Digging down into America’s weak labor market
The main reason the unemployment rate is so high is that the recession was so deep and the economic “recovery” is so anemic. But part of the problem may be a mismatch between job opening and the skills of unemployed workers. Here is WaPo’s Robert Samuelson:
Economist Harry Holzer of Georgetown University thinks the unemployment rate might be closer to 8 percent than today’s 9.1 percent if most of these jobs were filled. That implies up to 1.5 million more jobs. Economist Prakash Loungani of the International Monetary Fund estimates that 25 percent of unemployment is structural; that’s more than 3 million jobs. A recent survey of 2,000 firms by the McKinsey Global Institute, a research group, found that 40 percent had positions open at least six months because they couldn’t find suitable candidates.
Samuelson partly finds fault in high schools and businesses offering less training, while community colleges aren’t in sync with local job markets. I also suspect that college graduates are majoring in the wrong subjects. Too many history and business majors, two few engineers. More from Samuelson:
In any dynamic economy, constant changes in technologies, products and companies naturally create gaps between skills available and skills wanted. But today’s gaps seem to transcend this. A survey for the National Association of Manufacturers in 2009, near the recession’s nadir, found that a third of companies still faced shortages. These were largest for engineers and scientists and among aerospace, defense and biotechnology firms.
This may also be a huge problem going forward: Here is the McKinsey Global Institute:
For example, MGI estimates that the United States may face a shortfall of almost two million technical and analytical workers and a shortage of several hundred thousand nurses and as many as 100,000 physicians over the next ten years. In aerospace, 60 percent of the workforce is aged over 45 years old compared with 40 percent in the overall economy.