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The Emerging Workforce Crisis

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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.

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About Dave Nalle

  • Doug Hunter

    Interesting read. After reading I’m not sure if I’m a union member or a nativist. I fail to understand your disdain for those that want our borders enforced and law abiding immigrants to get their fair shake.

    I agree with your analysis of the demographic trends and would love so see as many educated workers allowed in as possible (let their countries education system foot the bill for our progress). I’d also like to see some laborer types allowed in but please, let the Mexicans line up like everyone else and put in an application. In virtually any scenario it’s better for us to get to vet our immigrants than to have a free for all that rewards those most willing to break the law. With a monitored application process we can select the most educated or the best english speakers, those with no criminal records or reasonable medical histories and vaccination records, or any other criteria we feel necessary to support our economy.

    Border seucrity and migrant workers aren’t two diametrically opposed ideas and there’s no reason to pretend they are.

  • http://www.elitebloggers.com Dave Nalle

    Interesting read. After reading I’m not sure if I’m a union member or a nativist.

    I don’t think you necessarily have to be either. They are just the particular blocks that some politicians are pandering to.

    I fail to understand your disdain for those that want our borders enforced and law abiding immigrants to get their fair shake.

    I don’t have a disdain for them. I have a disdain for those who want to exclude immigrants because they are from particular countries or parts of the world, and those who want to irrationally drive our current illegal workforce from the country rather than regularizing them and admitting that we need their labor.

    I agree with your analysis of the demographic trends and would love so see as many educated workers allowed in as possible (let their countries education system foot the bill for our progress).

    It’s not just educated workers we need. The demand for skilled laborers is even greater, although the need for educated workers will catch up sooner than most people realize.

    I’d also like to see some laborer types allowed in but please, let the Mexicans line up like everyone else and put in an application.

    I didn’t suggest anywhere in the article that we should just open the borders, did I?

    In virtually any scenario it’s better for us to get to vet our immigrants than to have a free for all that rewards those most willing to break the law.

    Yes, but we shouldn’t automatically exclude the people who most want to work here just because they came here illegally. IMO they should be the first to get visas once they go through a proper review process.

    With a monitored application process we can select the most educated or the best english speakers, those with no criminal records or reasonable medical histories and vaccination records, or any other criteria we feel necessary to support our economy.

    Sure, so long as we don’t set the standards so high that they discourage immigrants or make it easier to come in illegally. And as I noted in the article, I don’t think we should let all of these workers immigrate. I much prefer a good guest worker program.

    Border seucrity and migrant workers aren’t two diametrically opposed ideas and there’s no reason to pretend they are.

    I really don’t think I did anything of the sort in this article.

    Dave

  • Lumpy

    Fascinating analysis. Why don’t Michael Moore’s precious unemployed factory workers from Michigan just move a couple of states to the west and find work? Probably discouraged by the unions who don’t wnt to lose the dues.

  • http://vikk.typepad.com/blog_trek/ Heather Ames

    I have big issues with raising the retirement age. That’s fine for those who work in more sedentary occupations, and who wish to continue doing so. But what about those in the service industries?

    Working 8 hours standing on your feet becomes increasingly difficult as you age. It takes a toll on your back, your hips, your legs and feet. Waitresses, store clerks, nurses will all develop more chronic illnesses that will result in the need for medical care: circulatory problems, back strain, degenerative joint disease leading to hip and knee replacements. Need I go on?

    And what about the construction workers, miners, and others in physically demanding jobs? Do you seriously think they can continue lifting heavy weights, bending, straining, etc., etc.?

    And what happens when they all develop chronic health problems? All of us will see health costs climbing from doctor visits, surgical intervention, tests and medications.

    People may be living longer, but they are not going to live healthier lives if the U.S. doesn’t get out of this mindset that working until you die is the only way to go. We are the largest industrialized nation in the world that works longer and harder than any other nation.

    And what is that getting us? Road rage. Stress-related illnesses. Obesity rates that are continuing to climb.

    We all need to work together to find better ways of spending the last third of our lives than working until we cannot work any longer, and then living out our last remaining days confined to our homes.

  • http://www.elitebloggers.com Dave Nalle

    I have big issues with raising the retirement age. That’s fine for those who work in more sedentary occupations, and who wish to continue doing so. But what about those in the service industries?

    You think most service industry jobs aren’t pretty sedentary? Looked at the folks at MacDonalds recently?

    But seriously, how many people go from their first job to their retirement as a fry cook or a cashier? If you don’t move up into management or somehow find a job that’s at least marginally better, you’re never going to be able to afford to retire no matter what the retirement age is.

    Working 8 hours standing on your feet becomes increasingly difficult as you age. It takes a toll on your back, your hips, your legs and feet. Waitresses, store clerks, nurses will all develop more chronic illnesses that will result in the need for medical care: circulatory problems, back strain, degenerative joint disease leading to hip and knee replacements. Need I go on?

    OSHA does have rules on working conditions, and one of the recommended treatments for a lot of the conditions you mention is exercise. That said, I frequent a restaurant here in Austin where the average age of the watresses is at least 60. They seem to be surviving and love their work.

    And what about the construction workers, miners, and others in physically demanding jobs? Do you seriously think they can continue lifting heavy weights, bending, straining, etc., etc.?

    It’s certainly possible. I only suggested raising the retirement age by THREE years, not a decade or something. That’s about half what life expectancy has increased since 65 was set as the retirement age. Each person is unique. Some will be able to work until they’re 80 and others are going to be worn out before they are 60. You can’t take every unique extreme example into account in setting a national standard.

    And what happens when they all develop chronic health problems? All of us will see health costs climbing from doctor visits, surgical intervention, tests and medications.

    Actually, as the boomers start to die out some of the pressure for workers and services should decrease, so the greater needs of the next generation should be relatively easy to accomodate.

    But again, I only suggested adding THREE years to the retirement age. This is the same thing suggested by a congressional study group on how to move the social security system towards solvency.

    People may be living longer, but they are not going to live healthier lives if the U.S. doesn’t get out of this mindset that working until you die is the only way to go. We are the largest industrialized nation in the world that works longer and harder than any other nation.

    Studies suggest that it’s far more likely that someone who works into their old age will live longer than someone who retires. In many cases the shock of retirement appears to be fatal.

    We all need to work together to find better ways of spending the last third of our lives than working until we cannot work any longer, and then living out our last remaining days confined to our homes.

    Most older folks I know choose to keep working long after retirement. Like Clavos, who mentioned this earlier, they tried retiring and started to go nuts from boredom sø they went out and got a job. I know one guy who’s 87 and still farms 700 acres of land, runs a small company and does consulting work for the city.

    The fact is that a LOT of people LIKE to work and wouldn’t want to do anything else.

    Dave

  • Maurice

    I disagree with many of your points here, Dave. I know this is one of your pet topics.

    I will say that I like my job and want to work until I die.

  • http://www.elitebloggers.com Dave Nalle

    There’s always someone who disagrees with me, Maurice. It’s not usually you, but I assume you differ mainly with my belief that the solution to the workforce problem is through expanded immigration.

    Dave

  • Maurice

    Dave,

    I have long recognized the problem as you have described it; so yes my problem is with your solution.

    My vision of the future is that wages will continue to rise for those of us with skills. Especially for aging baby boomers like myself that want to work into their 80s and 90s.

    I have no problem with competing with LEGAL aliens.

  • bliffle

    Age discrimination is a big factor in getting jobs or gigs, even at a mere 50 yrs of age. I like to work, too, but not on a treadmill. 20 hours a week should be enough for anyone, and it would be, too, if we had managed our economy better and put excess income into leisure rather than consumption, but the advertising gurus dictated otherwise.

    I’d like to do a little ubuntu/linux consulting, since I’ve put so much time into it this year, but I suspect that the ageism is daunting and anyway the compensation seems to be low.

    I like working, and I think most people do. It’s fun to be involved in cooperative projects and have people making demands on you (how wonderful when you succeed!) and doing things for you, too.

    But human societies seem particularly skillful at turning the gold of achievement into the dross of demand. I think it’s because we promote the worst people to management.

  • Clavos

    “I think it’s because we promote the worst people to management.”

    There’s a lot of truth to that, at least in sales, where I’ve worked most of my life.

    The tendency there is to promote the best sales person to sales manager, at which point your administrative issues immediately start a rapid slide down the chute, PLUS, you’ve disabled your best sales generator.

  • Nancy

    It holds true in any field, I think, from my observations. Whenever someone is decent at a particular endeavor, they get promoted out of their level of expertise. Or it’s the weasel who maneuvers himself into getting promoted way beyond his self-imagined capabilities. Either way, it’s a disaster for those under him, the company, & the promotee himself. It’s a pity so few place have employee assessments of management, because even given some normal axe-grinding, you can learn a lot from employee assessments about someone’s capabilities (or lack thereof) AS a manager, and don’t necessarily have to act on said assessments.

  • Howard

    Dave, you failed to address one of the most glaring reasons for our impending shortage of skilled workers. For four generations our nation has said to its young, “If you don’t have a college education, if you aren’t considered professional, you are a failure.”

    That song has been sung for years by ill informed parents and educators wishing to pad their nest. Unfortunately, those listening are foolish. A good automobile mechanic is a godsend. A skilled woodworker is an artist. We should celebrate these skills and admit that one demonstrating such accomplishments may well be more intelligent than his banker or attorney.

    I think we have many very unhappy “professionals” who would have been very happy plumbers. Promote tech schools and apprentice programs. Remove the stigma of calouses

  • http://www.elitebloggers.com Dave Nalle

    An omnibus response:

    I have no problem with competing with LEGAL aliens.

    I think we can all agree that we’d rather have aliens here legally. The place where many disagree with me is that I don’t think those already here should be punished for serving us with their labor.
    20 hours a week should be enough for anyone

    The more advanced a society the less one should theoretically have to work. The problem is that we all evolved as labor-intensive hunter/gatherers, and our psyches and even our metabolisms are adjusted to working at a relatively high level which modern conveniences might actually render unnecessary, but we can’t change our natures.

    I think it’s because we promote the worst people to management.

    The Peter Principle, and a fundamental truth of society.
    Dave, you failed to address one of the most glaring reasons for our impending shortage of skilled workers. For four generations our nation has said to its young, “If you don’t have a college education, if you aren’t considered professional, you are a failure.”

    An excellent point, Howard. But I did address the issue of technical training in the article. I presented it as one of my solutions to the problem. A typical example of the problem you bring up is that we have too many doctors and not enough nurses. Maybe some of those doctors should have aimed a bit lower and trained to be nurses instead. Of course, what we REALLY have too many of is lawyers.

    Dave

  • Clavos

    “Of course, what we REALLY have too many of is lawyers.”

    ONE of them is too many, and congress is full of ‘em (and it).

  • http://www.republicofdave.com Dave Nalle

    Clavos. You of all people should know that lawyers have their uses. They do make excellent boat anchors, right?

    Dave

  • Howard

    Dave, you did suggest technical schools. My point, however, is the need to make skilled labor an acceptable goal in life. The loss of skilled labor in our society has been partially compensated with our “throw away” approach to repairs. Automobile engine repair is rapidly becoming a comedy of “let’s replace this part and see if that works”

    The greater loss is the shattered life of one in a misplaced career. An incompetent doctor could well have been a competent nurse, as you suggest. The blessing of being that competent nurse is the pychological health produced by one being in the proper labor pool. We’re all happier when we are at least the equal of our peers.

    Howard

  • http://www.elitebloggers.com Dave Nalle

    Given what nurses are paid these days it ought to be a very attractive career path, but our hospitals are still having to go overseas to hire nurses. The number of South African and Eastern European nurses in our hospitals is astonishing.

    I recently learned from one of my wife’s co-workers that our local public schools have gone the same route. Apparently they can’t find enough teachers so they are going to the (mor eor less) English-speaking parts of the world to recruit them. Her kids have had teachers imported from Cameroon and Costa Rica in the last few years.

    Dave

  • Howard

    Dave, you did suggest technical schools. My point, however, is the need to make skilled labor an acceptable goal in life. The loss of skilled labor in our society has been partially compensated with our “throw away” approach to repairs. Automobile engine repair is rapidly becoming a comedy of “let’s replace this part and see if that works”

    The greater loss in disappearing skilled labor is the shattered life of one in a misplaced career. An incompetent doctor could well have been a competent nurse, as you suggest. The blessing of being that competent nurse is the pychological health produced by one being in the proper labor pool. We’re all happier when we are at least the equal of our peers. We need to feel and express true admiration for a competent house framer.

    Howard

  • http://www.elitebloggers.com Dave Nalle

    Howard, you sound like you have a very sound view of life. If I wasn’t so damned tired I’d direct you to my article from a couple of years ago on Eric Sloane and his philosophy of life.

    I do know more than a couple of people who have given up high-pressure careers for something more satisfying and more in tune with their personal wellbeing.

    The classic example is my college roomate who after advanced degrees and a successful career as a reference librarian and researcher decided he really wanted to do nothing but drink beer and write about beer and so he did – and now he’s probably the foremost beer expert in the US and actually makes a living lecturing and consulting and just drinking and reviewing beer. Amazing.

    Dave

  • bliffle

    The sad fact is that ALL technical jobs, whether vocational or degreed, have been downgraded. A young person might well wonder whether it is worth it to undergo a long course of study and apprenticeship to enter a field like engineering, only to find himself downsized for a cheap substitute.

  • Clavos

    “The number of South African and Eastern European nurses in our hospitals is astonishing.”

    In this neck of the woods, they’re all from the Caribbean, and the shortage is so severe, the hospitals are paying sign-up bonuses ranging from $10K to 25K, depending on skill level..

    As you know, my wife has been in the hospital extensively over the last couple of years; almost twelve months out of 25.

    She has NEVER (not even on one shift) had a native-born American nurse.

  • http://www.elitebloggers.com Dave Nalle

    Bliffle, you seem not to be paying attention. What everyone else is pointing out here is that it’s not a problem of these jobs being ‘downgraded’, it’s a problem of not being able to find qualified Americans to do them and having to pay more and go elsewhere to find people to do them.

    Dave

  • Clavos

    What Dave said….

  • Mooja

    Dave, Yet again another well though out position on an important issue.

    Having worked in a field that combines IT and finance for the last 11 years I can say that here has not been one year I can remember, including the dot.com bust years, that we have not been operating at the bare minimum in terms of human resources. In talking with peers at other co’s in the finance industry this is a pretty common problem. There simply aren’t enough bodies available with the right skill sets and ambition to be successful. This has, and is, absolutely affected our growth over the years. This sector can supply many highly lucrative career paths and I have always been at a loss to explain the dilemma.

    Fortunately I have lived within my means and have saved enough of a nest egg to consider retirement now at 37 years of age. One of the idea’s I have been kicking around was to return to school to get a teaching degree and to apply at a local middle or high school. This is an option that I consider wasn’t available to me coming out of college as I was not certain how teachers were able to comfortably raise a family on the wages they receive. The only thing holding me back now is that it appears collective bargaining groups dominate in education and I am loath to align with them.

    I provide my background and current situation because I realized it had interesting implications on the issue you bring up. I am leaving a field that is already desperately short on capable bodies but I am also entering a field that has problems of its own. Namely wages. As a “retiree” I would be teaching but my livelihood would not depend on the wages I receive from teaching. I wouldn’t really care what my salary was and wouldn’t consider another line of work if I had to take a pay cut. This I would think, in a small way, would only worsen the wage problem affecting teachers.

    I wonder if there are enough others in my position to form a trend of sorts.

  • http://www.elitebloggers.com Dave Nalle

    Mooja, there are a LOT of retiree teachers, and it may be one of the few things holding the education system together. That said, they are also generally very dissatisfied with their jobs. Coming from the private sector they find the bureaucracy and inefficiency of the school systems ridiculous and they develop a very low opinion of career teachers who are taught to teach, but know nothing about their subjects beyond the textbook.

    Perhaps if we can get enough retirees into the system we can change it for the better.

    dave