Is It Demographic?ByRaymond D. Matkowsky
In the 1970s applying for a job was a competitive sport for job seekers and a chore for employers. It was not unusual for a job listing to get 300+ applicants. Those days are over with. The days of picking the cream of the crop are gone. Employers take what they could get. Many times it turns out that an employer has not made a bad choice. This labor shortage, however, is demographic and structural. Until it is recognized as such, it will remain.
Starting in 1945, there was a “baby boom.” By the late 1960s and early 1970s, these babies started entering the labor force. They not only swelled the labor participation rate they also jump started the economies of the United States (U.S.) and Europe (EU) to new heights. What we are seeing now is the loss of the benefits that we gained from the “Baby Boom.”
This is 2023 and these babies have been or are now retiring. The labor participation rates are going down through most of the world. This is causing both social and economic crises.
The latest figures indicate that the U.S. has between 10 to 11 million job openings. There only 6 million unemployed in the U.S. and not all these entire workers have the qualifications necessary. 12 million+ people are unemployed in the EU. Because of the number of countries involved, it is harder to determine the total number of vacancies that exist. It is doubtful that the situation is much different than in the United States and there is reason to believe that it is much worse. Generally, European demographics have older populations.
Jobs Are Plentiful
Jobs throughout the world are more plentiful than there are workers to fill them. With ageing populations, demand is increasing. Businesses will need to produce more with fewer workers. Businesses cannot and are not going to find sufficient workers. There are just not enough workers available.
Some retirees are reentering the workforce. But this is small and will not alter any needs. A three prong approach will be needed. The first thing to do is to stop the exodus of 25 to 54 year old workers from leaving the workforce or find adequate replacements. Legal immigration must be increased. This will add to the labor force and aid in solving many of the economic problems. Automation must be used not to replace workers, but to supplement them. None of the three will be the solution by itself. Combined, the three have a chance to succeed.
25 to 54 Age Group
The years when a person is 25 to 54 represents their prime working years. All age groups are important. But, this age group requires special consideration because of its size and work experience. This group may encompass three generations of workers and a great deal of knowledge. Efforts should be made to expand the labor participation rate of this group. This particular group has a Labor Participation Rate that is going down not increasing.
Some of the loss of the 25 to 54 age group maybe due to “Long Covid.” In 2019, 82.9% of this group was in the workforce. During Covid-19 the participation rate fell to 80%. As of September 2022 the rate was 82.7%. However, a small change can represent large numbers. The participation rate of this group has not quiet recovered its pre-Covid level.
Immigration
Legal immigration is a necessity in filling a portion of jobs. Immigrants can expand the 25 to 54 age group. They pay taxes. They increase the productivity of a country. Immigrants are not taking jobs away from your citizens. On the contrary, many times they take jobs that need to be done and that your citizens don’t want to do.
Many immigrants are poor and looking for a better life. Not the type to take an advanced job. However, assume that a better qualified immigrant applies for a job sought by many others, who do you think the employer will pick? This is not the immigrant stealing a job. It is the nature of business.
Automation
It is very unlikely that the U.S. or any nation can get enough human capital to fill all of the vacant positions. American businesses have tried for years and have fallen short every time. To progress, you need to fill these positions. Automation is the logical answer. Supplementing workers with automation and not replacing them. Besides, every machine needs a human to operate it.
A machine cannot replace a human at every turn. When a machine breaks down or some other problem occurs it requires a human to correct it. If there is no human to handle the problem, the machine remains broken.
Use automation to supplement the 25 to 54 year old vacancies and not to replace them. Besides, workers consume your products. Where are you going to be if your company cannot sell its products because consumers don’t have the money to buy?
If you have any comments, let us know. Email me at rdm@datastats.com. We will try to print it in our next newsletter.
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