ARTICLE TOO MANY WORKERS
Aaron Bernstein (Excerpts
from the article)
as they are on today’s problems, most companies
aren’t looking too far around the bend. But when they do, they’re in for some big
the economy strengthens, say demographers and
economists, labor shortages will come roaring back. What’s more, they’re likely to persist for
years, even decades. The reason: a looming crunch that will hit as
huge as numbers of boomers retire and fewer workers
fill the pipeline. With more than two-thirds of women already
working and with immigration at record highs, the
growth of the labor force will remain at a crawl for
decades to come.
prospect of more or less permanent labor shortages
could set in motion profound changes in American
business and society. Three decades of plentiful workers have given
Corporate America great leeway to shape employment to
its needs. But
soon, the balance of power will shift to workers,
forcing employers into wrenching adjustments.
late 1990s may well have been a foretaste. Remember all those pay raises and hiring wars?
The new day-care centers, flexible work hours,
and training programs for welfare moms? Get ready for a replay. “If employers thought the ‘90s were the
decade of the workers, the next decade will be even
more that way,” says Harvard University economist
dale W. Jorgeson.
famously nimble employment system will come under
mounting pressure. Today, employees shift from job to job and shoulder much of
the responsibility for a career that isn’t tethered
to one company. Relatively
fluid labor markets help boost productivity and
profits, economists believe, by channeling labor to
companies and industries with the most promise.
But if companies become hard up for labor,
managers will try to hang on to workers the way they
did in the 1950s and 1960s. Employers may feel the need to rewrite pensions and
early-retirement plans to keep aging boomers.
Indeed, Americans’ entire view about when to
retire could alter if companies encourage longevity on
matter which economic projections come true, the
demographic challenges ahead are inescapable: There
will be a sharp slowdown in the number of people
entering the workforce. Since 1980, the U.S. workforce exploded by 50%,
adding some 38 million people as baby boomers hit
their prime and as women flooded into the workforce.
Now, baby boomers are aging and nearly 80% of
women hold jobs outside the home.
By 2020, the labor force is set to grow just
16%, adding fewer than 20 million new workers,
according to Ellwood’s projections. And that’s assuming immigrants continue to
pour in at the record high pace of recent years.
growth began to slow in the 1990s, posting average
yearly gains of 1.2%, about half the pace of the 1970s
but still equal to the increases of prior decades. Now, benefits consultant Watson Wyatt Worldwide
figures that the growth rate will drop to a 0.8%
annual rate over the next decade, then gradually slide
to a mere 0.2% a year for as long as anyone can
America’s biggest difficulties, thought, will come
at the high end of the labor market, The number of
workers with a college degree has more than doubled
since 1980, to 40 million, lifting the share of
workers with a BA from 22% to 30%.
Even so, the rapid expansion of supply nearly
kept pace with demand. Wage hikes for college grads beat inflation by
more than 2% a year in the late 1990s, according to
the Economic Policy Institute, a Washington think
far, the economic slowdown hasn’t changed the
picture much. High-end
workers still won inflation adjusted play hikes of
around 2% or so in 2000 and 2001. Even the ravaged market for tech workers seems
to be turning around. The high-tech workforce fell by 5% last year,
to 9.9 million, according to a survey of 532 companies
released on May 6 by trade group the Information
Technology Association of America.
Now, employers say they expect to hire 15% more
tech workers this year as the economy rebounds. At the Treasury Dept., about 11% of its 9,500
information-technology workers are currently eligible
for retirement, a figure that will jump to nearly
one-third by 2008, says Dagne Fulcher, who manages
workforce programs. With pay often higher on the outside, Treasury has been
doling out retention bonuses of up to 25% of pay to
hang on to its techies.
enough college-educated workers will be touch if the
demand for skilled labor continues at the pace of the
past two decades. For one thing, the echo baby boom
simply isn’t large enough.
At 64 million people, the generation that
started hitting college in 1998 is 8 million larger
than the prior Gen X cohort. But the boomers numbered 76 million. So even if more of their kids off to college,
the ranks of graduates won’t grow as rapidly.
“If we could jack up enrollment rates, we
would come a lot closer to meeting the demand for
skilled labor. But
that’s a tall order,” says Anthony P. Carnevale, a
training expert at Educational Testing Service who has
written on future workforce-education needs.