Labor market likely to remain very tight - Executive Briefing Strategic Intelligence - Brief Article

HR Magazine, Jan, 2002 by Steve Bates

The labor market, which has tightened in recent years, is likely to remain tight for many more years--perhaps decades--according to government statistics and private economic forecasts.

Using federal Bureau of Labor Statistics (BLS) figures released in December, global consulting firm Watson Wyatt projects that the compound growth rate for the U.S. labor force during this decade will be about 0.75 percent--by far the lowest rate of any decade in recent history. By comparison, the labor force grew about 2.5 percent during the 1970s.

What's more, labor force growth is projected to be less than 0.5 percent through 2060, potentially creating a historically shallow pool of qualified workers, according to Watson Wyatt.

Although unemployment has risen in recent months as the economy has slowed, "it is unlikely that the current downturn will result in unemployment rates nearly as high as we experienced during prior recessions over the past 50 years," says Watson Wyatt research director Sylvester Schieber.

One reason: The BLS projects that 22 million jobs will be added to the workforce by the end of this decade, but as many as 4.8 million jobs may be unfilled by then because of retirements and other factors. The greatest growth of jobs in this decade will be in professional specialty occupations, which typically require high educational and skill levels and often are difficult to fill.

"If not addressed, the labor and skill shortage will have serious adverse consequences for the nation," says Ed Potter, president of the Washington, D.C.-based Employment Policy Foundation. He says the shortage could affect Americans' standard of living and could widen the gap between top-paying and low-paying occupations.

Steve Bates is senior writer for HR Magazine.