By Barbara Frankel
Employers increasingly are noticing a disturbing trend — there aren’t enough qualified applicants to fill the necessary jobs.
By 2020, the McKinsey Global Institute reports there will be shortage of 95 million skilled workers.
The Institute notes there will be “far too few workers with the advanced skills needed to drive a high-productivity economy and far too few job opportunities for low-skill workers.”
“For advanced economies, such imbalances would likely lead to more long- term and permanent joblessness. More young people without post-secondary training would fail to get a start in the job market and older workers would drop out because they don’t qualify for jobs that are being created. The polarization of incomes between high- and low-skill workers could become even more pronounced, slowing the advance in national living standards, and increasing public-sector burdens and social tensions. In some advanced economies, less-skilled workers could very well grow up poorer than their parents, in real terms.”
The Bureau of Labor Statistics sees three major trends in the next decade – an aging work force, a declining labor-force participation rate, and more diversity in the racial and ethnic composition of the labor force. From 2012-2022, the government predicts the only growth in the labor force will be from population growth, primarily from the Latinos and Asian, while labor-force participation will decline from 63.7% in 2012 to 61.6% in 2022. As of this week, the labor-force participation rate was 62.9%, the lowest level since 1978. The participation rate is defined as the percentage of the population over 16 working or actively looking for work, excluding those in prisons, active duty in the military or nursing homes.
“The decline is without precedent. A decline like this has never happened (since the federal government started keeping these statistics in 1948),” said, Bob Funk, CEO of Express Employment Professionals, which monitors employment trends.
Ironically, the decline is occurring at a time when the unemployment rate is low.
The labor-force participation rate began to decline during the 2001 recession, when some workers who couldn’t find employment became discouraged and stopped looking. That trend continued during the 2008-2009 recession and was exacerbated by the number of older workers who lost jobs and decided not to stay in the labor force.
Where Are the Millennials?
What’s different today, many economists agree, is that a far larger proportion of younger workers, including Millennials, have decided not to actively seek work.
One of every three workers in the United States are now Millennials (ages 18-34), according to the Pew Research Center.
This year, they surpassed Generation X as the largest group actively in the labor force.). Millennials are also more racially diverse.
Racial Diversity 15-34 Year Olds (US Census Bureau)
What’s holding the Millennials back? Increasingly, research shows two factors – too many younger people aren’t completing college and too many don’t have the skills that match the labor-market demands.
There is now a 10-percentage point gap in labor-force participation of Millennials with college degrees vs. those without – and that gap is widening, according to research by the Progressive Policy Institute. The research shows the prospects of Millennials are also diverging with what their employers need most – graduates with skills in STEM (Science, Technology, Engineering and Mathematics) backgrounds. According to research from the Progressive Policy Institute, real average earnings for college graduates declined by 12% over the last decade because most aren’t preparing for what employers need.
A recent survey of students conducted by the National Association of Colleges and Employers (NACE) saw a declining number of seniors looking to the for-profit sector as their primary, post-graduation choice for employment.
“[We are] seeing a growing number of alumni at all career stages–early, mid, late–changing jobs to enter the nonprofit sector,” says Cara Costello, senior associate director of alumni services for the University of Pennsylvania’s Wharton School, in an interview with The Wall Street Journal.
The U.S. will have more than 1.2 million job openings in science, technology, engineering and math (STEM) fields by 2018. Unfortunately, there will be a significant shortage of qualified college graduates to fill them, unless students step up their learning.
A survey this April by the HR Policy Foundation of Chief Human Resource Officers at 109 of the largest global companies found most are looking at IT professionals, engineers and sales people. And they aren’t finding enough good ones.
As one of the CHROs surveyed asked: “Will we have the talent that will give us the capability to grow? It won’t be capital that will constrain us. It won’t be the government relations issues that will constrain us. It’s really going to be: do we have the talent to grow? And, how do we build that pipeline? How do we find and source that talent?”