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Labor Shortage 3

(August 16, 2007) So far, a quick look at the data shows that, from a pure numerical perspective, there is no labor shortage. From a cultural perspective, a shift in the composition of the labor supply might be construed as a "shortage" (with reasonably scary subtext). It is possible to understand a potential labor supply problem only when you look at the question of growth.

As mentioned in yesterday's article, there will be 60 Million new workers in the USA over the next 20 years. That's a 20% growth in the labor supply. Unfortunately, we need about 70% growth just to stay out of recession. That's where the shortage is. If we just want to break even and have either none or very limited growth, we're in good shape.

About 12% of the current domestic American population is foreign born (i.e. immigrants). Post-1990 immigrants and their children accounted for 61 percent of population growth during the last decade. The bulk of population growth over the next 30 years will come from foreign born residents. In short, growth is contingent on the availability of foreign born workers in our economy.

Much of what we hear about the Labor Shortage seems to come down to three key issues:

  1. The demographic mix is changing pretty rapidly. New workers don't look very much like old workers anymore. For a couple of generations they looked a lot like each other.
  2. There is a public policy choice looming in front of us. Do we or don't we want growth and what are we ready to do about it? Growth is dependent on our immigration policy.  Many other countries are more successful in the competitive war for workers form other countries.
  3. The use of language like "the right kind of employee" or "the best fit" aggravate the perception of shortage. A focus on skill and aptitude requirements shifts the question to a more solvable performance basis.

John Sumser © TwoColorHat. All Rights Reserved.
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