Supply and Demand Conditions for Electricians
A Labor Market Update and
Electrician Program Data
December 2012
Prepared by:
Mohamed Mourssi
Research Analyst
(651) 259-7416
Labor market Information
MN Department of Employment & Economic Development (DEED)
In collaboration with:
Office of the Chancellor
Minnesota State Colleges and Universities
Contents
PURPOSE 3
BACKGROUND 3
Enrollment Caps 3
EXECUTIVE SUMMARY 4
DEMAND 4
SUPPLY 4
SUPPLY-DEMAND COMPARISON 4
HISTORY 5
Enrollment Caps 5
Enrollment and Graduate Data Sources 5
Related Report 5
DEMAND 6
Industry Employment Trends 6
Job Vacancies 11
Short-term Projections 12
Long-term Projections 13
SUPPLY 14
Trends in Unemployment 14
Program Graduates 16
Apprenticeship Completers 17
Program Enrollment 18
WAGES 20
RELATED EMPLOYMENT RATE 21
SUPPLY-DEMAND COMPARISON 23
SUMMARY 24
PURPOSE
The purpose of this report is to provide a current regional analysis of the labor market for electricians in the state of Minnesota. This report presents regional information on demand, supply, wages, and net supply-demand.
BACKGROUND
On March 15, 2007 a memo was sent to Presidents and Chief Academic Officers at the 13 Minnesota State Colleges and Universities with electrician programs that prohibited the addition of new electrician programs and directed that fiscal year 2008 enrollment be limited to the fiscal year 2007 level. This decision was based primarily on an analysis of statewide labor market data on electricians, including trends in electrical contractor industry employment, Unemployment Insurance claims, long-term occupational employment projections, job vacancies, and the number of electrician program completers from all Minnesota post-secondary institutions. Subsequently in April 2007 regional estimates of the supply/demand conditions for electricians were produced.
The March 15th, 2007 memo indicated that the decision to cap electrician enrollment would be re-reassessed in October of subsequent years using both internal and external inputs. This report references labor market activity through the first half of 2012.
Enrollment Caps
Based on an analysis of regional supply and demand conditions for electricians, enrollment caps were issued for colleges that have electrician programs. These caps have remained in effect for all colleges, except for Minnesota West Community and Technical College, whose enrollment cap was lifted in a June 4, 2009 memo and reinstated in a November 4, 2009 memo (p. 7). Based on this report, enrollment caps will be reconsidered. Changes, if any, will be communicated to colleges.
EXECUTIVE SUMMARY
Overall, statewide indicators show that the recovery from the 2007-2009 recession continues to impact the electrician labor market. There remains a surplus of electricians in Minnesota; however that surplus has been declining and is less than it was estimated one year ago.
DEMAND
· Employment in the construction industry, where most electricians are employed, is up by 2,780 jobs or 2.7 percent from a year ago (p. 7), and short-term industry employment is projected to slightly improve into the first half of 2013 (p. 12).
· Over the next 10 years, the number of employed electricians is projected to grow by 3,558 or 35 percent. An additional 2,700 opening will result from replacement needs (p. 13).
SUPPLY
· There were 586 electricians receiving regular Unemployment Insurance benefits in October 2012–a decline of 20.4 percent from a year ago, or 150 fewer individuals (p. 14).
· The number of graduates from Minnesota electrician programs (284) in 2012 was down by 91 from 2010 academic year and down 58 from the 2011 academic year (p. 16).
· Minnesota electrician program enrollment in the fall of 2012 is 813, a decrease of 223 or about 22 percent from 2010 academic year’s level, and a decrease of 55 or about 6.3 percent from 2011 academic year’s enrollment level (p. 18).
· Wage trends for electricians in 2011 showed no upward pressure, indicating a more than sufficient supply (p. 20).
· Graduate Follow-up Survey data showed increases in related-employment rates in 2011. Northeast is the only region that shows a decrease in the related employment rate by 5.6 percent, while the employment rate in southwest remained the same as 2010, 70.6 percent. All other regions show higher related employment rates than last year. Twin Cities employment rate increased to 84.4 percent from 80.2 percent in 2010 (p. 21).
SUPPLY-DEMAND COMPARISON
· In 2012, Minnesota has a very small surplus of 36 electricians based on the supply-demand comparison using the most recent job projections, job vacancy survey, unemployment insurance, and 2012 program graduate data (p. 23).
· Labor market and economic indicators point to a tightening market for electricians over the next five years. The next several years will likely see a turning point in the supply and demand ratio for electricians. Data indicate that this turnaround may happen most quickly in the Central region.
HISTORY
Electrician Program Enrollment CapCollege / Fall '06
Enrollment Cap
Anoka / 149
Dakota County / 74
Hibbing / 77
Lake Superior / 50
Minneapolis / 53
Minnesota State / 204
Minnesota West / 87
Northland / 71
Northwest / 57
Ridgewater / 55
Riverland / 87
Saint Cloud / 123
Saint Paul / 104
Total / 1,191
Region / Fall '06
Enrollment Cap
Northwest / 332
Northeast / 127
Central / 178
Twin Cities / 380
Southwest / 87
Southeast / 87
Total / 1,191
Enrollment Caps
Colleges’ base enrollment caps, as listed in the table, have remained unchanged. These enrollment caps reflect program enrollment levels reported by colleges for fall 2006.
Enrollment and Graduate Data Sources
Beginning with the December 2011 report, the source for annual enrollment and program graduate data has changed. Previously, colleges were asked to provide these data. Now, this report reflects data acquired from the system warehouse for current and prior years.
Legislative Audit Report
In testimony before legislative committees during 2007 and 2008, the International Brotherhood of Electrical Workers Local 292 questioned whether, during a time of high unemployment, the Minnesota State Colleges and Universities system should continue enrolling students in electrician programs at the same pace as in previous years. Interested by this and broader questions, the Legislative Audit Commission directed the Office of the Legislative Auditor to evaluate MnSCU’s occupational programs. In March 2009 the State of Minnesota Office of the Legislative Auditor – Program Evaluation Division issued its report titled: MnSCU Occupational Programs. The report, which studied all occupational programs, recommended that “When reviewing its cap on enrollments for construction electrician programs, MnSCU’s Office of the Chancellor should take local economic conditions into greater account.” In response to this recommendation, annual studies of the electricians labor market has been analyzed by planning region rather than just statewide, as had been the prior practice.
DEMAND
Industry Employment Trends
In Minnesota, approximately 80 percent of all electricians are employed in the construction industry.[1] Based on national staffing patterns within the construction industry itself, 93 percent of electricians are employed by electrical contractor firms.[2]
Chart 1 below shows the seasonally-adjusted employment trend in statewide construction industry employment. The total number of construction industry jobs in Minnesota grew until about February 2006. The total number of construction jobs in October 2012 was 94,000. This is down 38,000 or 28.8 percent from the high reached in February 2006, but up by a seasonally adjusted 3,700 jobs or 4.1 percent from a year ago.[3]
A more detailed breakdown of construction industry employment trends is not available on a seasonally-adjusted basis. Instead, Table 1.1 shows the comparison of employment to the same month a year ago. It should be noted that electrical contractors are found in the building equipment contractors industry.
In October 2012 the construction industry added jobs year over year for the second year in a row after more than five years of year over year job losses. As Table 1.1 shows, the industry expanded by adding 2,780 jobs, an over-the-year growth rate of 2.7 percent. Job growth was led by the construction of buildings sector. Employment in the residential building construction subsector has slightly decreased by 0.3 percent. Related to the slight loss in residential building is the employment loss in foundation, structure and building exterior contractors, the specialty trade subcontractors involved in the first phases of the building project down 296 jobs or 2.2 percent from a year ago. The heavy and civil engineering sector added 137 jobs over-the-year, a small gain of 0.8 percent.
As shown in table 1.2, during the third quarter of 2012, the number of housing units authorized by building permits in Minnesota is 82.12 percent above the number authorized during the third quarter of 2011; and is 90.47 percent above the number of permits authorized during the third quarter of 2010.[4] This brings the number of authorized units in third quarter 2012 above the level in third quarter 2008 for the first time since the recession.
The Quarterly Census of Employment and Wages is based on employer-submitted reports on payroll employment and wages for the Minnesota Unemployment Insurance Tax. It shows the most detailed breakdown of industry employment by industry category and geographic region. However, there is a six-month lag in time from the end of the quarter for which employment is reported and when it becomes available.
Chart 2 shows that while total specialty trades construction industry employment grew from 2001 through mid-2006; total electrical contractor employment is down since 2001. The demand for non-residential electrical contracting work weakened after 2001, leveled off from 2004 to 2007, but dropped sharply again from 2008 through 2010. The slowdown in residential construction has had a pronounced impact on residential electrical contracting employment since 2005. However, employment in most sectors began to level off in 2010 and expand slightly in 2011 with continued expansion in the first quarter of 2012.
Chart 3 shows that the Twin Cities region had 59 percent of the total electrical contractor industry jobs in Minnesota in 2011. Over 77 percent of the state’s job loss in the electrical contractor industry since 2001 has occurred in the Twin Cities region, a decline of 4,360 jobs or 41.0 percent.
Most regions in Greater Minnesota have experienced smaller changes over the time period, ranging from a 4.4 percent decrease in the Northeast region to a 26.9 percent decrease in the Southeast region. Numerically, the job loss ranges from 28 jobs lost in the Northeast region to 387 jobs lost in the Southeast region. Between 2009 and 2011, there were job declines in the electrical contractor industry in all regions of Minnesota.[5]
Job losses in the Electrical Contractor industry began to turn around in 2011 with over the year employment growth statewide in 2011 and third quarter 2012. Five out of six regions saw over the year job growth in this industry in 2011 and three out of six regions saw over the year job growth in third quarter 2012: Twin Cities, Northwest and Central Minnesota.
Job Vacancies
Twice each year the Department of Employment and Economic Development’s Labor Market Information Office (DEED-LMI) conducts a survey of job openings in Minnesota. Chart 4 shows that the statewide number of vacancies for electricians during the second quarter of 2012 decreased to almost half (54) from the same quarter in the previous year (106). The job vacancy rate for electricians in the second quarter of 2012 was estimated to be 0.5 percent, or 0.5 job openings for every 100 electrician positions in the state. This is less than both the overall job vacancy rate for the major construction and extraction occupational group (1.9%), and the overall job vacancy rate (2.5%).[6]
Short-term Projections
Short-term industry and occupation employment projections are produced quarterly by DEED-LMI. The most recent figures available are shown in Table 2 below. The number of employed electricians is projected to grow by 256, or 2.5 percent over the next year. Additionally, electricians will be needed to take jobs left vacant as individuals retire or otherwise leave the profession. An additional 240 electrician openings will result from projected replacement openings.[7]
Long-term Projections
Table 3 shows the electrician employment and job openings projections for Minnesota and the six planning regions for 2010-2020 from DEED-LMI long-term projections.
According to Table 3, there is a projected average annual demand of 626 electrician job openings each year from 2010 to 2020 in Minnesota. Job openings in the seven-county Twin Cities region are projected to account for 2,970 or 47.4 percent of the total openings for electricians in Minnesota. Net replacement demand, including retirements, is also a big part of the long-term projections figures. About 43.1 of every 100 projected openings are due to replacement demand.
SUPPLY
Trends in Unemployment
Monthly data on electricians who have been receiving Unemployment Insurance (UI) benefits provide the best available information on the number of unemployed electricians, both union and non-union members. However, it will not capture all of the unemployed due to eligibility requirements and the fact that some individuals may have exhausted benefits. The chart below shows the comparable trend for only those individuals receiving regular UI benefits over the past seven years. It does not include an additional number of unemployed workers who received Federal Emergency Unemployment Compensation (EUC) benefits. The EUC benefits were first paid in July 2008 and have been extended several times since then.
The impact of the 2007 to 2009 recession on top of the earlier slowdown in residential construction is dramatically reflected in the increase in unemployment insurance claims beginning in the fourth quarter of 2007 and accelerating in 2009. As shown in Chart 5, the number of people receiving Unemployment Insurance in October 2012 was 586, down by 150 or 20.4 percent from a year ago. The twelve-month moving average in October 2012 was 869, down by 97 or 10.05 percent from a year ago.[8] Recent numbers of UI recipients have declined to pre-recessionary levels. It should be noted that the number of electricians who exhausted their UI benefits reached a peak of 1,732 in calendar year 2010.