GORDON REPORT
October 2015
Confronting
U.S. Workforce Decline
The October Jobs Opening and Labor Turnover Survey (JOLTS)
produced by the U.S. Bureau of Labor Statistics points to significant long-term
trends in the U.S. labor market. In August 2015, the jobs opening rate was 3.6
percent. This was higher than the jobs opening rate registered before the
beginning of the 2009 recession at the same unemployment level. Also since
February 2015, job openings have exceeded hires for seven consecutive months.
In contrast, except for August 2014, hires exceeded job openings from December
2000 to January 2015.
Why is the overall U.S. economy not improving if the job
openings rate is increasing? A declining U.S. workforce participation rate
seems to be a factor that is casting a shadow across the U.S. economy. In
September the unemployment rate held steady at 5.1 percent only because about
350,000 American workers quit looking for a job. Both the number of available
prime-age workers and of people employed declined. Not since 1977 has the
United States seen a lower share of its workforce looking for a job.
At the same time, the Society for Human Resource Management
(SHRM) reported in its September survey that 33 percent of HR professionals are
having increasing difficulty filling jobs at all skill levels. Even more
telling, this figure rises to 55 percent for filling skilled jobs. SHRM
indicated that this trends have been increasing over the past 17 consecutive
months.
The National Federation of Independent Business' September
survey found that 45 percent of the respondents reported that they had few or
no qualified applicants for jobs they were seeking to fill. Twenty-seven
percent of these small business owners could not fill open positions during
this month.
The September Federal Reserve "Beige Book" noted
that almost all its districts reported that there were difficulties in filling
skilled jobs. A Conference Board study indicated that in mid-September all
business sectors were experiencing a record number of job vacancies they could
not fill.
The decline in workforce participation cannot simply be
explained by the escalation of baby-boomer retirements. In September the
participation rate of prime-age workers (ages 25 to 54) was 80.6 percent, a
rate last seen in April 1984. While the number of long-term unemployed has
dropped by over 840,000 workers over the past year, there has not been a
corresponding increase in employment, thus indicating that these people have
given up looking for work. All of these statistics point to the fact that large
numbers of Americans do not have the skills employers are seeking. This
skills-job crisis continues to grow. Our current estimate is that 8 million
jobs are vacant across the United States. If these trends continue, we estimate
that by 2020 the United States could have 14 to 24 million vacant jobs.
This mismatch has been building for more than 20 years. It
is a structural and systemic economic issue directly related to obsolescent
education-to-employment systems at the regional and national levels and the failure
of businesses to provide training to new and incumbent workers. According the
the 2015 Manpower Talent Report, only 20 percent of U.S. businesses provide
training to their employees.
There are talent-creation solutions underway at the local
level that I have termed RETAINs (Regional Talent Innovation Networks). But
they are not at scale.
After 30 years of so-called education and workforce reforms,
we have to go the whole way! It has become very apparent that partial reforms,
piecemeal plans, and concession to the status-quo have placed much of the
current and future workforce in jeopardy through a "knowledge-starvation
diet."
We need to recognize that there are "New Luddites"
among us. They have retarded progress by defending an outdated workforce
preparation system designed for a less-demanding 20th-century labor market.
That era has disappeared.
The majority of American need to move on. We urgently need
new regional knowledge-delivery systems. The RETAIN model can offer more people
a better-coordinated, higher quality education-to-employment pathway into a
challenging 21st-century labor market.
Edward E. Gordon is president of Imperial Consulting
Corporation - www.imperialcorp.com.
His latest book is Future Jobs:Solving the Employment and
Skills Crisis (Praeger, 2013), which is a 2015 Independent
Publisher Book Award winner.
