a caveat. Most of 

the new jobs projected for the future are 

expected to be filled by persons with some 

kind of post-secondary education. Education 

to gain the knowledge and skills that are in 

demand is the key to success in America’s 

dynamic labor market. 

Workers who bring to the labor market the 

knowledge and skills that today’s competitive 

economy demands are finding good jobs and 

rising compensation; those who do not keep 

up in terms of knowledge and skills 

increasingly lag behind in employment and 

earnings. Our goal at the Department of 

Labor is to ensure that all Americans have 

access to the information, training and 

resources that will help them get the skills 

they need to access the growing opportunities 

in our nation’s 21st century economy. 

Despite the difficult challenges that America 

has confronted over the past five years – 

terrorist attacks, accounting scandals, 

devastating hurricanes and high oil prices – 

our economy is doing well. That performance 

is a tribute to the dynamism, productivity and 

flexibility of our nation’s workforce. 

U.S. DEPARTMENT OF LABOR iii AUGUST 2006 
U.S. DEPARTMENT OF LABOR iv AUGUST 2006 
america’s dynamic workforce: 2006 

 ACKNOWLEDGEMENTS

This report was produced under the direction 

of U.S. Secretary of Labor Elaine L. Chao. It 

was designed and edited by the Office of the 

Assistant Secretary for Policy (OASP). 

Veronica Vargas Stidvent, Assistant Secretary 

for Policy; Suey Howe and Leon Sequeira, 

OASP Deputy Assistant Secretaries; and John 

Britton, OASP Chief of Staff provided

editorial advice and support throughout the 

development of America’s Dynamic 

Workforce: 2006. Laura Genero, Associate 

Deputy Secretary for Communications, 

generously provided insightful advice and 

assistance at various stages of design and 

development of the report. 

Many of the charts were derived from 

Charting the U.S. Labor Market in 2005, a 

compendium of labor market condition and 

trend charts compiled by the Bureau of Labor 

Statistics (BLS). The BLS report provides 

more information and technical detail on 

many of the topics summarized in this 

volume. It is available online at 

www.bls.gov/cps/labor2005/home.htm.

The text and charts for America’s Dynamic 

Workforce: 2006 were developed and edited 

by Ron Bird, Chief Economist, and by OASP 

economists David Langdon, Alison Pasternak, 

Regina Powers and Lisa Stuart. Additional 

design assistance and editorial review was 

provided by Mario Distasio, Kathleen Franks, 

Jim Jones, Brad Mantel, Sheila McConnell, 

Fred Siskind, Stephanie Swirsky, and Babette 

Williams. Gretta Jameson assisted in the 

coordination of print production. 

Diana Furchtgott-Roth, previously Chief 

Economist at the Department of Labor and 

now Senior Fellow at the Hudson Institute, 

edited the original 2004 version of America’s 

Dynamic Workforce and provided valuable 

advice to facilitate the development of the 

present edition. 

U.S. DEPARTMENT OF LABOR v AUGUST 2006 
 

U.S. DEPARTMENT OF LABOR vi AUGUST 2006 
america’s dynamic workforce: 2006 

INTRODUCTION

America’s Dynamic Workforce: 2006

presents an overview of current conditions 

and notable trends affecting the American 

labor market and economic activity. Primary 

emphasis is on measures of labor market 

performance – employment, labor force 

participation, unemployment, and 

compensation. General measures of 

economic performance such as gross 

domestic product (GDP) and productivity 

growth are also described as they relate to 

labor market conditions and trends. 

Throughout this report the focus is on the 

data – what the numbers actually say about 

the American labor market – and on how 

individual data items fit together to present an 

overall portrait of the health and dynamism of 

the market. 

There are six chapters: 

3⁄4 Chapter 1 summarizes the current levels 

and trends of payroll jobs, total 

employment, job openings, turnover, 

unemployment, and GDP. 

3⁄4 Chapter 2 provides a global context for 

understanding the U.S. labor market and 

compares the United States and other 

countries along common dimensions of 

labor market indicators. 

3⁄4 Chapter 3 presents an overview of 

patterns, recent trends and projections 

regarding the distribution of employment 

across industries and occupations. 

3⁄4 Chapter 4 examines the educational 

attainment of the labor force, including 

trends and comparisons of employment, 

earnings, and unemployment relative to 

educational attainment. 

3⁄4 Chapter 5 examines the concept of labor 

force flexibility in terms of schedules, 

work arrangements, and other factors. 

3⁄4 Chapter 6 highlights the dimensions of 

opportunity in the American workforce, 

including dynamic age, gender, race, and 

ethnicity perspectives. 

The end notes provide important technical 

details, caveats, and references to additional 

information about the data items discussed in 

the main text. 

Most of the tables and charts in America’s 

Dynamic Workforce: 2006 reflect annual 

average data for calendar years ending in 2005 

as the most recent full year available. In some 

cases, monthly data through the latest 

available month in 2006 (typically June) are 

also referenced. 

In this report, the terms “population” and 

“labor force” refer to the civilian 

noninstitutional population ages 16 and older 

and to the civilian labor force age 16 and over 

unless specified otherwise. Similarly, data on 

workers refer to employed persons age 16 and 

over unless otherwise noted. Monthly or 

quarterly labor market data are seasonally 

adjusted unless specified otherwise. 

Much of the data in this report were compiled 

from the public access files of the Bureau of 

Labor Statistics’ Web site at www.bls.gov. A 

number of the charts were derived from the 

extensive chart book published by BLS, 

Charting the U.S. Labor Market in 2005, 

and available for download from the BLS 

Web site. 

Readers seeking a more extensive review of 

international labor market comparisons than 

the summary provided in Chapter 2 are 

encouraged to download the Department of 

Labor publication A Chartbook of 

International Labor Comparisons at

www.dol.gov/asp/media/reports/ 

chartbook/index.htm. 

U.S. DEPARTMENT OF LABOR vii AUGUST 2006 
U.S. DEPARTMENT OF LABOR viii AUGUST 2006 
america’s dynamic workforce: 2006 

1 GROWING JOBS, OUTPUT AND EARNINGS

The American labor market is strong and 

resilient. The labor market indicators describe 

an economy that is creating jobs, expanding 

output, and rewarding work with good 

compensation. Since jobs began recovering in 

2003 from the effects of the last recession, the 

economy has tallied 34 consecutive months of 

job gains (through June 2006, the latest data 

available for this report). Employment has 

reached new record 

heights. 

The unemployment 

rate has fallen 

significantly from its 

post-recession high 

of 6.3 percent and 

has ranged between 

4.8 percent and 4.6 

percent during the 

first half of 2006. 

Both components of 

compensation – 

wages and employerpaid benefits – were 

higher in terms of 

real purchasing 

power in 2005 than 

in 2000. 

EMPLOYMENT

Net growth in

nonfarm payroll 

employment totaled 

5.4 million from 

August 2003 through 

the first half of 2006. 

Job growth during 

2005 was 2.0 million. 

In the first half of 

2006 a total of 

865,000 net new jobs 

were created. 

Figure 1-1 shows the monthly record of job 

gains that began after the post-recession low 

point in August 2003. Over this period, 

monthly job gains averaged 160,000. Monthly 

gains ranged from 37,000 in October 2005, 

following the Gulf Coast hurricanes to a high 

of 354,000 in November 2005, reflecting, in 

part, the post-hurricanes rebound. 

In 2005, nonfarm 

payroll employment 

averaged a record 

133.5 million, over 

1.6 million more 

than the previous 

record set in 2001. 

By June 2006, the 

jobs total reached 

135.2 million, a new 

record. Total 

employment, 

including farm and 

self employment, 

averaged 141.7 

million workers in 

2005, an increase of 

nearly 4.8 million 

from 2001. 1 

Figure 1-1. Payroll Jobs Have Increased for 34

Consecutive Months through June 2006

0

50

100

150

200

250

300

350

400

Sep Jan May Sep Jan May Sep Jan May

Thousands

SOURCE: Bureau of Labor Statistics, Current Employment Statistics program.

2003 2004 2005 2006

Change from prior month

Figure 1-2. Payroll Jobs Have Surpassed the 

Pre-Recession Peak

120

122

124

126

128

130

132

134

136

2000 2001 2002 2003 2004 2005 2006

SOURCE: Bureau of Labor Statistics, Current Employment Statistics program.

Millions RECESSION AND 

RECOVERY

Figure 1-2 shows in 

detail the monthly 

levels of payroll 

employment from 

January 2000 

through June 2006 

(latest available for 

this report). In 

February 2001, just 

U.S. DEPARTMENT OF LABOR 1 AUGUST 2006 
america’s dynamic workforce: 2006 

before the onset of the 2001 recession, payroll 

employment peaked at nearly 132.6 million. 

In the recession aftermath, payroll 

employment declined to a low of 129.8 

million in August 2003.

The recession that began in the first quarter of 

2001 had its origins in economic events in 

2000, when financial market reversals and 

inventory build-ups appear to have triggered 

increased layoffs and slower job growth. The 

disruptions of the September 11 terrorist 

attacks added pressure to an already declining 

economy. Job losses totaled 775,000 in the 

first six months of the recession (March 

through August 2001). Job losses during 

September through December amounted to 

1.1 million more. The overall recession 

impact was a loss of nearly 2.8 million jobs 

over 30 months beginning in March 2001 and 

extending through August 2003 – equal to 2.1 

percent of the pre-recession peak 

employment. 

In terms of the proportion of payroll jobs 

lost, the 2001 recession was more severe than 

the immediately previous (1990) recession, 

which recorded a 1.5 percent decline in

payroll employment, but less severe than the 

1981 recession, which recorded a 3.1 percent 

decrease in payroll employment.2

 

Job market recovery began after the low-point 

of August 2003 and has continued without 

interruption for 34 months through June 

2006. In the last four months of 2003, job 

gains totaled 501,000, or 125,000 per month, 

on average. In 2004, 2.1 million net new jobs 

were created; in 2005, the total was 2.0 

million; and in the first six months of 2006, 

854,000 net new jobs were created. 

The rebound of payroll jobs erased the 

recession losses by February 2005 when the 

total payroll employment surpassed the 

previous record of February 2001. By June 

2006, payroll employment was nearly 2.7 

million higher than the February 2001 mark. 

In 2005, the average level of payroll 

employment increased in 47 of the 50 states 

compared to 2004. Maine’s payroll 

employment level was unchanged, and 

Louisiana and Michigan recorded job losses. 

The average employment increase for the 47 

states that experienced job growth was 48,200, 

or nearly a 2.0 percent gain over 2004. The 

largest over-the-year increases in annual

average payroll employment were in Florida 

(+300,100), California (+254,800), and Texas 

(+237,900). The largest annual average 

percentage increase was in Nevada (6.2

percent). 

Figure 1-3. The Unemployment Rate Has 

Declined to Near-Record Lows

0

2

4

6

8

10

12

1970 1975 1980 1985 1990 1995 2000 2005

SOURCE: Bureau of Labor Statistics, Current Population Survey.

Percent Shaded areas indicate recessions

UNEMPLOYMENT

Figure 1-3 shows the trend of the 

unemployment rate from January 1970 to May 

2006. At 4.6 percent in June 2006, the 

national unemployment rate was at its lowest 

level in nearly five years. 

The unemployment rate declined from a postrecession high of 6.3 percent in June 2003. 

The unemployment rate was 4.2 percent in 

February 2001, just prior to the start of the 

last recession. The previous expansion lowpoint for the unemployment rate was 3.8 

percent in April 2000. 

June 2006 marked the 64th month since the 

start of the last recession in March 2001. The 

U.S. DEPARTMENT OF LABOR 2 AUGUST 2006 
america’s dynamic workforce: 2006 

4.6 percent unemployment rate in June 

compares to a 5.5 percent unemployment rate 

in the 64th month (October 1995) following 

the beginning of the previous recession in 

1990. 

At 6.3 percent in June 2003, the peak 

unemployment rate 

following the 2001 

recession was lower 

than the peak rate 

for any recession 

since the 6.1 percent 

peak following the 

1970 recession. The 

average peak rate for 

the previous five 

recessions (1970s – 

1990s) was 8.3 

percent. 

In 2005, on average, 

7.6 million persons 

were unemployed, 

and by June 2006 the number had declined to 

less than 7.0 million. These levels represent a 

significant decline from the 9.2 million 

unemployed at the post-recession peak in 

2003. 

The official unemployment rate calculation 

classifies persons as unemployed if they do 

not have a job, have actively looked for work 

in the prior 4 weeks, and are currently 

available for work. Each month, BLS also 

publishes alternative measures of labor 

underutilization, one of which includes 

persons not in the labor force who have 

looked for work in the previous 12 months, 

and who want a job even though they have 

not actively looked during the latest reporting 

period. 

In 2005, the number of persons in this 

“marginally attached” category totaled 1.5 

million, of whom 436,000 cited 

discouragement about job prospects as the 

reason for not actively looking for work. The 

remainder cited other reasons, such as lack of 

transportation, illness, or family 

responsibilities. The 1.5 million average level 

for this group in 2005 was down from 1.6 

million in 2004 and comparable to the 1994-

2004 average of 1.4 million. 

Including the 436,000 discouraged workers in 

the unemployment 

rate computation 

would have raised 

the 2005 average rate 

from 5.1 percent to 

5.4 percent. 

Including all 1.5 

million of the 

“marginally 

attached” would 

have raised the rate 

to 6.1 percent, below 

the post-recession 

peak of 7.0 percent 

for this expanded 

labor underutilization 

measure in 2003 and on par with the 6.1 

percent average since reporting of this 

measure began in 1994. 

Figure 1-4. More Than Half of the Population 16 

Years of Age and Over Worked in 2005

Employed

(141.7 million)

Others not in

the labor force

(75.2 million)

Marginally attached 

(1.5 million)

Unemployed

(7.6 million)

SOURCE: Bureau of Labor Statistics, Current Population Survey.

In 2005, the median duration of 

unemployment averaged 8.9 weeks for the 

year. On a monthly basis, the median

duration of unemployment generally declined 

in 2005 from 9.3 weeks in January to 8.5 

weeks in December. 

The post-recession high for median duration 

of unemployment was 11.5 weeks in June 

2003. Since the median duration series was 

first reported in 1967, the average has been 

7.1 weeks. 

Figure 1-4 shows the distribution in 2005 of 

the total 226.1 million noninstitutional civilian 

population ages 16 and older. The 141.7 

million employed comprised 62.7 percent. 

The 7.6 million unemployed comprised 3.4 

percent. Employed and unemployed 

combined comprise the labor force. 

The 1.5 million persons “marginally attached” 

to the labor force comprised 0.7 percent of 

U.S. DEPARTMENT OF LABOR 3 AUGUST 2006 
america’s dynamic workforce: 2006 

the civilian noninstitutional population ages 

16 and older. The other 75.2 million persons 

not in the labor force comprised 33.3 percent 

of the civilian noninstitutional population ages 

16 and older. The 75.2 million individuals 

not in the labor force included persons who 

cited reasons such as retirement, disability, 

and school attendance for being outside the 

labor force. 

Figure 1-5 shows average unemployment rates 

by state in 2005. Hawaii reported the lowest 

unemployment rate among the states (2.8 

percent). North Dakota had the next lowest 

rate (3.4 percent). closely followed by 

Vermont and Virginia (3.5 percent each). 

The highest rates were recorded in Mississippi 

and Louisiana (7.9 and 7.1 percent, 

respectively), reflecting the impact of the Gulf 

Coast hurricanes. 

The largest unemployment rate declines from 

2004 to 2005 occurred in Alabama and

Oregon (-1.2 percentage points each).

JOB OPENINGS AND TURNOVER

As the unemployment rate has fallen over the 

past two years, the number of unfilled job 

openings has steadily risen – another sign of a 

strengthening labor market. 

Figure 1-6 shows that data from the BLS Job 

Openings and Labor Turnover Survey 

(JOLTS). As part of the monthly survey, BLS 

asks employers each month the number of 

unfilled job openings that exist on the last 

business day of the month. As of the end of 

May 2006, there were 4.0 million unfilled job 

openings nationally . This was an increase of 

1.3 million from the post-recession low of 2.7 

million at the end of September 2003 and an 

increase of 500,000 from April 2005. 

Job openings include both existing jobs that 

have become vacant and new jobs that the 

employer has created but not yet filled. 

During the course of a month, many jobs 

become available and many are filled. 

Data for job openings on the last business day 

ALASKA

CALIF.

ARIZ.

NEV.

N.M.

HAWAII

ARK.

TEXAS

COLO.

UTAH

OKLA.

KAN. MO.

IDAHO

WYO.

ORE.

WASH.

MONT.

IOWA NEB.

S.D.

MINN.

N.D.

ALA.

LA.

MISS.

FLA.

TENN.

ILL.

KY.

GA.

S.C.

N.C.

VA.

W.VA.

D.C.

IND.

OHIO

MICH.

PA.

WIS.

MD.

DEL.

N.Y.

N.J.

VT.

CONN.

MASS. N.H.

R.I.

MAINE

New England

Middle

Atlantic

East

North Central

West

North Central

Pacific

Mountain

South Central

West

East

South Central

South

Atlantic

Unemployment rate

6.5% or higher

5.5% - 6.4%

4.5% - 5.4%

3.5% - 4.4%

3.4% or lower

Figure 1-5. In 2005, Unemployment Rates Were 

Lowest in the South Atlantic States and Highest 

in the East North Central States

NOTE: Data are 2005 annual averages.

SOURCE: Bureau of Labor Statistics, Local Areas Unemployment Statistics program.

Figure 1-6. Job Openings Have Increased by

Over One Million Since 2003

0

1

2

3

4

5

2001 2002 2003 2004 2005 2006

SOURCE: Bureau of Labor Statistics, Job Openings and Labor Turnover Survey.

Millions

Figure 1-7. Turnover Shows Labor Market

Dynamics

42

44

46

48

50

52

54

56

58

60

2001 2002 2003 2004 2005

Annual Hires Annual Separations

SOURCE: Bureau of Labor Statistics, Job Openings and Labor Turnover Survey.

Millions

U.S. DEPARTMENT OF LABOR 4 AUGUST 2006 
america’s dynamic workforce: 2006 

each month provide 

a snapshot estimate 

of the typical number 

of openings on a 

given day. A rising 

trend of openings 

suggests that job 

opportunities may be 

growing faster than 

qualified candidates 

are being found to 

fill them. 

The JOLTS program 

also collects data 

from employers on 

changes in payrolls. The numbers of 

separations and hires represent jobs vacated 

or filled, respectively. Some individuals 

change jobs or enter or leave the job market 

several times during a year, so the numbers of 

individuals who are involved in hires or 

separations is somewhat smaller than the 

numbers of jobs affected. 

Figure 1-7 shows annual turnover – hires and 

separations for 2001 to 2005. In 2005, 

employers made 57.4 million hires to fill 

vacancies or newly created jobs.3

 On average 

about 3.6 percent of jobs were filled or refilled each month. In parallel, over the course 

of 2005, separations totaled 54.5 million. 

Separations included 30.9 million voluntary 

quits by employees, 

19.9 million layoffs 

or discharges, and 

3.7 million other 

separations, 

including those 

because of 

retirement, disability 

and death. It is likely 

that many of the 

voluntary quits 

involved job changes 

from one employer 

to another, but the 

exact number is 

unknown. 

OUTPUT AND 

PRODUCTIVITY

The strength of the 

labor market is a 

reflection of the 

strong growth of real 

(after inflation 

adjustment) gross 

domestic product 

(GDP) in recent 

years. In 2005, real 

GDP reached nearly 

$12.5 trillion.4

 Since 1980, real GDP has 

more than doubled. 

On a per capita basis, GDP in 2005 was 

$42,090. This was 3.4 times the per capita real 

GDP of $12,567 in 1948 (2005 dollars), and 

1.7 times the per capita real GDP in 1980. 

Real GDP growth (Figure 1-8) averaged 3.2 

percent in 2005.5 This followed a 3.9 percent 

growth rate in 2004 and a 2.5 percent growth 

rate in 2003. Including the 2001 recession 

year, real GDP growth over the past five years 

averaged 2.4 percent per year, comparable to 

the 2.5 percent average over the 1991-1995 

recession and recovery period. Since 1948, 

annual real GDP growth has averaged 3.4 

percent.

Percent per year

1.4 1.5

2.5

3.1

-0.5

0.5

1.5

2.5

3.5

4.5

5.5

1979-

1990

1990-

1995

1995-

2000

2000-

2005

Figure 1-9. Labor Productivity Has Accelerated 

Since 1995, Led by Gains in Manufacturing

SOURCE: Bureau of Labor Statistics, Major Sector Productivity and Costs program.

Output per hour of all persons, nonfarm

business sector, 1979-2005

Output per hour of all persons, manufacturing

sector, 1987-2005

Percent per year

1.8

3.3

4.7

4.1

-0.5

0.5

1.5

2.5

3.5

4.5

5.5

1987-

1990

1990-

1995

1995-

2000

2000-

2005

Figure 1-8. Annual Average Growth of Real 

Gross Domestic Product (GDP), 1981 - 2005

-4

-2

0

2

4

6

8

 1983 1986 1989 1992 1995 1998 2001 2004 

Percent

SOURCE: Bureau of Economic Analysis.

Underlying recent 

strong GDP growth 

has been a notable 

increase in labor 

productivity (Figure 

1-9). Growth of 

labor productivity in 

the nonfarm business 

sector averaged 3.1 

percent per year over 

the 2000-2005 

period, more than 

twice the 1979-1990 

and 1990-1995 

averages. 

U.S. DEPARTMENT OF LABOR 5 AUGUST 2006 
america’s dynamic workforce: 2006 

Acceleration of productivity growth in the 

nonfarm business sector began in the late 

1990s as the annual average growth rate 

jumped to 2.5 percent. 

Growth in manufacturing productivity also 

has accelerated. Over the 2000-2005 period, 

output per hour grew 

at an average annual 

rate of 4.1 percent. 

This was a notable 

gain over the 1987-

1990 average of 1.8 

percent annual 

growth. 

COMPENSATION 

GAINS

Increasing real 

output and 

productivity have 

yielded real gains in 

compensation for 

employees. Compensation includes both 

wages and the cost of benefits such as health 

insurance, retirement plan contributions, paid 

leave, and other benefits. 

Figure 1-10 shows the index of real hourly 

compensation of employees in the nonfarm 

business sector. In Figure 1-10, the recent 

real compensation growth experience appears 

similar to the 1947-

1970 trend and 

stronger than the 

trend of 1970 to 

1995. 

In the late 1990s, the 

trend of real hourly 

compensation

increased notably, 

posting gains of 4.5 

percent in 1998, 2.6 

percent in 1999, and 

3.7 percent in 2000. 

Over the most recent 

five years (2001-

2005) the growth of 

real hourly compensation continued at a 

relatively robust rate of 1.4 percent per year, 

compared to the 1977-1997 average annual 

growth of 0.7 percent and to the 0.6 percent 

annual average rate for the comparable

business cycle years of 1991-1995. In 2005, 

the average level of 

real hourly 

compensation in the 

nonfarm business 

sector was 7.0 

percent higher than 

in 2000. 

Compensation 

measured by the 

Constant Dollar 

Employment Cost 

Index (CD-ECI) also 

shows gains in real 

hourly terms over 

the past five years. 

The average level of 

the CD-ECI in 2005 was 5.8 percent higher 

than in 2000; by comparison, the 1995 level 

was 3.0 percent higher than in 1990. The CDECI facilitates comparisons of changes in the 

wages and benefits components of 

compensation. In 2005, hourly wages were 

1.9 percent higher than in 2000. Between 

1990 and 1995, wages rose 1.1 percent. 

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

194719511955195919631967

197119751979198319871991199519992003

SOURCE: Bureau of Labor Statistics, Major Sector Productivity and Costs program.

Index, 1992 = 100

Figure 1-10. Real Hourly Compensation Index, 

Nonfarm Business Sector, 1947 – 2005

Much of the increase 

in compensation in 

the past five years 

was due to higher 

benefits costs. In 

2005, benefits costs 

measured by the CDECI were 16.0 

percent higher than 

in 2000. Rapidly 

rising benefits costs 

were also an element 

of rising 

compensation in the 

early 1990s.6

 

Benefits costs rose 

620

1,582

1,225

510

-1,349

-569

745

1,950

157

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

Management

Professional

Construction

Repair, etc.

Production

Admin. Support

Transportation

Sales

Service

Figure 1-11. Higher Paying Jobs Drove Much of

2001-2005 Employment Growth

Thousands Higher paying: 3.9 million

combined employment increase

Lower paying: 0.9 million

combined employment increase

NOTE: Across all occupations, average earnings in 2005 were $26.06 per hour.

SOURCE: Office of Assistant Secretary for Policy analysis of Bureau of Labor Statistics, National Compensation

Survey and Current Population Survey data.

$47.52 $40.91 $28.08 $27.83 $22.19 $20.69 $20.56 $18.53 $14.57

2005 hourly earnings:

U.S. DEPARTMENT OF LABOR 6 AUGUST 2006 
america’s dynamic workforce: 2006 

7.2 percent in constant dollars from 1990 to 

1995, compared to the 1.1 percent increase in 

real wages during that period. 

Figure 1-11 illustrates the relationship 

between increasing compensation and the 

changing structure of the labor market. Over 

the past five years, job growth was greater 

among relatively well compensated 

occupations: management, business and 

finance; professional and related; construction 

and extraction occupations; and repair, 

maintenance and installation occupations. 

Each of these four occupational groups paid 

above the average compensation of $26.06 

per hour in 2005.7

 These four highercompensation occupations accounted for 3.9 

million net additional jobs between 2001 and 

2005.8 The five lower-compensation 

occupations together accounted for 934,000 

net additional jobs. Two of the latter 

occupational categories had net losses of jobs 

over the period: production occupations (-1.3 

million) and administrative support 

occupations (-569,000).9 For the lowercompensation occupations, employment 

losses in production occupations and in

administrative support occupations offset 

gains in transportation, sales, and service 

occupations. 

A GOOD YEAR

2005 was a good year for American workers 

and the first half of 2006 continued the strong 

trend. In 2005, job growth resulted in 2.0 

million net new jobs and the unemployment 

rate averaged 5.1 percent over the year. The 

pace of job growth in the first half of 2006 

suggests that we are moving into a steady and 

sustainable economic path. With the 

unemployment rate dropping below 5 percent 

in the first half of 2006, the labor market 

outlook is favorable for those seeking to enter 

or re-enter the labor market. The American 

economy is strong, and our success in meeting 

the challenges of recent years while 

continuing economic expansion provides a 

foundation from which we can expect to 

successfully meet future challenges that may 

come our way. 

U.S. DEPARTMENT OF LABOR 7 AUGUST 2006 
america’s dynamic workforce: 2006 

2 Strong International Competitiveness 

Figure 2-1. GDP Per Capita in 2004,

United States and Selected Other Nations

40

32

28 30 28 28

25

32 30 30

21

0

5

10

15

20

25

30

35

40

45

US

Canada

Eurozone

France

Germany

Italy

Spain

UK

Australia

Japan

South Korea

SOURCE: BLS and World Bank. Extracted from Chart 1.1, “A Chartbook of International Labor Comparisons,”

U.S. Department of Labor, June 2006.

Thousands, U.S. Dollars, Purchasing Power Parity Adjusted

The strength and productivity of American 

workers are reflected in high per capita

output. U.S. per capita gross domestic 

product (GDP) was $39,900 in 2004, the most 

recent year for which broad international 

comparisons of per capita GDP can be made 

on a purchasing power adjusted basis. (See 

Figure 2-1.) 

Among member countries of the 

Organization for Economic Cooperation and 

Development (OECD), the United States 

ranked near the top in terms of GDP per 

capita. Only Luxembourg, Norway, and 

Ireland (not shown in the figure) had higher 

per capita GDP. Among large major 

economies, U.S. per capita GDP was more 

than 20 percent higher than that of Australia 

or Canada. Among the largest members of 

the European Monetary Union (Eurozone), 

per capita GDP ranged from $25,300 in Spain 

to $29,600 in France.10 Overall, U.S. per 

capita GDP was 34 percent higher than in 

Japan.

46.3

35.8

40.3

47.0

42.5

35.9 37.1 38.9 37.2

32.4

18.4

0

10

20

30

40

50

60

US

Canada

Eurozone

France

Germany

Italy

Spain

UK

Australia

Japan

South Korea

SOURCE: OECD Productivity Database, January 2006.

U.S. Dollars

Figure 2-2. GDP Per Hour Worked in 2004,

United States and Selected Other Nations

PRODUCTIVITY IS CRITICAL

Underlying the United States’ high per capita 

GDP is our dynamic, productive workforce. 

High output per capita reflects efficiency 

(output per hour worked) as shown in Figure 

2-2 and effort (annual hours worked per 

capita) as shown in Figure 2-3. 

859 890

698

617 678

760 698

793

872 914

1122

0

200

400

600

800

1000

1200

1400

US

Canada

Eurozone

France

Germany

Italy

Spain

UK

Australia

Japan

South Korea

SOURCE: OECD Productivity Database, January 2006.

Hours

Figure 2-3. Annual Hours Worked Per Capita in

2004, United States and Selected Other Nations

On average, each hour on the job contributed 

$46.30 to domestic output. Among the large, 

major economies shown in Figures 2-1 and 2-

2, only France achieved greater GDP per hour 

worked ($47 per hour), but lower effort 

resulted in lower per capita output for France 

compared to the United States. 

Other Eurozone countries exhibited less 

efficiency, and the Eurozone as a whole had 

U.S. DEPARTMENT OF LABOR 8 AUGUST 2006 
america’s dynamic workforce: 2006 

an average GDP per hour of $40.30 in 2004. 

Indeed, a number of European economies, as 

well as Canada and Australia, posted figures 

more than $10.00 per hour lower than the 

U.S. figure. 

The U.S. workforce is a leader in productivity, 

but what distinguishes the United States from 

other productivity leaders, like France, is the 

fact that the U.S. workforce is also a leader in 

work effort, that is, hours on the job. 

Hours worked per capita is a single measure 

of the labor activity across the population – 

taking into account both the proportion of 

the population that is employed and the 

number of hours people work. In 2004, per 

capita hours worked totaled 859 hours, 

placing the United States in the same 

neighborhood as Australia and Canada. 

South Korea easily surpassed these countries 

by posting 1,122 hours per capita. The gap 

reflected the 2,394 hours an average South 

Korean employee worked per year in 2004; in 

contrast, an average U.S. worker worked 1,808 

hours. On the flip side was France’s relatively 

low hours per capita. Here lies the difference 

between per capita GDP in the United States 

and France. In broad terms, the two 

countries’ workers are similarly productive, 

but the French simply work fewer hours. 

With respect to the economic indicators just 

discussed, the United States generally has led 

most other OECD nations over the past 10 

years. The same holds true across most labor 

market measures, and it reflects strength 

throughout the U.S. labor market. 

At 5.1 percent, the U.S. unemployment rate in 

2005 was well below that of most of its 

European peers. (See Figure 2-4.) Both 

Japan and South Korea benefited from even 

lower rates, continuing long-term trends for 

both countries. The United Kingdom’s rate 

has hovered around 5 percent for several 

years, after trending down from over 10 

percent in 1993. The U.S. unemployment rate 

edged down further by mid-2006. In May, it 

reached a nearly 5-year low of 4.6 percent. 

Figure 2-4. Unemployment Rates in 2005,

United States and Selected Nations

5.1

6.8

8.6

9.5 9.5

7.7

9.2

4.7 5.1 4.4 3.7

0

5

10

15

US

Canada

Eurozone

France

Germany

Italy

Spain

UK

Australia

Japan

South Korea

NOTE: The figures are standardized unemployment rates published by the OECD.

SOURCE: OECD Main Economic Indicators, August 2006.

Percent

EMPLOYMENT GROWTH

The best route to low unemployment is

strong employment growth, and the United 

States has enjoyed such growth. The labor 

markets of both the United States and the 

European Union (EU-15) are quite similar in 

size and make for interesting comparisons.11 

Between 1990 and 2005, civilian employment 

in the United States rose 19.3 percent, while 

the comparable measure for the EU-15 rose 

11.1 percent. (See Figure 2-5.) Employment 

clearly has increased in both areas, but the 

Figure 2-5. Employment in the United States and

the European Union, 1990-2005

110

120

130

140

150

1990 1992 1994 1996 1998 2000 2002 2004

United States

EU-15

SOURCE: Haver Analytics (Eurostat and Bureau of Labor Statistics, Current Population Survey).

Millions

U.S. DEPARTMENT OF LABOR 9 AUGUST 2006 
america’s dynamic workforce: 2006 

EU-15 has outpaced 

the United States in 

employment growth 

for only five of the 

past 15 years, most 

notably during and 

after the last two 

U.S. recessions, 

1990-91 and 2001. 

Since 2003, the 

United States again 

has taken the lead, 

while a number of 

European countries 

have seen somewhat 

stagnant employment 

growth, most notably 

France and 

Germany. 

On the surface, 

Japan’s very low 

unemployment rates 

belie its employment 

woes. Japan saw six 

consecutive years of 

employment declines 

between 1997 and 

2003, as the number 

of employed fell by 

2.4 million (3.7 

percent). The subsequent recovery in Japan 

has boosted employment by only 400,000 

persons (0.6 percent).

In addition to tepid job growth, a common 

thread between Japan and Europe is the 

incidence of long-term unemployment, 

defined as a spell of unemployment lasting at 

least 12 months. (See Figure 2-6.) In Japan, 

the long-term unemployed account for onethird of the total in 2005; in the European 

Union, the figure was over 44 percent. Even 

the United Kingdom’s share doubled the 

roughly 12 percent seen in the United States. 

Despite its relatively higher unemployment 

rate, Canada’s incidence of long-term 

unemployment was lower than that of the 

United States. South 

Korea enjoyed very 

low overall 

unemployment and 

very low incidence of 

long-term 

unemployment. 

Figure 2-6. Incidence of Long-term Unemployment 

in 2005, United States and Selected Other Nations

11.8 9.6

44.3 42.5

54.0 52.2

32.6

22.4

17.7

33.3

0.8

0

20

40

60

US

Canada

EU-15

France

Germany

Italy

Spain

UK

Australia

Japan

South Korea

NOTE: Long-term refers to persons unemployed 12 months and over.

SOURCE: OECD Employment Outlook 2006.

Percent

LABOR FORCE 

PARTICIPATION

In Figure 2-7, the 

blue bars show labor 

force participation 

rates for persons 

ages 15 or 16 to 64 

across major OECD 

economies in 2005. 

The U.S. labor force 

participation rate, 

75.4 percent (for 

ages 16-64) was 

somewhat higher 

than the 71.3 percent 

registered in the 

European Union (for 

ages 15.64), 

The employmentpopulation ratio (red 

bars in Figure 2-7) 

provides another 

measure of labor force attachment, more 

specifically, successful attachment, as it

excludes the unemployed from the ratio. The 

difference between the bars indicating labor 

force participation rates and the bars 

indicating the employment-population ratio 

provides a visual reference for comparison of 

relative unemployment rates. 

Figure 2-7. Labor Force Participation Rates

and Employment-Population Ratios in 2005,

United States and Selected Other Nations

0

20

40

60

80

100

US

Canada

EU-15

France

Germany

Italy

Spain

UK

Australia

Japan

South Korea

Labor force participation rate Employment-population ratio

NOTE: For the U.S., the participation rate is for persons ages 16 to 64.

SOURCE: OECD Employment Outlook 2006.

Percent of persons ages 15 to 64

As with the labor force participation rate, 

there were only minor differences between 

the United States and other countries with 

low unemployment rates. The United States, 

Canada, United Kingdom, Australia, and 

Japan all had employment-population ratios in 

the neighborhood of 70 percent. The notably 

lower percentages for South Korea reflect its 

U.S. DEPARTMENT OF LABOR 10 AUGUST 2006 
america’s dynamic workforce: 2006 

relatively low labor force participation rates. 

For the major European economies 

(excluding the United Kingdom), the reduced 

employment-population ratios reflect their 

elevated unemployment rates as well. 

BROAD STRENGTH

These broad labor market indicators highlight 

the strengths of the U.S. economy and labor 

market. The successful record of the United 

States across a broad range of indicators and 

over an extended time period is remarkable 

for a mature industrial economy. The fact 

that the United States has achieved these 

results in the face of growing world-wide 

competition and other challenges, both 

natural and man-made, is a further testament 

to the robustness and resilience of an 

economic system based on free and open 

markets. High and growing output per capita, 

growing employment, high labor force 

participation rates and employmentpopulation ratios, strong productivity growth 

and low unemployment relative to other 

nations reflect the energy, creativity, skills, 

flexibility and competitiveness of American 

workers and employers.

 

U.S. DEPARTMENT OF LABOR 11 AUGUST 2006 
america’s dynamic workforce: 2006 

3 Dynamic Labor Market Structure 

A notable feature of 

the U.S. labor market 

is its constant activity 

as people freely 

move in and out of 

the labor market, as 

total jobs grow, and 

as workers change 

jobs. High turnover 

in the United States 

– as evidenced by 

high levels of both 

separations and hires 

– partially reflects 

broad changes over 

time in the economy’s industry and 

occupation patterns. As the historical 

employment shift away from the goodsproducing sector continues, new employment 

patterns emerge. 

Robust employment growth is the norm. 

Over the past half-century (1955 to 2005) 

payroll employment increased from 50.7 

million to 133.5 million as our growing 

population found new jobs in a growing 

economy. The total number of jobs has 

doubled since 1967, and over the most recent 

15 years (1990 to 2005) total payrolls 

increased by 22 percent. 

Annual employment growth has averaged 2.0 

percent since 1955, and only 15 years of the 

past 50 have seen annual payroll employment 

growth under 1.0 percent, typically years 

during or following recessions. Payroll 

employment in 2005 showed a 1.5 percent 

gain over 2004. 

However, robust total job growth has masked 

significant changes in the industrial and 

occupational structure of the labor market. 

Employment growth rates have varied widely 

among industries as changing demand, 

technology and 

global competition 

have reshaped the 

labor market. 

STRUCTURAL 

CHANGE

Figure 3-1 shows the 

long-term trend of 

shifting relative share 

of employment 

toward the services 

sector of the 

economy. The 

service sector 

accounted for 62 

percent of nonfarm payroll employment in 

1940, and that share rose to 83 percent in 

2005. The service sector share of payroll 

employment is projected to rise to nearly 86 

percent by 2014. 

Figure 3-1. Goods-Producing and ServiceProviding Industry Employment Shares

0%

20%

40%

60%

80%

100%

1940 1950 1960 1970 1980 1990 2000 2005 2014

Goods producing Service providing (proj.)

SOURCE: Bureau of Labor Statistics, Current Employment Statistics and Employment Projections programs.

Over the long time period shown in Figure 3-

1, total employment has grown in both the 

goods-producing and service-providing 

sectors, but the overwhelming majority of net 

new jobs have been in the service sector. 

From 1940 to 2005, 9.8 million net new jobs 

were created in the goods- producing sector, 

and 91.3 million net new jobs were created in 

the service-providing sector. 

The growth of service-providing industries 

has been broad based, and it has been 

particularly vigorous in private health care. 

The health care industry and health care 

occupations throughout the economy have 

expanded in size and scope in response to 

technological advances in medicine and an 

aging population. The professional and 

business services industry sector has grown as 

a consequence of higher demand for 

knowledge-based and technical services. 

U.S. DEPARTMENT OF LABOR 12 AUGUST 2006 
america’s dynamic workforce: 2006 

As changing 

technology and 

global competition 

place a premium on 

organizational 

efficiency and quick 

response, the 

demand for a flexible 

labor supply has 

spurred employment 

growth in the 

temporary help 

sector. The changes 

in the industrial 

structure of 

employment have 

also been reflected in changes in the 

occupational structure of employment. As 

service-related industries have grown, 

employment growth has also shifted toward 

managerial, professional, and related 

occupations. 

These fundamental changes have presented a 

challenge to meet new demands for skills, 

knowledge and talents as labor demand has 

shifted to expanding industries and 

occupations.

Figure 3-2 illustrates the on-going shift of the 

industrial structure of employment in terms of 

the 1990 to 2005 changes in employment for 

selected major 

industry sectors. 

The 6.0 million 

increase in 

employment for the 

professional and 

business services 

industry sector and 

the 6.4 million 

increase in 

employment for the 

education and health 

services sector stand 

in contrast to net job 

losses for 

manufacturing. 

Those two sectors 

accounted for over 

half (51.7 percent) of 

net nonfarm payroll 

employment growth 

over the past 15 

years. In 2005, the 

17.3 million jobs in 

the private education 

and health industries 

sector accounted for 

13 percent of all 

payroll jobs and 

comprised the 

second largest of the 

major sectors. 

Figure 3-2. Employment Change Between 1990

and 2005, Major Industry Sectors

SOURCE: Bureau of Labor Statistics, Current Employment Statistics program.

3.4

1.1

3.5

6.4

6.0

1.5

0.4

-0.2

0.9

2.1

0.5

-1.7

-1.8

2.0

-0.1

-2 0 2 4 6

Government

Other services

Leisure and hospitality

Education and health services

Professional and business services

Financial activities

Information

Utilities

Transportation and warehousing

Retail trade

Wholesale trade

Nondurable goods manufacturing 

Durable goods manufacturing 

Construction

Natural resources and mining

8

Millions

Representing nearly 4 out of 10 nonfarm jobs 

in 1940, the goods-producing industries have 

seen their share of employment diminish 

steadily over time. By 1990, the goodsproducing sector accounted for just 21.7 

percent of nonfarm payroll jobs, and, in 2005, 

goods-producing industries accounted for just 

16.6 percent. The goods-producing 

industries’ share of nonfarm payroll 

employment is projected to drop to 14.4 

percent by 2014. 

GOODS-PRODUCING INDUSTRIES

Figure 3-3 shows indexed employment series 

for the goods-producing industry 

supersectors, 1940 to 

2005. The data in 

the chart illustrate 

the change in payroll 

employment for each 

goods-producing 

sector compared to 

that sector’s 1940 

level. The indexed 

trend of total

nonfarm payroll 

employment is also 

shown for 

comparison. 

Construction has 

been the exception 

Figure 3-3. Indexed Total Nonfarm and GoodsProducing Employment, 1940 to 2005

0

100

200

300

400

500

600

1940 1950 1960 1970 1980 1990 2000

SOURCE: Bureau of Labor Statistics, Current Employment Statistics program.

Index, 1940 = 100

Construction

Total nonfarm

Manufacturing

Natural resources and mining

U.S. DEPARTMENT OF LABOR 13 AUGUST 2006 
america’s dynamic workforce: 2006 

for job growth within the goods-producing 

industries. Construction job growth generally 

has kept pace with total nonfarm 

employment, with the exception of brief 

cyclical downturns offset by quick recoveries. 

The rate of growth following the 1990-91 

recession held steady through most of the 

decade. Only minor job losses came in the 

period surrounding the 2001 recession, and 

rapid job growth soon resumed. In 2005, the 

employment index for construction stood at 

538, indicating that the construction industry 

employment level of 7.3 million in 2005 was 

more than 5 times greater than the level in 

1940. By comparison, manufacturing 

employment (index = 141) was 41 percent 

higher than in 1940 and significantly below 

the all-time high 

manufacturing 

employment index 

value of 192 in 1979. 

At 14.2 million in 

2005, manufacturing 

employment 

reflected a steady 

decline over the past 

quarter century of 

nearly 27 percent. 

In 1950, construction 

accounted for 13.9 

percent of goodsproducing jobs. 

Over the next 40 

years, the share rose 

to 22.2 percent. In 

2005, just 15 years 

later, construction 

represented 32.9 

percent of goodsproducing jobs. 

Steady growth in 

construction

employment has 

contrasted with flat 

or falling 

employment in 

manufacturing. The trend in mining 

employment was weak until a hiring boom 

occurred in recent years. Rising petroleum 

prices have fueled much of the growth, 

although both coal and metal mining have 

reversed their long-term declines as well. 

SERVICE-PROVIDING INDUSTRIES

Among the service-providing industries, two 

major industries stand out for their job 

growth since 1990. (See Figure 3-4.) 

Professional and business services, and private 

education and health care and social assistance 

services together represented just 10.9 percent 

of nonfarm payroll employment in 1940. 

They represented nearly one in five jobs by 

1990 and over one-quarter by 2005. By 2014, 

they are projected to account for nearly three 

out of ten nonfarm 

payroll jobs. The 

growth of these two 

sectors has notably 

exceeded the growth 

of government (the 

leading services 

sector in terms of 

employment) and all 

other private service 

industries. 

Figure 3-5. Employment Change, Selected 

Professional and Business Services, 1990-2005

SOURCE: Bureau of Labor Statistics, Current Employment Statistics program.

0 500 1000 1500 2000 2500

Waste management and remediation

Services to buildings and dwellings

Business support services

Employment services

Management of companies/ enterprises

Management & technical consulting

Computer sys. design & related serv.

Architectural and engineering services

Accounting and bookkeeping services

Legal services

Thousands

Figure 3-4. Growing Service-Providing Industry

Employment, 1940–2005 and Projected 2014

0

10

20

30

40

50

1940 1950 1960 1970 1980 1990 2000 2005 2014

(proj.)

Professional & business services Education & health services

Government Other service-providing

SOURCE: Bureau of Labor Statistics, Current Employment Statistics and Employment Projections programs.

Percent of Jobs

Payroll employment 

throughout 

professional and 

business services has 

expanded notably 

over the past decade 

and a half.12 Within 

the sector, only travel 

arrangement services 

lost jobs, with all the 

declines coming 

since 1998. Gains 

were especially 

notable in three 

industries: 

employment services; 

computer systems 

design and related 

U.S. DEPARTMENT OF LABOR 14 AUGUST 2006 
america’s dynamic workforce: 2006 

services; and management, scientific, and 

technical consulting. (See Figure 3-5.) 

These three industries accounted for just onefifth of professional and business services 

employment in 1990 but over half the job 

gains between 1990 and 2005. This pattern is 

expected to continue to 2014. 

Employment services saw a 139 percent surge 

in employment between 1990 and 2005. The 

expansion of temporary help services explains 

much of the strength in employment services. 

Temporary help firms provide a just-in-time 

labor supply that allows firms to adjust their 

labor input during times of uncertain demand. 

For some workers, temporary work can 

facilitate entry or re-entry into the labor 

market, particularly for part-time or 

intermittent assignments. This flexibility 

translates into relatively low wages for a 

number of occupations, versus the wage rates 

for the same occupations outside the 

temporary help industry. There are important 

exceptions, however; nurses and computer 

programmers on temporary help assignments 

earn more per hour, on average, than their 

counterparts in other industries.13

The computer systems design and 

management and technical consulting 

industries are notable not only for their 

impressive employment growth but also for 

their relatively high earnings. Between 1990 

and 2005, these 

industries together 

added 1.3 million 

jobs, a 177 percent 

jump, while private 

service-providing 

employment in 

general rose by onethird. In 1990, 

workers in the two 

industries earned 

more than the 

average for all private 

service-providing 

industries, and their earnings increased more 

over the subsequent 15 years. Average weekly 

earnings for nonsupervisory workers 

increased 69.1 percent to $848 in management 

and technical consulting and 72.3 percent to 

$1,203 in computer systems design services. 

Over the same period, average weekly 

earnings for private service-providing 

industries increased 61.2 percent to $509. 

The health care sector includes some of the 

largest and fastest-growing private industries 

in terms of employment. With 12.3 million 

payroll employees in 2005, the private health 

care industry comprised 9.2 percent of all 

payroll jobs and 71 percent of total jobs in the 

large education and health industry supersector. Overall health care sector 

employment grew by 4.1 million between 

1990 and 2005 – a 50 percent increase. 

Within the health care sector, the ambulatory 

care industry group grew by 80 percent (2.3 

million jobs) from 1990 to a total of 5.1 

million jobs in 2005, making it the largest 

subcategory within health care. (See Figure 

3.6.) This industry includes offices of 

physicians and other health practitioners, 

outpatient care centers, medical laboratories, 

and home health care services. 

Private hospitals added 834,000 jobs from 

1990, bringing 2005 hospital employment to 

4.3 million, a 23.8 percent increase. Nursing 

and residential care 

facilities added 1.0 

million jobs, a 54 

percent increase that 

brought total 

employment in 

nursing and 

residential care 

facilities to 2.9 

million in 2005. 

Figure 3-6. Distribution of Health Care Industry

Employment, 2005

SOURCE: Bureau of Labor Statistics, Current Employment Statistics program.

Nursing and

residential care

facilities,

2.9 million jobs

Hospitals,

4.3 million jobs

Ambulatory

health care, 

5.1 million jobs

Another long-term 

trend evidenced by 

industry employment 

shifts is a transition 

U.S. DEPARTMENT OF LABOR 15 AUGUST 2006 
america’s dynamic workforce: 2006 

in retail trade away from traditional food and 

beverage stores and toward general 

merchandise stores – particularly toward 

warehouse clubs, superstores, and discount 

department stores.14 

Data on weekly earnings of nonsupervisory 

workers in these 

industries do not 

suggest that these 

shifts are 

systematically 

resulting in the 

replacement of 

higher-paying jobs 

with lower-paying 

jobs. As of 2005, 

weekly earnings in 

food and beverage 

stores were $326, 

versus $320 in 

discount department 

stores and $342 in 

warehouse clubs and super centers. Although 

weekly earnings growth has stagnated in food 

and beverage stores in recent years, earnings 

are rising steadily in the latter two industries. 

BUSINESS EMPLOYMENT DYNAMICS

Figure 3-7 shows another perspective on the 

dynamics of the American labor market – 

gross job creation and loss as business 

establishments start or cease operations and 

expand or contract the size of their payrolls. 

The chart displays quarterly estimates of gross 

job gains and losses from first quarter 1995 

through third quarter 2005 (not seasonally 

adjusted). The data are derived from the BLS 

Business Employment Dynamics (BED) 

program and show the transitory job flows 

into and out of the labor market. These data 

include the flow of jobs resulting from the 

constant reshuffling of employment 

opportunities in the economy, as well as 

seasonal fluctuations, as businesses adjust 

their payrolls and respond to the forces of 

supply and demand. 

During the period, job creation because of the 

opening of new establishments or the 

expansion of existing ones totaled 352 million, 

and job elimination because of closing of 

some establishments or reductions in 

numbers of jobs at others totaled 337 

million.15 The flows 

of job creation and 

elimination in the 

dynamic labor 

market somewhat 

mirrored the patterns 

of net job creation or 

loss shown earlier in 

Figure 3-2, but not 

entirely. 

The professional and 

business services 

industry sector 

experienced a high 

number of gross job 

gains – 63.1 million, 

but during the same period closing or 

contracting establishments lost 58.6 million 

jobs. While this growing sector experienced 

significant net job increases, the forces of 

change sweeping across the economy were 

more complex than the net change suggests. 

This growing sector experienced both the 

highest number of jobs created and the 

highest number of jobs eliminated as 

competition sorted out the successes and the 

failures among new and existing business 

establishments. 

Figure 3-7. Sum of Quarterly Gross Job Gains 

and Losses, 1995–2005

NOTE: Data are not seasonally adjusted.

SOURCE: Bureau of Labor Statistics, Business Employment Dynamics program.

0 25 50 7

Natural resources & mining

Construction

Manufacturing

Wholesale trade

Retail trade

Transportation & warehousing

Utilities

Information

Financial activities

Professional & business services

Education & health services

Leisure & hospitality

Other services

5

Gross job gains

Gross job losses

Millions

The retail trade and the leisure and hospitality 

industry sectors also experienced high levels 

of job creation and elimination during the 

period, despite relatively smaller net job 

growth compared to the professional and 

business services sector. The high rates of 

gross job gains and losses for these industries 

reflect the characteristics of competition in 

those industries – a relatively high turnover of 

establishments (openings and closings) as well 

as seasonal expansions and contractions of 

payrolls in these highly competitive and 

U.S. DEPARTMENT OF LABOR 16 AUGUST 2006 
america’s dynamic workforce: 2006 

rapidly changing sectors. The relatively 

smaller experience of job creation and

elimination for the education and health care 

sector reflects the greater stability and 

longevity of establishments in these industries. 

It is notable, also, that manufacturing, which 

experienced net employment decline, also 

experienced relatively high levels of job 

creation in parallel with job elimination. In 

manufacturing 35.1 million jobs were 

eliminated in aggregate during the period, but 

job gains in new or expanding establishments 

totaled 32 million. While the overall level of 

jobs in manufacturing was falling over the 

past decade, new jobs were also being 

created.16

OCCUPATIONAL 

TRENDS

Occupational

employment data 

also highlight

patterns of structural 

change that are 

expected to persist. 

Figure 3-8 shows the 

level of employment 

by occupation in 

1985 and 2005.17 

Over the past 20 

years the major 

occupation groups 

with both the fastest 

percentage growth 

and the largest 

numerical increase in 

employment were 

professional and 

related occupations 

and management, 

business and 

financial operations 

occupations. 

Professional and 

related occupations 

accounted for 20.3 percent (28.8 million) of 

total employment in 2005, up from 16.9 

percent in 1985. Employment growth of 10.7 

million in professional and related 

occupations accounted for 30.9 percent of 

total employment growth over the 1985 to 

2005 period. 

Management, business and financial 

operations occupations accounted for 14.5 

percent (20.5 million) of total employment in 

2005, up from 12.4 percent in 1985. 

Employment growth of 7.2 million in 

management, business and financial 

operations occupations accounted for 20.8 

percent of total employment growth over the 

1985 to 2005 period. 

Projections of 

employment growth 

from 2004 to 2014 

show continuation of 

the trends of growth 

in management and 

professional 

occupations. Figure 

3-9 shows both 

projected job growth 

and job openings for 

net replacement of 

retirees and others 

who are expected to 

permanently leave 

occupations over the 

2004-to-2014 period. 

The projections 

show that job 

demand will be 

strong in coming 

years. Over the 

period, net job 

growth is expected to 

total 18.9 million. In 

addition to job 

growth, net 

replacement for 

retirees and others 

leaving the labor 

Figure 3-8. Employment by Occupational

Categories, 1985 and 2005

SOURCE: Bureau of Labor Statistics, Current Population Survey. Data are from the specially constructed conversion

series available online at http://ww.bls.gov/cps/constio198399.htm.

13.3

18.1

16.6

12.2

17.5

1.1

6.9

4.2

9.8

7.7

20.5

28.8

23.1

16.4

19.5

1.0

9.1

5.2

9.4

8.7

0 5 10 15 20 25 30 35

Management, business, and financial

operations

Professional and related

Service

Sales and related

Office and administrative support

Farming, fishing, and forestry

Construction and extraction

Installation, maintenance, and repair

Production

Transportation and material moving

1985 2005

Millions

Figure 3-9. Employment Growth and Net 

Replacement by Occupations, 2004 to 2014

SOURCE: Bureau of Labor Statistics, Employment Projections Program.

2.2

6.0

5.3

1.5

1.4

0.0

0.9

0.7

-0.1

1.1

2.8

5.5

8.0

5.0

6.1

0.3

1.5

1.3

3.0

2.3

-1 0 1 2 3 4 5 6 7 8 9

Management, business & financial

Professional and related

Service

Sales and related

Office & administrative

Farming, fishing & forestry

Construction & extraction

Installation, maintenance & repair

Production 

Transportation & material moving Net replacements

Employment growth

Millions

U.S. DEPARTMENT OF LABOR 17 AUGUST 2006 
america’s dynamic workforce: 2006 

force is expected to provide another 35.8 

million job openings. Together, growth plus 

net replacement will yield 54.7 million 

cumulative job openings between 2004 and 

2014. 

Growth-related job openings over the 10-year 

period will be greatest in professional and 

related occupations (6.0 million jobs) and in 

service occupations (5.3 million). Growthrelated job openings will also be strong in the 

management, business, and financial 

occupations (2.3 million) and in office and 

administrative support occupations (2.0 

million). Only one major occupation is 

projected to see no increase in job openings 

due to growth: farming, fishing, and forestry 

occupations.

The largest major occupation category in 

terms of replacement needs will be the service 

occupations group, which includes a broad 

range of detailed occupation categories

including police officers, firefighters, barbers, 

hairstylists, cooks, waiters, health care aides, 

janitors, and maids. Between 2004 and 2014 

it is projected that 8.0 million replacement job 

openings will need to be filled in the service 

occupations category in addition to the 5.3 

million jobs expected to open because of 

growth. 

Professional and related occupations are 

expected to need 5.5 million jobs filled for 

replacement needs in addition to the 6.0 

million openings associated with occupational 

employment growth. Within the professional 

and related occupations category, health care 

workers will be especially in demand. 

Between 2004 and 2014, it is projected that 

3.0 million job openings for growth plus net 

replacement will become available in the 

professional categories of health care 

practitioners and technical occupations. These 

will include 1.2 million registered nurses and 

1.0 million health technologists and 

technicians. Management occupations will 

have growth and net replacement openings 

for 105,000 medical and health services 

managers. Service occupations will include 

openings for 1.7 million health care support 

services workers. 

Office and administrative occupation are 

projected to yield 5.5 million job openings for 

replacement needs, in addition to the 

moderate growth needs of 2.0 million. Even 

production occupations will need workers: 

2.5 million net replacement openings are 

projected despite little increase in job 

openings due to growth. In America’s 

dynamic labor market, job opportunities can 

persist even in shrinking industries or 

occupations. 

PERSISTENT CHANGE

The American labor market has met the 

challenges of increasing global competition, 

changing technology and shifting market 

demands that have reshaped the industrial and 

occupation structure of employment. The 

willingness of American workers to adapt to 

changing realities, to learn new skills, and to 

seize new opportunities have helped keep 

employment growth high and unemployment 

low. The outlook for the future is for 

continued structural change from both the 

industrial and occupational perspectives and 

for continuing growth of job opportunities.

U.S. DEPARTMENT OF LABOR 18 AUGUST 2006 
america’s dynamic workforce: 2006 

4 Education Pays 

Sixty-five years ago only about one in twenty 

Americans ages 25 or older was a college 

graduate. Many jobs required no more than 

basic literacy and physical skills largely learned 

through experience. The change in the 

educational attainment of the labor force 

since the 1940s has been dramatic. 

Figure 4-1 shows that by 1970, 14.1 percent 

of the labor force ages 25 to 64 (8.7 million 

persons) had completed four years of 

college.18 In addition, 11.8 percent (7.3 

million persons) had completed some college, 

but were short of completing a four-year 

program. The group with some college 

includes those with 

two-year associate 

degrees or postsecondary vocational 

certificates in

addition to college 

dropouts who did 

not complete any 

degree program. 

As recently as 1970, 

a high school 

diploma was 

sufficient for most 

jobs, and 38.1 

percent of the labor 

force (23.5 million 

persons) had completed no education beyond 

high school (12th grade). In 1970, 36.1 

percent of the labor force (22.3 million 

persons) had not completed high school. 

RISING EDUCATIONAL ATTAINMENT

The proportion of persons ages 25 to 64 years 

old with some college (or an associate degree) 

more than doubled between 1970 and 2005 

(from 11.8 percent to 27.8 percent). The 

share with a bachelor’s degree or higher also 

more than doubled over the period (from 14.1 

percent to 32.3 percent). In contrast, the 

share of the labor force with less than a high 

school diploma declined markedly. 

In 2005, 32.3 percent (38.9. million) of labor 

force members age 25 to 64 had earned a 

bachelor’s degree or higher, 27.8 percent (33.4 

million) had undertaken some college but had 

not attained a baccalaureate degree, 30.1 

percent (36.3 million) had attained only a high 

school diploma (or GED certificate), and 9.8 

percent (11.8 million) had attained less than a 

complete high school education (no diploma 

or GED certificate). 

The number of 

people age 25-64 in 

the labor force with 

less than a complete 

high school 

education fell by 

nearly half (- 47.1 

percent) since 1970. 

Over that period the 

number of persons 

with some postsecondary education 

(some college, 

associate degree, 

bachelor’s degree or 

higher) increased from 16.0 million (25.9 

percent of the age 25-64 labor force) to 72.4 

million (60.1 percent of the age 25 to 64 labor 

force). 

NOTE: Data are from the March 1970-2005 Current Population Survey and are for persons age 25-64. Data

beginning in 1992 are based on highest diploma or degree received; prior to this time, data were based on

years of school completed.

SOURCE: Bureau of Labor Statistics, Current Population Survey.

Figure 4-1. Rising Educational Attainment of the 

Labor Force Reflects Labor Market Changes

1970 1975 1980 1985 1990 1995 2000 2005

Percent of Labor Force Ages 25-64

Bachelor's degree and higher

Some college or associate degree

High school graduates, no college

Less than a high school diploma

100

80

60

40

20

The relationship between educational 

attainment and wages is strong and positive. 

Figure 4-2 shows that among workers 25 

years old and over, median weekly earnings of 

wage and salary workers who usually work full 

time are nearly two and a half times more for 

U.S. DEPARTMENT OF LABOR 19 AUGUST 2006 
america’s dynamic workforce: 2006 

persons with at least a college degree than for 

those who have not completed high school. 

The weekly difference of $604 in 2005 would 

amount to an annual difference of $31,408 if 

extended over a 52-week year. 

The trend toward higher educational 

attainment represents more than changing 

opportunities and tastes for consuming 

education services. The trends in educational 

attainment are closely associated with the 

trends in the occupational and industrial 

structure of the labor market, especially the 

growth in the demand for workers to provide 

professional, technical and managerial services 

as described in Chapter 3. 

THE EDUCATION 

PREMIUM

The growing demand 

for educational 

attainment over the 

past three decades is 

a factor underlying 

the increase in the 

education premium 

over the period. The 

education premium 

is the difference in 

earnings between the 

lower and higher 

educated groups in 

the labor force. 

Figure 4-3 shows the 

increasing spread of 

earnings between the 

major education 

groups. 

In 1979, the $334 

difference (in 2005 

inflation-adjusted 

dollars) in median 

weekly earnings of 

usual full-time 

workers between 

those with less than a 

high school diploma 

and those who had completed 4 or more years 

of college amounted to a 63.7 percent 

education premium – college completers 

enjoyed 1.6 times higher median weekly 

earnings than high school dropouts. By 2005, 

the education premium had risen to 148 

percent: College graduates with a bachelor’s 

or higher degree had median weekly earnings 

nearly 2.5 times greater than the typical high 

school dropout earned. 

Only college graduates have experienced 

growth in real median weekly earnings since 

1979. In contrast, high school dropouts have 

seen their real median weekly earnings decline 

by about 20 percent. 

The earnings gains from higher educational 

attainment are also 

apparent in gender 

comparisons. In 

2005, among wage 

and salary workers 

age 25 or older who 

usually work full 

time, both women 

and men who were 

college graduates 

earned more than 

twice as much per 

week compared to 

their counterparts 

with less educational 

attainment than a 

high school diploma. 

$409

$670

$1,013

$583

$0

$200

$400

$600

$800

$1,000

$1,200

Less than a

high school

diploma

High school

graduates,

no college

Some college

or associate

degree

Bachelor's

degree and

higher

Figure 4-2. Median Weekly Earnings of Full-Time

Wage and Salary Workers Age 25 and Over, 2005

SOURCE: Bureau of Labor Statistics, Current Population Survey.

Dollars

$200

$400

$600

$800

$1,000

$1,200

1979 1984 1989 1994 1999 2004

Figure 4-3. Real Median Weekly Earnings for 

College Graduates Have Trended Up Over Time

NOTE: Median weekly earnings of full-time wage and salary workers 25 years of age and over. Earnings data have

been adjusted using the CPI-U-RS. Data beginning in 1992 are based on highest diploma or degree received;

prior to 1992, data were based on years of school completed.

SOURCE: Bureau of Labor Statistics

Less than a high school diploma

High school graduates, no college

Some college or associate degree

Bachelor's degree and higher 

Median weekly earnings of full-time workers (in constant 2005 dollars)

Women with college 

degrees (bachelor’s 

degree or higher) 

reported median 

earnings of $883 per 

week, 2.6 times as 

much as women with 

less than a high 

school diploma, 1.8 

times as much as 

women with a high 

school diploma and 

no college, and 1.5 

U.S. DEPARTMENT OF LABOR 20 AUGUST 2006 
america’s dynamic workforce: 2006 

times as much as 

women with some 

college but less than 

a bachelor’s degree. 

Men with college 

degrees (bachelor’s 

degree or higher) 

reported median 

earnings of $1,167 

per week, 2.6 times 

as much as men with 

less than a high 

school diploma, 1.8 

times as much as 

men with a high 

school diploma and 

no college, and 1.5 times as much as men with 

some college but less than a bachelor’s

degree.19 

EDUCATION AND UNEMPLOYMENT

Educational attainment is an important 

determinant of other labor market outcomes 

including unemployment rates and labor force 

participation rates. In 2005, the 

unemployment rate for college graduates 

(bachelor’s degree or higher) age 25 and older 

averaged 2.3 percent. In comparison, persons 

age 25 or older without a high school diploma 

experienced 7.6 percent unemployment on 

average. The corresponding unemployment 

rate for high school graduates with no college 

was 4.7 percent, and 

the unemployment 

rate for those with 

some college but less 

than a bachelor’s 

degree was 3.9 

percent. 

Figure 4-4 shows 

that higher 

educational 

attainment is 

associated with lower 

unemployment rates 

regardless of race or 

ethnicity. The 

unemployment rate, 

however, is 

particularly lower for 

African American 

college graduates 

than high school 

dropouts. – 3.5 

percent for college 

graduates versus 14.4 

percent for those 

without a high 

school diploma (or 

GED). 

The relative cost of 

being a high school 

dropout has grown in terms of unemployment 

risk. The unemployment rate for high school 

dropouts spiked in the early 1980s, and while 

trending downward somewhat since then, it is 

still considerably higher than for other groups. 

The jobless rate for college graduates has been 

consistently lower and less subject to business 

cycle fluctuations than the unemployment 

rates associated with lower educational

attainment. 

NOTE: Includes workers age 25-64.

SOURCE: Bureau of Labor Statistics, Current Population Survey.

Figure 4-4. The Higher the Education Level, the 

Lower the Unemployment Rate

0 2 4 6 8 10 12 14 16

Bachelor's degree or

higher

Some college or

associate degree

High school

graduates, no college

Less than a high

school diploma

White

Black or African American

Asian

Hispanic or Latino

Unemployment rate

Educational Attainment

Figure 4-5 shows how the gap in 

unemployment rates between those with a 4-

year college degree and those without a high 

school diploma has increased since 1970. 

LABOR FORCE PARTICIPATION

Educational 

attainment is also 

associated with 

notable differences 

in labor force 

participation. For 

individuals age 25 

and older, the labor 

participation rate in 

2005 averaged 79.5 

percent for those 

with advanced 

degrees (masters 

degree, first 

Figure 4-5. The Difference in Unemployment 

by Education Is Wider Than in 1970

0

4

8

12

16

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003

Percent

Less than a high school diploma

High school graduates, no college

Bachelor's degree or higher

Some college or associate degree

NOTE: Data are from the March 1970-2005 Current Population Survey and are for persons age 25-64. Data

beginning in 1992 are based on highest diploma or degree received; prior to this time, data were based on

years of school completed.

SOURCE: Bureau of Labor Statistics, Current Population Survey.

U.S. DEPARTMENT OF LABOR 21 AUGUST 2006 
america’s dynamic workforce: 2006 

professional degree or doctoral degree), 77.4 

percent for those whose highest degree was a 

bachelor’s degree, 76.7 percent for persons 

with an associate (typically two-year) degree, 

70.2 percent for those with some college but 

no degree, 63.2 percent for those with a high 

school diploma only, and 45.5 percent for 

those without a high school diploma. 

To some extent the differences in labor force 

participation reflect the fact that educational 

attainment is generally lower among older 

Americans, whose lower labor force 

participation is the result of retirement or 

disability. For example, in 2005 the 35.1 

million Americans age 65 and older included 

7.6 percent with advanced degrees and 11.4 

percent with bachelor’s degrees only, 

compared to 9.7 percent advanced degree 

holders and 18.2 percent bachelor’s degree 

(only) holders for the total population age 25 

and older. At the lower end of the 

educational attainment range, individuals 

without high school diplomas accounted for 

25.6 percent of the age 65 and older 

population versus 14.7 percent of the overall 

population age 25 and older. 

However, Figure 4-6 shows that despite the 

overall differences in educational attainment 

across the age groups, higher educational 

attainment is associated with higher labor 

force participation within each age cohort. 

For the oldest 

Americans (ages 65 

and older) 27.4 

percent of the 2.7 

million with 

advanced degrees 

and 20.9 percent of 

those with bachelor’s 

degrees only were in 

the labor force in 

2005.20 Also among 

the 65 and older age 

group, only 8.7 

percent of persons 

without a high 

school diploma and 13.8 percent of persons 

with a high school diploma but no college 

were in the labor market. 

3⁄4 For the 55-to-64 age group the labor force 

participation rate ranged from 77.8 

percent for advanced degree holders and 

72.4 percent for those with a bachelor’s

degree only, to 43.0 percent for those 

without a high school diploma or GED 

certificate. 

3⁄4 For the 45-to-54 age group, the labor 

force participation rate ranged from 92.1 

percent for advanced degree holders and 

88.0 percent for those with a bachelor’s

degree only, to 62.3 percent for those 

without a high school diploma or GED 

certificate. 

3⁄4 For the 35-to-44 age group, the labor 

force participation rate ranged from 90.1 

percent for advanced degree holders and 

86.6 percent for those with a bachelor’s

degree only, to 71.8 percent for those 

without a high school diploma or GED 

certificate. 

3⁄4 For the 25-to-34 age group, the labor 

force participation rate ranged from 88.6 

percent for advanced degree holders and 

87.3 percent for those with a bachelor’s

degree only, to 71.0 percent for those 

without a high school diploma or GED 

certificate. 

Figure 4-6. Labor Force Participation by

Education and Age, 2005

0

10

20

30

40

50

60

70

80

90

100

25-34 35-44 45-54 55-64 65+

No HS Diploma HS Diploma Only

Some College No Degree AA Degree

BA Degree Advanced Degree

SOURCE: Bureau of Labor Statistics, Current Population Survey, annual average 2005.

Percent

Combined with the 

earnings advantages 

of higher educational 

attainment, higher 

labor force 

participation at older 

ages translates into a 

real economic

advantage for those 

who attain higher 

education. 

U.S. DEPARTMENT OF LABOR 22 AUGUST 2006 
america’s dynamic workforce: 2006 

EDUCATION AND 

JOBS PROJECTIONS

The demand for a 

highly educated 

workforce is 

expected to continue. 

BLS projections for 

2004 through 2014 

indicate that nearly 

two-thirds (63.4 

percent) of the 

projected 18.9 

million new jobs will 

most likely be filled 

by workers with 

some post-secondary 

education. (See 

Figure 4-7.) While 

most of the 18.9 

million new job 

openings because of 

growth will be in 

occupations for 

which workers with 

higher educational 

attainment will be 

the most suited, 

there will also be 

many jobs available 

for those with less education. 

In addition to growth, the BLS projections 

estimate openings because of net replacement 

needs – replacement of workers who 

permanently leave occupations for retirement 

or other reasons. The beginning of retirement 

of the Baby Boom generation over the next 

several years will contribute to replacement 

openings across occupations all along the 

spectrum of education requirements. 

Between 2004 and 2014, BLS projections 

show that the number of net replacement 

openings will total 35.8 million and total 

openings for both growth and net 

replacement needs will be 54.7 million. In 

general, occupations in the high-school-or-less 

educational 

requirements cluster 

will account for a 

greater share of 

replacement job 

openings than of 

growth job openings 

because many of 

those occupations 

have a high turnover, 

an aging incumbent 

workforce and 

relatively large 

replacement needs 

despite slower 

relative growth. 

Figure 4-7. Nearly Two-Thirds of New Jobs

Are Expected to Be Filled by Workers with

Some Post-Secondary Education

Some College

27.7%

Bachelor’s

Degree or

Higher

35.7%

High School

or Less

36.6%

Source: Bureau of Labor Statistics, Employment Projections program, National Employment Matrix 2004-2014.

Projected Employment Change, by Educational Attainment

Within the projected 

job growth category, 

the projection for 

the high-growth, 

high-wage subgroup 

is particularly 

noteworthy. Highgrowth, high-wage 

jobs are occupations 

that are in the top 

half of the 2004 

OES earnings 

distribution (median 

annual earnings greater than $28,770) and are 

projected to experience higher-than-average 

job growth over the 2004-2014 horizon. 

Among the 18.9 million new jobs associated 

with projected growth by 2014, 8.7 million fall 

within the high-growth, high-wage group. 

Figure 4-8. Most New High-Growth, High-Wage 

Jobs Are Expected to Be Filled by Workers with

a Bachelor’s Degree or Higher

Some College

24%

High School

or Less

13%

Bachelor’s

Degree or

Higher

63%

Source: Bureau of Labor Statistics, Employment Projections program, National Employment Matrix 2004-2014.

Projected Employment Change In High-Growth, High-Wage Jobs,

by Expected Educational Attainment

Figure 4-8 shows that among those 

occupations with both high growth and high 

wages, 87.0 percent of new jobs are expected 

to be filled by workers with at least some 

post-secondary education. Within the highgrowth, high-wage group, 5.5 million jobs 

(62.8 percent of the total) will most likely be 

filled by workers with at least a bachelor’s 

degree and 2.1 million (24.2 percent) by those 

with some post-secondary education, such as 

a two-year community college academic 

U.S. DEPARTMENT OF LABOR 23 AUGUST 2006 
america’s dynamic workforce: 2006 

program, a vocational certificate or specialized 

formal training. 

FACTORS DRIVING DEMAND FOR 

EDUCATED WORKERS

Technology has played a role to spur the 

demand for a more highly educated 

workforce. Many technological innovations 

require more educated workers to install, 

operate and maintain equipment. This is 

particularly true for information and 

communications technology which has led the 

dramatic rise in productivity over the past 20 

years. Technological change has introduced 

new occupations that require new skills and 

education in new subjects, and it has changed 

the educational requirements and skill content 

of many traditional occupations. 

Another factor contributing to the growing 

demand for educational attainment is the pace 

of change in both technology and in the 

competitive conditions of global markets. 

The faster pace of change in the modern 

economy means that both employers and 

employees must adapt to new conditions 

more often than in the past. To remain 

competitive, employers introduce new 

products and new processes to produce goods 

or services. Employees need new knowledge 

and skills to maintain current jobs or to find 

new ones. 

The latest longitudinal survey data show that 

the average American worker between ages 37 

and 45 in 2002 had changed jobs 10.2 times 

between ages 18 and 38. For workers who 

started a new job between ages 33 and 38, a 

total of 39 percent reported that they changed 

jobs again within a year and 70 percent 

changed jobs again within five years.21 

AN INVESTMENT IN OUR FUTURE

The commitment and investment in education 

that Americans have made to achieve higher 

levels of educational attainment reflect their 

realization of the present and future benefits 

of education for labor market success. The 

101.1 million Americans ages 25 and older 

who had completed some post-secondary 

education in 2005 comprised a valuable 

national asset of knowledge, skill, and 

experience. Of these, 18.4 million were 

advance degree holders, 34.5 million had a 

bachelor’s degree, 16.5 million had completed 

two-year associate or vocational degree 

programs, and 31.8 million had some college 

education but no degree. 

The 21st century labor market seeks and 

rewards workers who can offer the 

educational foundation, technical skills and 

creative flexibility that employers need to 

compete and to adapt to changing needs 

successfully. Higher educational attainment 

contributes to a worker’s ability to efficiently 

absorb new knowledge and to learn new skills. 

Workers who can quickly move up the 

learning curve of a new job have a 

competitive advantage for economic success.

U.S. DEPARTMENT OF LABOR 24 AUGUST 2006 
america’s dynamic workforce: 2006 

5 America’s Flexible Labor Market 

Flexibility is a hallmark of the American labor 

market, which places a high value on the 

freedom to choose one’s work and the terms 

of employment. America’s labor market is 

characterized by a dominance of the at-will 

employment relationship, which provides 

labor market flexibility by keeping hiring costs 

and separation costs relatively low. 

CHANGING JOBS

Flexibility allows 

workers to take 

advantage of new 

opportunities and to 

move from one job 

to another. The 

notion of one job 

over the course of 

one’s work life is not 

a pervasive feature of 

the American labor 

market. As Figure 5-

1 shows, in 2004, 

longer employment 

tenure was most 

common among men 

in their 50s, with just over half of those men 

reporting ten or 

more years of 

employment with 

their current 

employer. 

Over the last two 

decades, the 

proportion of men 

with ten or more 

years of employment 

with their current 

employer has 

declined for all age 

groups. For 

example, among employed men age 40-44 

years, 51.1 percent had worked for their 

current employer for at least ten years in 1983. 

In 2004, the proportion was only 36.2 

percent. 

For women, the evidence about job tenure is 

more mixed. As Figure 5-2 shows, the 

proportion of women employed by their 

current employer for at least ten years 

increases with age. 

Longer employment 

tenure was most 

common among 

women in their 60s, 

with just over half 

reporting ten or 

more years with their 

current employer in 

2004. 

For women, changes 

over time in these 

proportions vary by 

age. Longer 

employment tenure 

has become 

somewhat more common among women age 

40-54. For example, 

for women age 40-44 

years, the proportion 

increased from 23.4 

percent in 1983 to 

28.5 percent in 2004. 

In contrast, for 

women 30-34 years 

old, the proportion 

decreased from 14.8 

percent in 1983 to 

9.8 percent in 2004. 

Figure 5-1. Men with Ten or More Years of 

Tenure with Current Employer

19

37

51

58 62 66 66

48

12

25

36

48 53 53 49 47

0

20

40

60

80

30 to 34

years

35 to 39 40 to 44 45 to 49 50 to 54 55 to 59 60 to 64 65 years

and over

Percent 1983 2004

Age

SOURCE: Bureau of Labor Statistics, Current Population Survey.

Figure 5-2. Women with Ten or More Years of

Tenure with Current Employer

22 23

33

43

53 55

10

21

29

36

44 48 51 51

15

51

0

20

40

60

80

30 to 34

years

35 to 39 40 to 44 45 to 49 50 to 54 55 to 59 60 to 64 65 years

and over

1983 2004

SOURCE: Bureau of Labor Statistics, Current Population Survey.

Percent

Age The changes in job 

tenure over time 

U.S. DEPARTMENT OF LABOR 25 AUGUST 2006 
america’s dynamic workforce: 2006 

reflect the ability of 

workers to move to 

different jobs and 

therefore reflect the 

dynamism of the 

American labor 

market. The 57 

million hires and 55 

million separations 

the U.S. labor market 

witnessed in 2005 

were evidence of this 

dynamism. 

WORK 

ARRANGEMENTS

However, flexibility in America’s labor market 

involves more than just changing jobs. 

Flexibility can also involve customizing 

various aspects of the job to suit the needs of 

the establishment and the worker. Flexible 

work schedules represent one such form of 

flexibility. Such schedules allow workers to 

vary the time they begin or end work, and 

they have become more common. According 

to BLS, in 2004, 27.5 percent of all full-time 

wage and salary workers had flexible work 

schedules, compared to just 15.0 percent in 

1991. 

Arranging work outside the traditional

employment relationship is another tool for 

flexibility. Such work arrangements can 

include independent 

contracting, on-call 

work, and work for 

temporary help 

agencies and contract 

firms. 

As Figure 5-3 

illustrates, alternative 

work arrangements 

have become more 

common in recent 

years. According to 

the Current 

Population Survey, in 

the last decade, the 

number of workers 

with alternative 

arrangements has 

increased by 21.3 

percent, representing 

about 11 percent of 

the employed in 

2005. Since 2001, 

the number of 

independent 

contractors and oncall workers has risen 

by almost 20 percent 

each and the number 

of contract firm 

workers has increased by almost one-third. 

According to the Current Population Survey, 

the number of U.S. workers reporting work 

for temporary help agencies has remained 

steady. However, data from the 

establishment-based Current Employment 

Statistics program suggest that employment in 

temporary services actually increased by over 

8 percent between 2001 and 2005. 

Figure 5-3. More Workers Have Alternative 

Work Arrangements

0.0

2.0

4.0

6.0

8.0

10.0

12.0

1995 1997 1999 2001 2005

Independent Contractors

On-Call Workers

Workers Provided by Temporary Help Agencies

Workers Provided by Contract Firms

SOURCE: Bureau of Labor Statistics, February Current Population Survey, 1995, 1997, 1999, 2001, 2005.

Millions

Among workers with alternative 

arrangements, independent contractors are 

more likely to prefer their work arrangements 

than other workers; 82.3 percent stated a 

preference for this type of alternative work 

arrangement in 2005, about the same as in 

1995. However, the proportion of on-call 

workers and 

temporary help 

agency workers who 

prefer their 

alternative 

arrangement has 

increased over time. 

In 1995, 35.8 percent 

of on-call workers 

and 26.6 percent of 

temporary help 

agency workers 

preferred their work 

arrangement to a 

traditional 

0

10

20

30

40

50

Independent

Contractors

On Call Workers Temporary Help

Agency

Workers

Workers

Provided by

Contract Firm

Worker

Workers with

Traditional

Arrangements

Less Than High School Diploma High School Graduate, No College

Some College or Associate Degree Bachelor's Degree or Higher

Enrolled in School

Percent

NOTE: School enrollment data refer to workers 16-24 years old. Other data refer to workers 25-64 years old.

SOURCE: Bureau of Labor Statistics, February Current Population Survey, 2005.

Figure 5-4. Education Patterns Vary by Work

Arrangement

U.S. DEPARTMENT OF LABOR 26 AUGUST 2006 
america’s dynamic workforce: 2006 

arrangement, compared to 46.1 percent and 

32.1 percent, respectively, in 2005. 

Demographic characteristics differ among 

workers with various alternative work 

arrangements. Independent contractors are 

more likely than traditional workers to be 

white and male. Independent contractors also 

tend to be older. In 2005, 27.3 percent of 

independent contractors were age 55 and 

over, compared to 15.5 percent of traditional 

workers. 

Independent contractors and workers 

provided by contract firms are more likely 

than other types of workers, including those 

with traditional work arrangements, to have a 

bachelor’s degree or 

higher. At the other 

end of the education 

spectrum, temporary 

help, on-call, and 

contract firm 

workers are more 

likely than traditional 

workers or 

independent 

contractors to have 

less than a high 

school diploma. (See 

Figure 5-4.) 

PART-TIME WORK

Another mechanism for work flexibility is 

part-time employment. Today, part-time 

workers (less than 35 hours per week) account 

for about 17 percent of the workforce. Some 

part-time workers would prefer full-time work 

but are unable to find it. However, the vast 

majority of those who work part-time do so 

for so-called noneconomic reasons, such as to care 

for family members or to make time for 

educational pursuits. 

Since 1994, among workers who usually work 

part-time, the proportion of those who do so 

for noneconomic reasons has held steady at 

about 8 in 10. (See Figure 5-5.) 

Those who usually work part-time for 

noneconomic reasons are more likely to be 

women and older. In 2005, 68.5 percent of 

those who usually worked part-time for 

noneconomic reasons were women, and 22.7 

percent were age 55 or over. 

Except for workers provided by contract 

firms, workers with alternative arrangements 

are more likely to work part-time than are 

workers with traditional arrangements. In 

particular, on-call workers are more likely to 

work part-time schedules; in 2005, 44.2 

percent of on-call workers worked part-time 

schedules, compared to 16.9 percent of 

workers with traditional arrangements. 

THE WORK 

LOCATION

Flexibility can also 

involve work done at 

a location different 

from the traditional 

workplace. Working 

at home is a popular 

alternative for 

American workers, 

and many have 

formal arrangements 

to be paid for their 

work at home. 

In 2004, 20.7 million 

persons usually did some work at home as 

part of their primary job. These workers, who 

reported working at home at least once per 

week, accounted for about 15 percent of total 

nonagricultural employment in May 2004, 

about the same percentage as in May 2001. 

Figure 5-5. Most Part-Time Workers Work

Part-Time for Noneconomic Reasons

0

5

10

15

20

25

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Economic Reasons

Noneconomic Reasons

NOTE: Includes workers age 16 and over working 1-34 hours per week.

SOURCE: Bureau of Labor Statistics, Current Population Survey.

Millions

The likelihood of working at home varies 

greatly by occupation. This is not surprising, 

since some jobs are more readily done away 

from the workplace than others. Almost 30 

percent of workers in management, 

professional, and related occupations reported 

working at home in 2004. About 1 in 5 sales 

workers usually worked at home. In contrast, 

U.S. DEPARTMENT OF LABOR 27 AUGUST 2006 
america’s dynamic workforce: 2006 

only 3 percent of workers in production, 

transportation, and material moving 

occupations performed job-related work at 

home. From an industry perspective, workers 

employed in professional and business 

services, in financial activities, and in 

education and health services were among the 

most likely to work at home in 2004. 

Women and men were about equally likely to 

work at home in 2004, at about 15 percent 

each. Whites (16 percent) were twice as likely 

as blacks (8 percent) and Hispanics (7 

percent) to work at home, reflecting, at least 

in part, the relatively higher concentration of 

whites in occupations that are associated with 

work at home. 

About 3.3 million 

wage and salary 

workers, or 1 in 4 

wage and salary 

workers working at 

home, had a formal 

arrangement with 

their employer to be 

paid for the time 

they put in at home. 

About half of these 

paid home workers 

spent 8 hours or 

more per week 

working at home, and about 1 in 7 put in 35 

hours or more per week at home. On

average, those with a formal arrangement to 

be paid for their work time at home logged 

about 19 hours per week at home, up slightly 

from 18 hours in 2001. 

About one-third of persons who usually 

worked at home in May 2004 were selfemployed. Of the 7.0 million self-employed 

persons who worked at home, two-thirds had 

a home-based business – that is, a business 

run from their home and no other location. 

The likelihood of working at home increased 

with educational attainment. Employed 

persons 25 years and over with a bachelor’s 

degree or higher were more than 6 times more 

likely to work at home as those without a high 

school diploma (32 and 5 percent, 

respectively). Much of this disparity is due to 

the varying occupational patterns of workers 

with different levels of education. For 

example, college graduates are much more 

likely to be employed in managerial and 

professional occupations—which have a 

greater work-at-home rate—than are high 

school dropouts. (See Figure 5-6.) 

WHERE FLEXIBILITY WORKS

Certain jobs may be 

more amenable to 

particular 

mechanisms for 

flexibility. For 

example, among 

workers with 

alternative work 

arrangements in 

2005, independent 

contractors were 

more likely to be in 

management and 

business, sales, or 

construction

occupations than 

were workers with traditional arrangements. 

Workers provided by contract firms were 

more likely to be in professional occupations, 

service occupations, and construction

occupations than were traditional workers. 

Temporary help workers were more likely to 

be in office and administrative support 

occupations and in production and 

transportation occupations than were 

traditional workers, and on-call workers were 

more likely to be in professional occupations, 

service occupations and construction

occupations than were traditional workers. 

Figure 5-6. Proportion of Workers Working 

at Home Increases with More Education, 2004

0

5

10

15

20

25

30

35

Less than a

high school

diploma

High school

graduates, no

college

Some college or

associate's

degree

Bachelor's

degree or

higher

NOTE: Percent of workers 25 years and older who usually worked at home at least once a week.

SOURCE: Bureau of Labor Statistics, Current Population Survey.

Percent

Figure 5-7 shows the proportion of workers 

with various forms of work flexibility, 

U.S. DEPARTMENT OF LABOR 28 AUGUST 2006 
america’s dynamic workforce: 2006 

stratified by selected 

occupations. 

Flexibility in the 

form of flexible 

scheduling and work 

at home are more 

common in 

management, sales, 

and professional 

occupations, while 

working part-time 

for noneconomic 

reasons is more 

common in sales, 

service, and office 

occupations. These 

forms of flexibility tend to be less common in 

production, transportation, and related 

occupations (not shown).

Clearly, flexibility in the workplace can take 

many forms and can involve combinations of 

arrangements to suit the needs of the worker 

and the requirements 

of the job. Because 

flexibility involves 

tailoring to the job as 

well as the worker, it 

can vary greatly by 

occupation. 

Flexibility in its many 

forms will continue 

to be a key factor in 

maintaining a 

dynamic U.S. 

workforce. While 

dramatic changes in 

how work is done 

have yet to be realized, employers and 

workers will need flexibility to respond and 

adapt to changes in the global economy as 

well as technological innovations, allowing 

new opportunities for when, where, and how 

we work.

Figure 5-7. Flexibility Varies by Occupation

0

10

20

30

40

50

Management,

Business,

Financial

Professional

and Related

Service Sales and

Related

Office and

Administrative

Flexible Schedule Usually Work Part-time

Usually Work at Home

NOTE: Data on flexible schedules come from May 2004 Current Population Survey and refer to full-time wage and

salary workers. Data on work at home come from May 2004 Current Population Survey. Data on part-time 

work come from 2005 Current Population Survey annual averages and refer to wage and salary workers who

usually work 1-34 hours.

SOURCE: Bureau of Labor Statistics, Current Population Survey.

Percent of Occupation

U.S. DEPARTMENT OF LABOR 29 AUGUST 2006 
america’s dynamic workforce: 2006 

6 Opportunities to Prosper 

Experience shows that America’s economy 

likely will continue to face challenges arising 

from technological innovation, globalization, 

demographic trends, natural disasters, and 

political events. However, the flexible and 

dynamic nature of our labor market enables 

America’s workers to grasp the opportunities 

presented by these changes. In recognizing 

opportunities to succeed in the workforce, 

America’s workers strengthen our economy at 

the same time. This chapter examines 

opportunity in the 

American labor 

market from three 

perspectives: the 

effects of an aging 

population, the 

expanding role of 

women, and the 

experience of racial 

and ethnic 

minorities. 

AGING POPULATION

The changing age 

composition of the 

U.S. population is a 

challenge that also presents a source of

opportunity for the 

U.S. labor market. 

As Figure 6-1 shows, 

the proportion of the 

population ages 65 

and older is 

projected to grow 

from about 12.4 

percent of the total 

population in 2000 

to about 20.7 percent 

in 2050. The Baby 

Boom generation is 

now just beginning 

to turn 60 years of age, but over the next 

several years, all 78.2 million of them will pass 

that milestone, moving into the traditional age 

of retirement. The population next in line is 

today’s 20 to 39 year olds, and there are about 

half a million fewer of them, according to 

2005 Census estimates. The growing size of 

the aging population relative to the younger 

population may contribute to better job 

market conditions for younger workers in 

terms of lower unemployment rates and more 

job openings. 

Figure 6-2. Older Workers in the Labor Force

0

2

4

6

8

10

12

14

16

18

20

1948

1952

1956

1960

1964

1968

1972

1976

1980

1984

1988

1992

1996

2000

2004

Percent of Labor Force

0

5

10

15

20

25

30

35

40

45

50

Labor Force Participation Rate

NOTE: Includes workers age 55 and over.

SOURCE: Bureau of Labor Statistics, Current Population Survey,1948-2005 annual averages. 

Percent of Labor Force

Labor Force Participation Rate

Figure 6-1. The U.S. Population Is Aging

80.5

83.2

88.9

95.1

101.6

109.1

166.5

185.5

192.3

197.0

210.3

224.0

35.1

40.2

54.6

71.5

80.0

86.7

0

50

100

150

200

250

300

350

400

450

2000 2010 2020 2030 2040 2050

Age 65 and older

Age 20-64

Age 19 and younger

Millions

SOURCE: U.S. Census Bureau, 2004, "U.S. Interim Projections by Age, Sex, Race, and Hispanic Origin,"

http://www.census.gov/ipc/www/usinterimproj/ Internet Release Date: March 18, 2004.

An aging population 

leads to an aging 

workforce. In the 

last several years, 

workers age 55 and 

older have 

represented a 

growing share of the 

labor force, growing 

from 11.6 percent in 

1993 to 16.2 percent 

in 2005. Over the 

same time, the labor 

force participation of 

workers age 55 and 

older has increased 

from 29.4 percent to 

37.2 percent. (See 

Figure 6-2.) 

In the future, 

America’s older 

workers – who will 

be more educated 

than previous 

generations of older 

workers – may 

remain in the labor 

force longer, thereby 

increasing the typical 

U.S. DEPARTMENT OF LABOR 30 AUGUST 2006 
america’s dynamic workforce: 2006 

age of retirement. Still, as older workers 

maintain their attachment to the labor force, 

they may desire more flexibility and more 

non-traditional work relationships. As much 

as any other group of workers, older workers 

may benefit from the opportunities afforded 

by alternative work arrangements, such as 

part-time schedules and temporary and

contract work. Therefore, these arrangements 

may become even more important as 

employers provide the flexibility to retain 

productive older workers. 

WOMEN IN THE DYNAMIC LABOR FORCE

Likewise, over the last several decades, 

women have taken advantage of the 

opportunities presented by America’s dynamic 

labor market. Women’s labor force 

participation rate was 

32.7 percent in 1948. 

Over the years it 

increased steadily, 

from 46.3 percent in 

1975 to a peak of 

about 60 percent in 

2000. (See Figure 6-

3.) At 59.3 percent 

in 2005, the labor 

force participation 

rate of women has 

plateaued since 2000. 

More women than 

ever are in higherpaying occupations. 

Figure 6-4 shows 

data from a specially 

constructed series 

that estimates 

women’s 

employment in 

occupations over 

time.22 The data 

show that women’s 

share of 

employment in 

professional and 

related occupations 

and in management, business and financial 

operations occupations has steadily risen over 

time. 

Women represented 50.7 percent of all 

professional and related occupations in 1983 

but represented 56.3 percent in 2005. 

Women have also made progress in 

management occupations. In 1983, women 

comprised 31.2 percent of workers in 

management, business and financial 

operations occupations. By 2005, the 

proportion of women in such occupations 

had grown to 42.5 percent. 

Throughout the last several decades, women’s 

earnings have increased as a proportion of 

men’s earnings. At 81.0 percent in 2005, the 

ratio of women’s 

earnings to men’s 

has risen by more 

than 18 percentage 

points since 1979, 

when it stood

percent. In 2005, 

women’s median 

weekly earnings were 

$585 for full-time 

workers, compared 

to $722 for men. 

Figure 6-3. Women’s Labor Force Participation 

Over the Past 30 Years

30

35

40

45

50

55

60

65

19751977

197919811983

198519871989

199119931995

199719992001

20032005

Percent of Population in Labor Force

SOURCE: Bureau of Labor Statistics, Current Population Survey, 1975-2005 annual averages.

at 62.5

Women’s earnings 

are now, on average, 

much closer to men’s 

earnings, although 

some difference 

remains. However, 

simple earnings 

averages for men 

and women do not 

account for many 

factors that can 

explain earnings 

differences, such as 

educational 

attainment, 

occupational choice, 

hours of work, job 

Figure 6-4. Proportion of Women in

Professional and Management Occupations

0

10

20

30

40

50

60

1983

1985

19871989

1991199319951997

19992001

20032005

Percent

NOTE: Data use the specially constructed conversion series available online at

http://ww.bls.gov/cps/constio198399.htm.

SOURCE: Bureau of Labor Statistics, Current Population Survey, 1983-2005 annual averages.

Professional

Management, Business, and 

Financial Operations

U.S. DEPARTMENT OF LABOR 31 AUGUST 2006 
america’s dynamic workforce: 2006 

tenure, and other 

factors. 

The progress of 

women in the U.S. 

labor market 

highlights the vital 

role of education and 

the opportunities 

available to those 

who pursue it. 

Overall, real 

(inflation-adjusted) 

earnings of women 

25 years and over 

increased by over 

one-fourth from 

1979 to 2005, while 

real earnings of men 

changed very little. 

At all levels of 

education, changes in 

real earnings since 

1979 have been more 

favorable for women 

than for men. 

However, as Figure 

6-5 illustrates, 

women’s gains in 

earnings varied 

significantly by 

educational attainment, and women with 

more education experienced larger gains in 

real earnings. Indeed, women without a high 

school education experienced lower earnings 

after adjusting for inflation, while those with 

higher levels of education experienced higher 

earnings over time even after adjusting for 

inflation. 

MINORITY POPULATION GROWTH

The increasing racial and ethnic diversity of 

the U.S. population also will create new 

opportunities as well as challenges for the U.S. 

labor market, and education will play a vital 

role. As shown in Figure 6-6, the proportion 

of the population (all ages) whose race is 

classified as “white” 

has decreased from 

almost 9 in 10 in 

1960 to about 3 in 4 

in 2000. When 

Hispanic ethnicity is 

considered in 

addition to race, the 

U.S. population’s 

diversity is further 

underscored: In 

2005, about onethird of the country’s 

population belonged 

to either a racial or 

ethnic minority 

group. 

-10

7

12

34

26

-40 -20 0 20 40

Figure 6-5. Women’s Real Earnings Have

Increased More with More Education

Total, 25 years and over

Bachelor's degree and 

higher

Less than a high school diploma

High school graduates, no 

college

Some college or associate

degree

NOTE: Includes earnings adjusted for inflation of women workers age 25 and over, 1979-2005.

SOURCE: Bureau of Labor Statistics, Current Population Survey.

Percent

Greater population 

diversity naturally 

results in greater 

diversity among U.S. 

workers. In 2005, 

about 17.5 percent of 

the U.S. labor force 

identified themselves 

racially as other than 

“white,” including 

11.4 percent (17.0 

million) who 

identified themselves 

as black or African-American and 4.4 percent

(6.2 million) who identified themselves as 

Asian or Pacific Islander. In 2005, 13.3 

percent (19.8 million) of the labor force 

identified themselves as Hispanic (or Latino

Figure 6-6. Growing Racial Diversity in the U.S.

Population

Percent of Population

SOURCE: U.S. Census Bureau, “Overview of Race and Hispanic Origin: 2000,” March 2001, and “Historical Census

Statistics on Population Totals By Race, 1790 to 1990, and By Hispanic Origin, 1970 to 1990, For The United

States,” http://www.census.gov/population/www/documentation/twps0056.html Internet Release Date

September 13, 2002.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1960 1970 1980 1990 2000

Other

Asian and

Pacific

Islander American

Indian

Black

White

).

Immigration is a factor in the growing role of 

racial and ethnic minorities, but natural 

increase – native-born Americans – is also an

important source for growth of the minority 

population. The 2.9 million estimated 

increase in total population (all ages) between 

2004 and 2005 included 1.1 million 

immigrants and 1.7 million native births. Of 

these, 1.4 million of the native births were of 

minority race or ethnicity. 

U.S. DEPARTMENT OF LABOR 32 AUGUST 2006 
america’s dynamic workforce: 2006 

Figure 6-7 shows in 

detail the estimated 

increase from 2004 

to 2005 of the U.S. 

population from 

both births and 

immigration by racial 

and ethnic 

categories. From 

2004 to 2005, the 

Hispanic population 

grew by over 1.3 

million, with about 

39.5 percent of that 

growth due to 

immigration. The 

black population increased by almost half a 

million over the year, with 18.0 percent of the 

growth due to immigration. The Asian 

population increased by 421,000 over the year, 

with 56.7 percent of the increase due to 

immigration. By comparison, the nonHispanic white population increased by half a 

million, with 39.0 percent of the increase due 

to immigration. 

MINORITIES SHARE IN LABOR MARKET 

OPPORTUNITIES

The strong labor market in 2005 benefited 

American workers across all categories of race 

and ethnicity. Average annual employment of 

black (or African-American), Asian (or Pacific 

Islander), and 

Hispanic (who may 

be of any race) 

workers rose in 

numbers and as a 

percent of the total 

employed in 2005. 

The number of black 

(or AfricanAmerican) workers 

in 2005 was 15.3 

million, up 404,000 

from 2004, and they 

comprised 10.8 

percent of total 

employment. The 

number of Asian (or 

Pacific Islander) 

workers increased 

250,000 to 6.2 

million in 2005, and 

they comprised 4.4 

percent of total 

employment. 

Hispanic workers 

(who may be of any 

race) numbered 18.6 

million in 2005. 

Unemployment rates 

fell in 2005 across all 

racial and ethnic categories. The 

unemployment rate for blacks (or AfricanAmericans) fell from 10.4 percent in 2004 to 

10.0 percent in 2005. For Asian (or Pacific 

Islander) Americans, the unemployment rate 

fell from 4.4 percent in 2004 to 4.0 percent in 

2005. For Americans of Hispanic ethnicity, 

the unemployment rate fell from 7.0 percent 

in 2004 to 6.0 percent in 2005. 

EDUCATION PAYS FOR MINORITIES

For workers of all races or ethnicity, 

education plays a vital role in the labor

market. Across all racial and ethnic 

categories, higher levels of educational

attainment are associated with higher earnings 

and lower unemployment rates. Figure 6-8 

shows that, 

regardless of race or 

Hispanic ethnicity, 

college graduates 

earn substantially 

more than do high 

school graduates and 

more than twice as 

much as high school 

dropouts. 

SOURCE: Bureau of Labor Statistics, Current Population Survey, 2005.

Figure 6-8. Education Pays, Regardless of

Race or Ethnicity

$0 $200 $400 $600 $800 $1,000 $1,200

Bachelor's degree or

higher

Some college or

associate degree

High school

graduates, no college

Less than a high

school diploma

White

Black or African American

Asian

Hispanic or Latino

Educational Attainment

Dollars per Week

Median weekly earnings of usually full-time workers age 25 and over

Figure 6-7. Population Growth and Diversity,

2004-2005

319 407

182

204 816 89

239

534

0

200

400

600

800

1,000

1,200

1,400

1,600

Non-Hispanic

White

 Black Asian Hispanic (any

race)

Immigration

Births minus deaths

Thousands

SOURCE: U.S. Census Bureau, 2006, http://www.census.gov/Press-Release/www/2006/nationalracetable2.xls Internet

Release Date: May 10, 2006.

Comparing 2005 

median weekly 

earnings of those 

who usually work full 

U.S. DEPARTMENT OF LABOR 33 AUGUST 2006 
america’s dynamic workforce: 2006 

time (age 25 and 

over), the earnings 

premium for a 

bachelor’s degree or 

higher versus less 

than a high school 

diploma was

• 151.0 percent 

($625 per week) 

for Whites; 

• 122.6 percent 

($456 per week) 

for Blacks or

African 

Americans; 

• 160.4 percent ($635 per week) for Asians; 

and 

• 123.2 percent ($478 per week) for 

Hispanics or Latinos. 

 Figure 6-9 shows that the number of 

minority workers employed in professional 

and management jobs, which tend to be 

higher-paying jobs 

requiring higher 

levels of education, 

has steadily increased 

in recent years. 

Encouraging 

educational 

attainment for all 

U.S. workers will be 

a critical component 

of the continued 

success of the 

country’s dynamic 

workforce. 

Opportunity is a core 

value for Americans, and America’s dynamic 

labor market is a key source of opportunity. 

The American economy rewards effort, 

initiative, knowledge, experience and 

innovation. Strong employment growth, low 

unemployment, and good wages provide all 

Americans opportunities to prosper. 

Figure 6-9. Racial and Ethnic Minorities in

Professional and Management Jobs

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2000 2001 2002 2003 2004 2005

Black Asian Hispanic

Millions

SOURCE: Bureau of Labor Statistics, Current Population Survey, 2000-2005 annual averages.

U.S. DEPARTMENT OF LABOR 34 AUGUST 2006 
america’s dynamic workforce: 2006 

End Notes 

1The Bureau of Labor Statistics publishes two distinct but complementary employment series. 

Nonfarm payroll employment is based on a survey of establishments and total employment is based 

on a survey of households. 

2 The calculation is from the peak payroll employment level nearest to the NBER declared 

beginning of the recession to the employment nadir following the recession. For the 1981-82 

recession, the peak was 91,594,000 in July 1981 and the nadir was 88,756,000 in December 1982, a 

decline of 3.098 percent. For the 1990-91 recession, the peak was 109,820,000 in June 1990 and the 

nadir was 108, 203,000 in May 1991, a decline of 1.472 percent. For the 2001 recession the peak was 

132,551,000 in February 2001 and the nadir was 129,797,000 in August 2003, a decline of 2.078 

percent. 

3 Hires include re-hires of laid off employees and transfers of employees to other establishments 

operated by the same employer. 

4 $12.455 trillion according to the BEA revised estimate published in July 2006. 

5 GDP growth rates reflect BEA benchmark revisions published in July 2006. 

6 To the extent that higher compensation costs for health care benefits may not have been reflected 

in higher quality or quantity of health care services received, higher cost of compensation for 

employers may not equate with higher value perceived by employees. 

7 Based on annual average for 2005 of quarterly estimates from the BLS National Compensation 

Survey, Employer Cost of Employee Compensation reports. Occupations in the graph are ranked 

according to 2005 annual average hourly compensation. 

8 Based on annual average of monthly employment levels for each occupational group estimated 

from the Current Population Survey. 

9 In addition to the occupations shown in the chart, the Farming, fishing and forestry occupations 

group experienced an employment decline of 76,000. This group was not included in the chart 

because ECEC data to rank hourly compensation was not available. 

10 The members of the European Monetary Union are Austria, Belgium, Finland, France, Germany, 

Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain 

11 All European Union figures for the rest of the chapter will be for the 15 member countries prior 

to the latest expansion on May 1, 2004: Austria, Belgium, Finland, France, Germany, Greece, 

Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Denmark, Sweden and the United 

Kingdom. In part, this focus results from a lack of statistical data covering the current 25-member 

European Union. 

12 Employment data date from January 1990. 

13 Kilcoyne, Patrick. “Occupations in the Temporary Help Services Industry,” Occupational 

Employment and Wages, May 2004, Bureau of Labor Statistics Bulletin 2575. 

14 Strople, Michael H. “From supermarkets to supercenters: employment shifts to the one-stop 

shop,” Monthly Labor Review, February 2006. 

15 The sum of quarterly gross job gains and gross job losses for a length of time (such as 10 years) 

measures the number of jobs gained and lost during that period and not over the period. 

16 Some of the gross flows of jobs gained and lost reflect seasonal fluctuations that repeated year 

after year and add to the multi-year aggregates of gains and losses (the quarterly data used were not 

adjusted to remove seasonal effects), but some of the aggregate job gains and losses represent more 

lasting gains that partly offset closures and downsizing. 

U.S. DEPARTMENT OF LABOR 35 AUGUST 2006 
america’s dynamic workforce: 2006 

 

17 The data comparison in the section and in Figure 3-8 is based on a special conversion series 

developed by BLS. The specially constructed data series available online at 

http://www.bls.gov/cps/constio198399.htm provides a set of occupational definitions for CPS data 

from 1983 to 1999 that is consistent with new occupational categories introduced in 2000 

18 Degree status is implied but not certain for 1970-91 data. Prior to 1992, the Current Population 

Survey questionnaire asked for years of school attended and whether the terminal year was 

completed. Beginning in 1992, the CPS questionnaire explicitly asks about receipt of a high school 

diploma, GED certificate, or college degree. 

19 Data are annual averages of quarterly median earnings for wage and salary workers ages 25 or 

older who usually worked full-time. 

20 Data are annual average of monthly survey results. Because of movements in and out of the 

labor force during the year, the number of distinct persons with some labor force activity during the 

year would be somewhat higher for all categories than the average. 

21 See the BLS publication “Number of Jobs Held, Labor Market Activity, and Earnings Growth 

Among Younger Baby Boomers: Results from a Longitudinal Survey,” USLD 04-1678, August 25, 

2004. www.bls.gov/news.release/pdf/nlsoy.pdf

22 The specially constructed data series available online at 

http://www.bls.gov/cps/constio198399.htm provides a set of occupational definitions for CPS data 

from 1983 to 1999 that is consistent with new occupational categories introduced in 2000. 

U.S. DEPARTMENT OF LABOR 36 AUGUST 2006 

www.dol.gov