There’s a crisis looming in our job market, one which is coming faster than anyone anticipated. It’s not the dread specter of unemployment which has haunted us in the past. It’s certainly not job outsourcing. It’s not even the flood of illegal workers from over the border stealing American jobs. It’s really more like the opposite of all of these.
What we’re facing is a critical shortage of both skilled and unskilled workers which has already become a serious problem in some parts of the country and is likely to spread nationwide within the next few years. This isn’t entirely unanticipated. Labor experts have been predicting a serious worker shortage for years with a timeline putting it 20 or 30 years into the future. No one has been paying much attention, but current trends suggest that the problem is going to hit us sooner and be larger than anyone has predicted.
As our population grows and matures, it places more demands on our economy for workers with specific skills and for certain types of products. As the rest of the world increases in economic productivity and population its demand for the specialized services which the United States provides best also increases.
Part of the problem is the need of the aging baby boomers for more medical care, but part of it is also their increasing affluence. As they age they need more nurses and care workers, but they also demand and can afford better housing and more luxuries and more assistance with things like retirement plans and insurance. These are all services mostly provided by younger workers, and we don’t have as many younger workers in proportion to our older consumers as we would if our birth rate had remained constant throughout the last two generations.
Another part of the problem is the emerging industrialized world and its need for the financial, business, and technical services which the United States remains preeminent in supplying. Other advanced nations take up some of the slack, but we remain the largest supplier of engineers, managers, information technology, and technical workers. We may be outsourcing about 7% of our menial industrial jobs, but we’re also sending large numbers of our skilled workers overseas to supervise laborers for multinational corporations and to provide technical skills to support operations in foreign factories and businesses. Experts are actually suggesting that our economic growth is being held back by the shortage of skilled workers in the US because it discourages business expansion and the launching of new projects.
We have already seen the beginnings of the problems with our inadequate workforce in some areas. Everyone is probably familiar with the critical shortage of personnel in skilled but relatively low-paying jobs like telephone technical support. Americans with the skills to do these jobs can almost always get better jobs, so even though companies would pay $15 an hour or more for articulate Americans who can read a script on a computer screen to do these jobs, those people just don’t exist in sufficient numbers in our workforce. So instead, when you call for instructions on using your blender you get someone in Costa Rica or Bangalore.
In some parts of the country this problem is already far more pervasive. In areas where the older, more affluent population is increasing rapidly through migration, particularly the once sparsely populated mountain states of the west like Idaho, Utah and Montana, the part of the population which consumes services has so outstripped the younger population which provides them that certain types of jobs just cannot be filled, even at grossly inflated wages.
Unemployment in these states is in the 2-3% range, a level so low that even the relatively unemployable are probably being dragooned into working. What’s more, employers can’t find workers for some jobs at wages anywhere near the national average. It takes about $15 an hour to hire food service workers who work for about half that in some other parts of the country. Some businesses are outsourcing order taking to phone banks, offering substantial sign-on bonuses, or even bringing in legal workers from Eastern Europe to fill their labor needs.
These are states which a lot of retirees are moving to, and they’re hardest hit in the areas where demand is increasing at the same time that labor is becoming less available. The construction industry is feeling a large part of the strain, leading to long delays and much higher construction costs. All of the new arrivals need places to live, and these underpopulated states just don’t have the base population to do the needed building. Similarly, there’s a shortage of truck drivers, because more people means more demand for food and merchandise, and there just aren’t enough truck drivers to bring in and distribute products.
The worker shortage may seem isolated now, but the demographic forces driving it are not going to go away and there’s every indication that problem is bigger and more serious than anyone has predicted, perhaps leading to economic stagnation, material shortages, wage-driven inflation and increasing lack of basic services early in the next decade.
The obvious solution is more workers, especially in critical jobs like information services, healthcare, construction and transportation. We need both laborers and skilled workers and we’re going to need them in increasing numbers fairly quickly. Part of the solution lies in Mexico, where both moderately skilled and unskilled workers are eager to find opportunities in the United States. Easing that process and getting the workers where they are needed should be a top priority of government. That doesn’t mean just opening the borders or giving amnesty to every illegal immigrant, but it does mean keeping them in the labor pool but making sure they have jobs and aren’t criminals and then giving them guest worker visas. It also means making guest worker visas numerous and long term in the future to attract more qualified workers.
Mexican workers may help out with the construction and transportation industries, but we’re going to need more technically skilled workers as well. Active recruitment of workers from other parts of the developed world is already going on. Hindi doctors are well on their way to becoming as much of a ubiquitous cliche here as they are in Britain, and the flood of immigrants from the far east into our technical and scientific graduate schools is impossible to ignore. Most of these students would love to stay in the United States if jobs are available and the government makes visas easy to get. Even the lowest entry salary our technical industries pay will outstrip whatever they might earn at home.
We also need to make better use of our homegrown workers. Our public schools are not doing an adequate job preparing workers for the kinds of jobs which they ought to be pursuing. We need to increase the amount of technical training available in high schools and make it easier to attend technical schools and colleges with more scholarships and better loan programs. We ought to be able to graduate kids from high school with the technical skills to go directly into the workforce as healthcare workers and technicians where they are most needed.
Another option worth considering is raising the retirement age, to limit mandatory retirement and discourage voluntary early retirement. This will help keep more workers in the workforce longer and limit the “brain drain” of our most experienced and skilled workers. People live longer now than when the retirement age was set, and the overextended social security system would also benefit enormously from workers paying in a bit longer and taking money out for a few less years. Raising the social security retirement age to 68 makes a great deal of sense, along with incentives to encourage private retirement programs to follow suit.
We’re already seeing the beginnings of dramatic wage increases around the nation. Data from the Bureau of Labor Statistics shows dramatic overall increases in wages in the last year and wages are clearly trending upwards. Certain types of jobs are moving particularly quickly, in the obvious areas already mentioned such as healthcare, information technology, and service industries. Overall wage growth for this year is projected to be double what it was last year. This is good news for workers, but because the trend is so pervasive, it’s likely to be followed by an increase in inflation. This isn’t a crisis yet, but with the worker shortage the trend may continue to accelerate geometrically if something isn’t done to build up the workforce.
Presidential candidates who are talking about unemployment and the illegal immigrant problem are either pandering to very small and increasingly meaningless constituencies, or they are just uninformed. They ought to be laughed off the stage. They should be talking about educational incentive programs and ways to attract skilled guest workers.
We need to throw out a lot of our old ways of thinking and set aside politics and look to the general welfare of the nation. The protectionism and parochialism promoted by unions and nativist groups are increasingly counterproductive. Saving jobs for Americans is utterly meaningless, because we’re soon not going to have enough Americans to do the jobs which will keep the country functioning.