Is the actuarial job market getting tougher?

As I read through past threads on Actuarial Outpost, the general consensus from 2005 until today is that the job market for Actuaries is getting tougher and more competitive. It is interesting that the people continuously think the job market for actuaries is getting harder for such a long time. One would imagine that the actuarial job market should follow the natural cycles of any other profession. An easy market attracts more new candidates, and once the market is too crowded, people start avoiding the profession. As more people avoid the profession, the market will again return to a more lax state. However this cycle was not observed through the past 8 years with the actuarial job market, and instead people seem to think that the job market for actuaries is constantly getting tougher without any sign of recovery or reversal.

         This phenomenon raised my interest. Are people on Actuarial Outpost simply the ones who like to complain, or is the actuaries’ job market actually getting tougher? If it is getting tougher, how tough is it getting compared to other professional fields? If you are thinking about a career change, this article may offer something to think about. If you are getting ready to graduate with an Actuarial Science degree like I am, then you will be more prepared for the challenges you will face when looking for an actuarial job.

Is the actuarial job market getting tougher?

The actuarial job market is definitely getting tougher as the number of job seekers outnumber the annual vacancies by three to four times. There are approximately 1100 new actuarial positions available every year, 600 is from the organic growth of the industry[1] and 550 from the retirement of older actuaries[2]. In contrast there are 3500-4200 new actuarial job seekers on the market every year***.  For every vacancy there are three to four people fighting over the same position. Unless you deem yourself as the first 25% of candidates, you probably won’t find a job in the actuarial field.

To make it even worse, despite the market's’ inability to digest the candidates, the number of job seekers is increasing by approximately 200 per year. This number may not seem like a lot, but relative to the number of vacancies (1150/yr) it is significant. The continuous increase in candidates passing the actuarial exam is making the job market more crowded than ever. So it seems that complaints on Actuarial Outpost about how tough the job market has been are justified. The market is indeed getting tougher.  For those of you who cannot find jobs, you are not necessarily lazy or unqualified. You are simply unlucky enough to have chosen a tough market: the actuarial job market.

***I estimated this number of job seekers using the number of people passing the SOA probability exam in the USA each year: approximately 3500-4200 people, which is 70% of the total exam passers. I assume that all of these people have intents to find opportunities within the Actuarial field as the exam requires a significant effort to pass, and it is unlikely that one would take the exam without any intention of coming into the Actuarial field.

How tough is the job market for Actuarial Science majors relative to the job markets of the other professions?

I am going to compare the job market of Actuarial Science to the ones of Computer Science, Finance, and Accounting. I chose these fields because these were the majors that I considered when going to college, and these are also the professions mentioned for comparison on Actuarial Outpost. I found contradictory results: while the job market seems to favor the Computer Science major the most, the unemployment rate suggests Actuarial Science to be a better major in terms of career opportunities. However, because of potential biases associated with the unemployment statistics and my observation of my peers, I argue the former job market analysis is more accurate.

To analyze the respective job markets, I first compared the number of available new jobs with the number of qualifying candidates.

	Actuarial Science	Computer Science	Finance	Accounting
# of new jobs/yr[3]	1,081	123,249[4]	36,287[5]	51,787[6]
# of candidates[7]	4,435[8]	50,463[9]	39,749[10]	58,542[11]
# of graduates per job	4.10	0.41	1.10	1.13

It is not an illusion that your peers in Finance, Accounting, or Computer Science have an easier time finding jobs. Even though the Finance and Accounting majors are facing a relatively saturated market, with slightly more than one candidate fighting over one position, the Actuarial Science professionals are facing fierce competition with more than four candidates for every one job opening.

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         However, the unemployment rate of each major tells the exact opposite story. Computer Science suddenly becomes the worst major while Actuarial Science is now the best major with legendary unemployment rate of 0%. This is the statistic that has lured many students into the field of actuarial science. To be honest, I am not sure which set of statistics is telling the truth. From my personal experience, I would lean towards the first. However, if the first set is true, how could Actuarial Science major have an unemployment rate of 0%?

         The first possibility is that the statistics are inaccurate because of the small sample size for Actuarial Science majors. When the sample size is small, the derived statistics have higher variation and therefore more extreme results. This is further confirmed by the information published by WSJ: majors with highest and lowest unemployment rate are all occupied by the least popular majors, which have smaller sample sizes.

The second possibility is that Actuarial Science majors are more occupation oriented. They may care more about stability and not being jobless, so they would accept an irrelevant or menial job just to stay away from unemployment.  Computer Science majors may have a more stubborn criteria for their jobs, so they would be willing to stay home while waiting for a better offer.

The third possibility is that Actuarial Science major actually gives a candidate an exponentially higher advantage relative to other candidates who simply pass exams without an Actuarial Science degree, so the Actuarial Science major gets the majority of 1000 new jobs available each year while the rest of the candidates would fight for the remaining spots.

Most likely, it is the combination of these three factors that has resulted in 0% unemployment rate. However, two of the three factors are only biases due to the statistical method and individuals’ attitudes towards jobs. They are not true factors reflecting the current market condition for actuaries.

In conclusion, don’t be lured by the low unemployment rate. It is not as easy as it seems. Actuarial job market is in fact tougher than the other ones. Unless you are confident that you make a top tier actuarial candidate, choose an alternate major that will be more transferable and has better job market prospects.
If you have any questions or suggestions, please don't hesitate to comment below!

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^[1] According to Bureau of Labor Statistics, the projected job growth over the next ten years is 5,800. After the growth is annualized, there will be 580 new jobs per year.

^[2] I assumed the retirement rate of actuaries to be 2.562%. Since there are 21,700 existing actuaries, 556 of them will retire every year. I calculated the 2.562% by using the number of people becoming age 65 every year and the number of existing work force. This is a rough estimate, so if you can find a better statistic, please let me know!

^[3] The statistics are calculated using the assumption that the retirement rate is 2.562% with the statistics from the Bureau of Labor Statistics

^[4] The statistic includes jobs for computer programmers, computer systems analysts, database administrators, information security analyst, web developer, network computer architect, network and computer systems administrators, and software developers.

^[5] This statistic includes jobs for budget analysts, cost estimators, financial analysts, financial examiners, and personal financial advisors.

^[6] This statistics includes jobs for accountant, auditors, tax examiners and collectors, and revenue agents.

^[7] These statistics are from College Prowler, and they include both Master and Bachelor graduates.

^[8] This statistic is the number of people passing exam P in the U.S. every year.

^[9] This statistic includes graduates from the following majors: Computer Science, Computer Programming, Computer and IT Administration, Computer Systems, Data Processing, and Information Studies

^[10] This statistic includes graduates from the following majors: Finance, Banking and Finance, and Investments and Securities

^[11] This statistic includes graduates from the following majors: Accounting, Accounting Technician and Bookkeeping, and Taxation

[12] http://graphicsweb.wsj.com/documents/NILF1111/#term=