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 Outline of Analysis
| Analysis of Growth and Change Among the Major Components of Employment within the New Orleans-Metairie MSA: 1969-2020 United States Major Components of Total Employment: 1969 - 2020  Figure 1. Introduction Since the millennium, self-employment, particularly that of Nonfarm Proprietors, has been an unheralded but remarkable source of job growth in the national economy. Even many casual observers of national economic trends are aware that since 2000 (the turn of the century) job growth nationally as been decidedly unspectacular when compared with that of the last several decades of the previous century. The pace of job growth over 2000-2007, even prior to the onset of the Great Recession, was well below par. Between 2000 and 2007 the job count nationally advanced from 165,370,800 to 179,543,700, yielding a net positive change of +14,172,900. The net change in jobs witnessed between 2007 and 2012 amounted to a -564,000 job loss. Many observers and analysts that monitor general economic conditions and trends are acquainted with the broad scope of job growth summarized above. However, they may be unacquainted with the major components of employment, and surprised by how the performance of these components individually contributed to total job growth overall. While the Bureau of Economic Analysis breaks out the job data that they report by industry categories, it also reports the data by those that are wage and salary jobs and proprietors. Proprietors, in turn, are broken out among those that are Farm Proprietors and Nonfarm Proprietors. This LA-REAP analysis investigates this trend in the changing composition of employment as it relates specifically to the New Orleans-Metairie MSA. Major Components of Total Employment, New Orleans-Metairie MSA, 2020  Figure 2. Total Employment: 2020 = 747,849 Figure 2 depicts the composition of the New Orleans-Metairie MSA's employment among the three major components for 2020. Wage and Salary Employment equated to 547,370 comprising 73.19% of the total jobs; Nonfarm Proprietors' Employment totaled 199,626 jobs comprising 26.69%; Farm Proprietors' Employment amounted to 853 jobs comprising 0.11% of the New Orleans-Metairie MSA's employment in 2020. For every 100 jobs reported for the New Orleans-Metairie MSA in 2020, about 27 were held by self-employed Nonfarm Proprietors and Farm Proprietors. BEA Definitions of the Major Components of Total EmploymentWage and Salary EmploymentWage and salary employment, also referred to as wage and salary jobs, measures the average annual number of full-time and part-time jobs in each area by place-of-work. All jobs for which wages and salaries are paid are counted. Full-time and part-time jobs are counted with equal weight. Jury and witness service, as well as paid employment of prisoners, are not counted as wage and salary employment; the payments for these activities are classified as "other labor income" in the personal income measure. Corporate directorships are counted as self-employment. Nonfarm Proprietors' EmploymentThe BEA local area estimates of nonfarm self-employment consist of the number of sole proprietorships and the number of individual business partners not assumed to be limited partners. The nonfarm self-employment estimates resemble the wage and salary employment estimates in that both series measure jobs--as opposed to workers--on a full-time and part-time basis. However, because of limitations in source data, two important measurement differences exist between the two sets of estimates. First, the self-employment estimates are largely on a place-of-residence basis rather than on the preferred place-of-work basis. Second, the self-employment estimates reflect the total number of sole proprietorships or partnerships active at any time during the year--as opposed to the annual average measure used for wage and salary employment. Farm Proprietors' EmploymentFarm self-employment is defined as the number of non-corporate farm operators, consisting of sole proprietors and partners. A farm is defined as an establishment that produces, or normally would be expected to produce, at least $1,000 worth of farm products--crops and livestock--in a typical year. Because of the low cutoff point for this definition, the farm self-employment estimates are effectively on a full-time and part-time basis. The estimates are consistent with the job-count basis of the estimates of wage and salary employment because farm proprietors are counted without regard to any other employment. Also referred to as farm self-employment. Major Components as a Percent of Total Employment: New Orleans-Metairie MSA, Louisiana, and the U.S., 2020  Figure 3. What are the differences in employment composition between New Orleans-Metairie MSA, Louisiana and the United States? Figure 3 illustrates three major components---Wage and Salary Employment, Nonfarm Proprietors' Employment and Farm Proprietors' Employment as a percent of total employment. The share of the New Orleans-Metairie MSA's employment reported as Nonfarm Proprietors' Employment (26.7%) is below (-0.8%) the share nationally (21.9%). The share of the New Orleans-Metairie MSA's employment reported as Farm Proprietors' Employment (0.1%) is below (-0.8%) the share nationally (0.9%). In combination, Nonfarm Proprietors' Employment and Farm Proprietors' Employment amounted to 26.8% (26.7% + 0.1%) of the New Orleans-Metairie MSA's employment in 2020. Wage and Salary Employment made up the balance (73.2%) of employment, which amounted to a moderately smaller share than the corresponding 77.2% for Wage and Salary Employment nationwide. Nationwide in 2020, there are just over one (1.13) Nonfarm self-employed jobs for every four Wage and Salary jobs. For the New Orleans-Metairie MSA, there are just over one (1.09) Nonfarm self-employed jobs for every three Wage and Salary jobs. Employment Growth Indices (1969=100): New Orleans-Metairie MSA, 1969 - 2020  Figure 4. Figure 4 compares the cumulative growth of the three major components of employment for the New Orleans-Metairie MSA over 1969-2020. The cumulative growth indices express each component as 100 for the base year of 1969, and represent each component in subsequent years as a percent of their level in 1969. The indices enable a direct comparison of the differences in the cumulative percentage growth of Wage and Salary Employment, Nonfarm Proprietors' Employment and Farm Proprietors' Employment for the New Orleans-Metairie MSA over more than five decades. Over the 1969-2020 period, Wage and Salary Employment in the New Orleans-Metairie MSA increased by 20.0%. Nonfarm Proprietors' Employment, however, rose by 342.2%, while Farm Proprietors' Employment decreased by -18.0%. In 1969, there was one (1) self-employed Nonfarm Proprietors' job for roughly ten (10.10) Wage and Salary jobs in the New Orleans-Metairie MSA. Yet, over the 51-year interval from 1969 to 2020, for every Nonfarm Proprietors' job created only about one (0.59) Wage and Salary jobs were added to the employment roll. Major Components as a Percent of Total Employment: New Orleans-Metairie MSA, 1969 - 2020  Figure 5. While the previous graph illustrates differences in the degree of growth among the three major components of employment, the above figure traces their changing share and relative importance over time. Differences in growth among the three components arithmetically yields the changes in their relative share as shown here. Wage and Salary Employment as a share of the New Orleans-Metairie MSA's employment declined from 90.8% in 1969 to 73.2% in 2020, a shift in relative share of -17.6%. Offsetting this decline was a +17.7% increase in Nonfarm Proprietors' Employment's share from 9.0% in 1969 to 26.7% in 2020; and a -0.1% retreat in Farm Proprietors' Employment's share, from 0.2% to 0.1% over the same period. Shifts in Share of Total Employment Among Major Components: New Orleans-Metairie MSA, Louisiana, and the U.S., 1969-2020  Figure 6. How does the shift in employment composition for the New Orleans-Metairie MSA compare with the shifts in share among the three major components for Louisiana and the United States over 1969 to 2020? In the above figure, Wage and Salary Employment's share for Louisiana and nationally declined by -11.8% and -9.3%, respectively, whereas Wage and Salary Employment's share declined by -17.6% in the New Orleans-Metairie MSA from 1969 to 2020. In Louisiana, the shift in share of Nonfarm Proprietors' Employment and Farm Proprietors' Employment totaled +13.8% and -2.0%, respectively. Nationally, the shift in share of Nonfarm Proprietors' Employment and Farm Proprietors' Employment amounted to +11.4% and -2.1%, respectively, while the corresponding shifts in share for the New Orleans-Metairie MSA equated to +17.7% and -0.1%, respectively. Wage and Salary Employment as a Percent of Total Employment: 1969-2020  Figure 7. Nationally, Wage and Salary Employment as a share of employment declined from 86.5% in 1969 to 77.2% in 2020, for a net loss of -9.3%. For the New Orleans-Metairie MSA, Wage and Salary Employment dropped from 90.8% to 73.2% over 1969-2020, for a net loss of -17.6%. Nonfarm Proprietors' Employment as a Percent of Total Employment: 1969-2020  Figure 8. Nationally, Nonfarm Proprietors' Employment as a share of employment advanced from 10.5% in 1969 to 21.9% in 2020, for a net gain of +11.4%. For the New Orleans-Metairie MSA, Nonfarm Proprietors' Employment rose from 9.0% to 26.7% over 1969-2020, for a net gain of +17.7%. Between 2000 and 2020 the Nonfarm Proprietors' Employment shift in share amounted to +6.4% (from 15.4% to 21.9%). For Washington, the shift in share registered +9.2% (14.4% to 23.6%) while for the New Orleans-Metairie MSA the shift in share recorded +12.0% (14.7% to 26.7%). Farm Proprietors' Employment as a Percent of Total Employment: 1969-2020  Figure 9. Nationally, Farm Proprietors' Employment as a share of employment declined from 3.0% in 1969 to 0.9% in 2020, for a net loss of -2.1%. For the New Orleans-Metairie MSA, Farm Proprietors' Employment dropped from 0.2% to 0.1% over 1969-2020, for a net loss of -0.1%. Indicies of Structural Change Among the Major Components of Employment: 1969-2020  Figure 10. The "index of structural change" shown in Figure 10 calibrates the timing and magnitude of change in the composition of the New Orleans-Metairie MSA's employment among the three major components compared with Louisiana and the nation over 1969-2020. The period of most dramatic change held in common by New Orleans-Metairie MSA, Louisiana and the nation spanned the period of the late 1970s to the mid-1980s and post 2000. Structural change is defined and measured here as the composite change in shares among the three major components of employment. Changes in shares are based on differences between each component's share in 1969, and its share of employment for each year since. Index values equal the sum of the absolute value of the share changes among the three components year-over-year relative to 1969. A rise in the index indicates that composition of employment among the three major components deviated further away from their 1969 distribution. Note: Figure 6 displayed the share shifts among the three components over the interval 1969-2020. Accordingly, the 2020 value of the structural change indices for New Orleans-Metairie MSA, Louisiana and the nation are simply the sum of the absolute values of share shifts shown in Figure 6.
Major Components Contributions to Total Employment Growth: 1970-2020  Figure 11. The discussion thus far has centered primarily on examining and comparing changes in the composition of the New Orleans-Metairie MSA's employment compared with Louisiana and the nation over 1970-2020. Figure 11 focuses attention on how much each component contributed individually to the New Orleans-Metairie MSA's employment growth over the 52-year period. The annual growth rate of the New Orleans-Metairie MSA's employment averaged 0.83% over 1970-2020. Each component's individual contribution to this total amounted to 0.38% for Wage and Salary Employment, 0.44% for Nonfarm Proprietors' Employment and 0.00% for Farm Proprietors' Employment, all of which sum to 0.83%.*
In order to gauge each component's contribution to total employment growth the table above displays each component's overall contribution to growth as a percent of total growth. Note, for example, Nonfarm Proprietors' Employment's overall percentage contribution to the average total growth over 1970-2020 of 53.67% was derived by: 53.67% = ( 0.44% ÷ 0.83% ) x 100.* New Orleans-Metairie MSA Major Components as a Percent of Total Employment: 1969 vs. 2020 and Component Contributions to Employment Growth, 1970-2020  Figure 12. Figure 12 recaps the theme and distills the results presented throughout this analysis of the major components of employment. In 1969, Wage and Salary Employment comprised 90.8% of the New Orleans-Metairie MSA's total employment. However, over the following 51-year period 1970-2020 Wage and Salary Employment accounted for only 46.4% of the annual growth in the New Orleans-Metairie MSA's employment. As a result, by 2020 Wage and Salary Employment's share declined to 73.2%. Because Nonfarm Proprietors' Employment alone accounted for 53.7% of the New Orleans-Metairie MSA's total employment growth over 1970-2020, its share rose from 9.0% in 1969 to 26.7% in 2020. Farm Proprietors' Employment, in turn, declined from 0.2% to 0.1% over the same period owing to its -0.1% contribution to the growth of the New Orleans-Metairie MSA's total employment.
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