It’s the best of times for U.S. workers, it’s the worst of times for U.S. employers. Unemployment is at record lows while wage growth is at record highs, and many companies are hitting a wall trying to find qualified new hires to fill their ranks.
Jobs — particularly in industries such as construction — are going begging. And unless something changes fairly soon, this is going to have a big impact on economic trends. As Mark Zandi, chief economist at Moody’s Analytics, tells NY Times business columnist Eduardo Porter for a recent column, “Over the next 20 to 25 years, a labor shortage is going to put a binding constraint on growth.”
One of the biggest factors in the current talent scarcity is the withdrawal from the labor force by working-age (25 to 54) American men. The nation’s labor-force participation rate of this demographic is nearly the lowest in the industrialized world, Princeton University economist Alan B. Krueger tells Porter. Many of these men lack the skills that today’s new jobs require, while others have been lost due to disability or opioid addiction.
What to do? Porter cites a new study from researchers at the University of Maryland that recommends a number of policy solutions that may appeal to conservatives and liberals alike. The researchers, Melissa Kearney and Katharine Abraham, say improving access to high-quality education and providing more child-care resources will help people upgrade their skills while making it easier for working moms to re-enter the workforce. Expanding the earned-income tax credit may also entice nonparticipants to get back in the job-hunting game.
And, although support seems to be growing for raising the minimum wage ( to as high as $15 per hour in some quarters, in order to equalize it with the inflation-adjusted minimum wage from decades ago), Kearney and Abraham express caution about doing so, noting that it will price some job seekers out of the market. They also recommend reforming disability insurance to encourage recipients to seek jobs. And, they say, limiting immigration will only exacerbate the labor shortage, notwithstanding the stated conviction of many Americans that immigrants take jobs from deserving citizens.
These are all common-sense proposals, but they require political unity and some expenditure of public funds. That’s a tall order, of course. So maybe it’s time the nation’s employers take it upon themselves to be activists on this front, for the sake of the labor market and the economy.