Report Paints Sobering Picture of U.S. Jobs Challenge

Susan Hall
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It will take the United States until 2016 to replace the 7 million jobs lost during the recession and it must create 21 million jobs by 2020 to reach full employment, according to a new report by the McKinsey Global Institute.


It defines full employment as 5 percent unemployment, while the U.S. unemployment rate stands at 9.1 percent. The results include a survey of 2,000 business leaders as well as interviews with 100 business leaders, educators and labor experts. It looks at three scenarios for reaching full employment, with only the most optimistic scenario actually being successful. (You can learn more about this from the audio on the Web page linked to above.)


It defines six sectors expected to create 85 percent of the new jobs this decade: health care, business services, leisure and hospitality, construction, manufacturing, and retailing, with the majority of the new jobs coming in the first three.


In the audio, Byron Auguste, a director in McKinsey's Washington, D.C., office, refers to manufacturing as a "swing sector" that needs to stabilize employment after its extreme cuts during the recession. On Friday, President Obama, addressing a critical weakness in his re-election bid, announced a government partnership with business and universities to spur manufacturing and to help U.S. workers gain skills for the next generation of jobs to be created there. (My colleague suggests some wage angst in her post, "U.S. to Become New Center of Low-cost Manufacturing?") Auguste refers to manufacturing as a sector that "captures the imagination" in the discussion about jobs, but hints that the big job news will occur elsewhere.


The mismatch between worker skills remains a big concern. Auguste notes that in 2020, if current rates continue, the United States will have 6 million more high school dropouts than jobs at that skill level and will have 1.5 million too few people going to college. He echoes the call for a huge push toward STEM (science, technology, engineering, math) education. And employers complain that those who do go to college or receive other post-secondary training do not come out with the skills they need. Forty percent of those surveyed said they had positions that remained open for six months or more for lack of qualified applicants. And they're not just talking about tech skills. The report points to growing shortages of welders, nutritionists, nuclear technicians and nursing aides as well


The report also notes that broadband and advanced IT systems mean that work can be split up and lower-skill tasks farmed out. I've noted before that physical location tends to be less of a factor in jobs all the time and the option to work remotely might ease the skill shortages that employers report.


McKinsey's Director of Research Susan Lund uses the example that nurses or physician's assistants could do more health monitoring, while doctors' time could be freed up for more highly specialized tasks. The lower-skill tasks could be done in less-costly areas or by workers in their homes. She says technology also allows employers to pinpoint more precisely the times when work needs to be done and more closely match staff to their needs. Half of those surveyed say they will use more temp, part-time and contingent workers for tasks that do not require a full-time hire. (She and Auguste note that employers remain reluctant to make permanent hires.)


She notes a swath through the midsection of the country where companies could take advantage of the changing nature of work to find creative solutions to their labor needs. She said employers also must get involved in shaping policy and work with educators to create the training programs to ensure a skilled work force.


According to the report:

Our analysis identified four areas where progress must be made: ensuring that Americans have the necessary education and skills for the jobs created; seeing to it that global investment generates jobs in the United States; encouraging innovation, the creation of new companies, and the scaling up of new industries in the United States; and clearing the way to growth by making compliance with regulations less onerous.

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