FEBRUARY
GORDON REPORT
White
Paper
Job Shock:
Solving the Pandemic & 2030 Employment Meltdown
Part II:
What Has Changed?
Would You Use a Videotape in a Blu-ray Disc Player?
The days of semi-skilled blue-collar factory jobs are fast
disappearing. These jobs once provided a 19-year-old high school graduate or
drop-out with the wages and benefits needed to support a family with a
middle-class standard of living. Thinking that working in low-skill
manufacturing or service occupations will propel you into the middle-class
today is as sensible as buying a videotape for a Blu-ray disc player.
The decline of
many types of U.S. manufacturing jobs was a hot political issue in both the
2016 and 2020 Presidential elections. The economic consequences of the closing
of large manufacturing plants, particularly those making automobiles and large
household appliances, has been especially severe. Many of these factories were
located in smaller cities in which they were the central economic engines of
their communities since the 1950s. They provided large numbers of assembly-line
workers with well-paying, lower-skill blue-collar jobs. The growing prominence
of electric vehicles has made such auto plants obsolete. The new technologies
used in these vehicles mean that robotics are a central feature of their
assembly lines. Such assembly lines depend on higher-skill workers who control,
maintain, and repair the automated equipment. Manufacturing in general is
undergoing a similar transition with jobs that support automated equipment
growing dramatically.
The December
2020 survey of the National Association of Manufacturers illustrates the rapid
escalation of skills demanded in manufacturing. Even in the midst of the
COVID-19 pandemic, respondents reported the “inability to attract and retain
talent” as their top business challenge. The Manufacturing Institute has
projected that 2.4 million manufacturing jobs will likely be unfilled over the
next decade due to skill deficits.
The Fourth
Industrial Revolution is wiping out many types of middle-skill jobs. The
COVID-19 pandemic has more severely affected middle-skill and low-skill
workers. More individuals see both their financial well-being and social
status threatened. This has helped to fuel the growth of populist movements
that are latching on to conspiracy theories or finding other scapegoats to
blame for their current jobless or low-paying job situations. They are placing
the blame on the wrong targets. They should be directing their anger at
inadequate or outmoded training and education systems that do not provide the
skills needed for the jobs that are currently in demand.
Demographic Time Bomb
The United
States and the world are facing a structural labor-market race between
advancing technology, on the one hand, and demographics and education on the
other. In the United States alone 79 million baby-boomers are retiring between
2010 and 2030. The U.S. Census Bureau projects that one in five Americans will
be 65 or older in 2030 and by 2025 the number of retirees will be enough to
populate 27 Floridas. While the US population is projected to grow to over 355
million in 2030, an increase of about 6 percent, the working age population 18
to 64 is only projected to increase by 2 percent.
Similar
demographic shifts are also occurring in other nations in Europe and Asia.
Birth rates are falling significantly in Italy, Germany, China, Japan, and
South Korea to name a few. In these nations as in the United States, the
working age population is supporting an ever-growing number of retirees. This
demographic shift increases the importance of raising worker productivity. In
most nations the current pace of education reform and worker retraining will be
too little, too late. For example, in China about 70 percent of the labor force
remains unskilled as its huge rural population is relegated to inferior schools
where most students receive no more than a junior high education. (Rozelle, Invisible China)
The central
premise of this "Job Shock" White Paper is that radical improvements
in educational and training programs are needed to obtain a global labor force
that meets the Fourth Industrial Revolution’s technological demands. American
businesses have become over-reliant on importing foreign talent. However, as
the world-wide war for talent heats up, it will be virtually impossible for the
United States to use this strategy to compensate for our chronic domestic
talent shortages. This situation is likely to become more acute between 2020
and 2030.
Lessons from the Past
This is not the
first time the United States has struggled with job shock. Beginning in
the1890s the spread of electric power led to mass production methods in
factories and population shifting from farms to cities. Factory technologies
required workers with basic reading and math skills. To meet these expanded
educational needs, compulsory tax-supported education gradually spread across
the nation.
The launch of
Sputnik in 1957 triggered the Space Race between the United States and the
Soviet Union. This spurred the growth of the American aeronautic and defense
industries with a consequent rise of jobs and careers in STEM (science,
technology, engineering and mathematics) areas. Encouraged by federal funding,
many initiatives sought to improve and expand STEM education and interest more
students in pursuing careers in these areas. The 1970s saw the introduction of
personal computers (PCs) in homes and businesses across the United States further
expanding technical employment growth.
The good news
is that there is not a fixed number of jobs in the U.S. economy. These past
disruptive job transitions provide evidence that personal attitudes toward jobs
do change and that the American labor market is very elastic. The new job
requirements of the 1970s sparked a nationwide impetus for improving reading,
math, and science instruction in elementary and secondary schools. There also
was tremendous growth in educational options at the college level, and U.S.
businesses developed in-house training and education programs for new and
incumbent workers.
Today’s Job Demands
The Space Race
and computer technology revolution produced islands of educational excellence
but did not lead to the general development and expansion of education programs
across the United States. The current education-to-employment system lags far
behind the rate of change in the skill demands of the U.S. labor economy.
Two-thirds of occupations now require post-secondary education, while a high
school education or less suffices for only about one-third of jobs.
The challenge
we now face is that only about one-third of our high school graduates leave
school with reading and math comprehension at the twelfth-grade level. These
skill levels are needed for the successful completion of post-secondary
certificates, apprenticeships, community college two-year degrees, or four-year
degrees.
Today’s
technologies are increasing the importance of the ability to work in teams that
often include workers in a variety of skill and job classifications. This in
turn is heightening the importance of so-called “soft skills,” such as
effective communication, problem-solving, self-motivation, time management,
leadership, and ethical workplace standards.
The COVID-19
crisis has abruptly changed workplaces and skill demands worldwide. It is
increasing the adoption of automation, robotics, and technologies that
facilitate remote-work options. In this changed environment, adaptability has
become a vital skill. A key to adaptability is the cognitive ability of
learning how to learn as it enables workers to quickly gain new knowledge and
analyze how to implement it to meet new workforce challenges.
We are now in
the throes of Job Shock. Too many Americans both young and old cannot find a
good job, and many have given up even looking for one. The U.S. labor market
participation rate began a downward slide after the 2010 recession and has
dived by two percentage points over the past year as the COVID-19 pandemic has
decimated some sectors of the U.S. economy. (U.S. Bureau of Labor Statistics,
January 2021) This makes the official unemployment rate an inaccurate barometer
of workforce conditions.
The United
States is now facing a need to provide updated education and training to two
expanding sectors of the adult population – those who are not currently
employed and those who need to transition to other occupations due to the
impact of the COVID pandemic. In addition, the talent development needs of the
current workforce must be addressed. In next month’s Gordon Report, the “Job
Shock” White Paper will examine the current education and skills profiles of
different segments of the U.S. population and what consequences we can expect
over the next decade if changes are not made.
The monthly Gordon
Report Webinars will be focusing on key topics of the “Job Shock" White
Paper. For more information on signing up or viewing these webinars, click
here
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