It may seem fanciful, but a new report published last week by The Conference Board concludes that the United States and other advanced economies will actually face significant labor shortages over the coming decade and a half.
This forecast has been made primarily based on the Baby Boomer workforce departing the labor market over this period.
The Baby Boomer phenomenon is what makes things different in now compared to the decades previously: For the first time since World War II, working age populations will actually be declining in mature markets.
As Dr. Gad Levanon, director of macroeconomics at The Conference Board reported, “The global financial crisis and its aftermath – stubbornly high unemployment in many countries – have postponed the onset of this demographic transformation, but will not prevent it from taking hold.”
According to The Conference Board’s analysis, several countries have already begun to see this happen, as their natural rates of employment have now fallen below their pre-recession levels: Japan, Germany, South Korea and Canada.
The same thing is expected to happen in the United States and the United Kingdom by 2015 … and in the Scandinavian countries, the Benelux countries plus Australia by 2016 or 2017.
Other mature economies like those of Spain, France, Portugal, Italy and Greece won’t experience this until the years further out – but The Conference Board predicts that it will happen there as well.
U.S. market sectors that are expected to experience the most severe labor shortages include healthcare occupations, STEM occupations (science, technology, engineering and mathematics), as well as skilled trades that don’t require a college degree but that do require specialist training.
Among the challenges The Conference Board envisions in these three major categories are the following:
- Skilled labor occupations like construction, transportation and utility plant operations are going to be adversely affected by many more retirements happening than new job seekers coming in to fill the void.
- STEM occupations won’t be as stressed as some might imagine, because higher productivity will alleviate the pressure on hiring more workers in IT and high-tech manufacturing segment. That being said, certain sub-segments such as information security, environmental and agricultural engineering, and applied mathematics are expected to face severe labor shortages.
- The numbers of new entrants in various healthcare occupations are constrained by high barriers to entry such as extensive education and experience requirements, along with accreditation requirements.
The Conference Board report has constructed a Labor Shortage Index covering 32 countries. The index combines current labor-market tightness with future demographic trends to predict the likelihood of the different countries experiencing labor shortages.
The bottom line on the index: with the exception of the Mediterranean countries, all of the labor markets in developed economies are expected to be squeezed pretty tightly starting within the next few years.
It’s been quite a while since we’ve been hearing about pending labor shortages … but that’s exactly what The Conference Board is predicting. Here’s a link to more details about the report, which is appropriately titled From Not Enough Jobs to Not Enough Workers.
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2 thoughts on “Coming Up: A Labor Shortage?”
With 47% of the population on the government dole — and being incented to stay there — no wonder there is/will be a shortage.
It’s time to put those folks back to work. Require them to be trained for the future — but no, that might violate their right to a “free” lunch …
Maybe I’m just not educated enough, but I don’t know what an “advanced economy” is.
The same goes for “mature markets”. What are they, when will they be considered aging, and what or who is being sold to whom? Similarly, I need remedial education on “natural rates” of employment. Please.
Come to think of it, here’s one. When I read “mature economies”, there is a strange connotation that comes to my mind. Rome of perhaps 1800 years ago was a “mature” economy. What happens to “mature” over time? Crutches, respiratory troubles, aches, impotence, and eventually . . . having its ashes spread across somewhere or simply end up in a jar on someone’s dresser.
The bemoaned shortages might be explained by two other declines – or crunches: Education and pay rates. At the same rate that the associated industries agglomerate to ever-larger entities, they become so powerful that they are paralyzed by their own muscle mass, so to speak. At the same time, and in part because of that, the average young person’s motivation to excel and stretch their minds is approaching rock bottom. I know many ofthem and they are desperate for it.
I also know many skilled labor workers, like construction, transportation and utility plant operators. They “retire” for two reasons: They are laid off and then re-hired at such low wages and with just enough hours not to qualify for benefits, that they end up working for less than their unemployment. So, it’s not the retirements, it’s the lack of educational structure and the dismal pay.
I’m happy to hear that “certain sub-segments such as information security, environmental and agricultural engineering are expected to face severe labor shortages.” After all, “information security” is like government: works perfectly, but for whom? And as far as “environmental and agricultural engineering” goes, if they wither to extinction, perhaps we can save a few pieces of un-engineered life, un-“Round-up”ed crops, un-hormonized meat, eggs or dairy, non-devastated forestlands non-pesticided rural/urban boundaries and suburbs. I cannot be diplomatic about this. But then, we can also simply offshore the chemical industries to countries where either the laws are very lenient or the enforcement is nil, and where dispensable labor comes cheap. And it’s all the fault of the waning U.S. labor force.
As to the predicted infirmity of the labor force in the sickness industry: It is a for-profit business, not charity. There is no shortage of personnel but there is a shortage of willingness to pay them appropriately. But not to worry, there’s an easy fix: Breed them in the Philippines, South America, India, etc. and certify them there. Change job requirements so that skilled work can be done by cheaper labor.