Washington (AP) – Employers will not have the immediate opportunity to relax as the US labor market recovers and workers’ needs increase this summer. The labor shortage will likely continue for years after the economy’s rapid recovery has shaken its growing pain.
Imagine last year that a number of people of working age did something that they have never done in the history of the country. He shrank.
The Census Bureau estimates that by 2020, the U.S. population aged 16 to 64 will decline 0.1%. This is a slight decrease, but after decades of steady increases, this is the first decrease of any kind. This reflects a sharp drop in the number of immigrants, the retirement of the vast baby boomers and a drop in the birth rate. The death toll from the coronavirus last year also reduced the size of the 16-64 age group.
A year ago, in 2019, the working-age population was practically stable.
It is not entirely clear how the population structure will change once the pandemic is over. But even if the working-age population grows again, it will almost certainly grow at the rate of anemia. A continued decline or even a slight increase in its population will cause economic problems. Healthy economic growth has always relied on strong population growth to stimulate consumer spending, justify business expansion, and boost corporate profits. Growth can stagnate without a large influx of new workers.
Still, some economists are planning a personal silver lining. Fewer people of working age can force companies to compete more fiercely for the hiring and retention of their employees. And that could mean higher wages, better opportunities and other incentives to retain and attract workers, a trend already evident in the June jobs report released by the government on Friday. Average hourly wages were faster than the rate before the pandemic, a significant increase of 3.6% from a year ago.
Manoi Pradan, founder of Talking Heads Marco, an economic research firm and former Morgan Stanley economist, said:
If wages rise sharply, it also increasingly separates the wealthiest Americans from the rest, and low-income households struggle to pay rent, food, child care, and other essential costs. It can help reduce the vast inequality that you have.
As population growth slows, economic expansion depends on the ability of businesses to increase the productivity of their workers. Productivity gains often achieved through investments in labor-saving technologies can further increase wages. Even if the economy struggles to grow at what is normally considered a healthy pace, the standard of living will increase.
Brookings Institution demographer William Frey calculated that last year the number of legal and unauthorized immigrants entering the United States fell below 500,000 for the fourth year in a row, less than half from that of 2016.. the effects of the pandemic.
The fundamental long-term resistance of the working-age population is the escape from the labor force of the huge baby boomers. According to Frey, the number of people over 65 is expected to increase by 30% over the next decade.
“We’ve never been in this situation before,” he said. “It’s not just enough (young adults) to replace those who are leaving.”
The situation has been exacerbated by a series of early retirements this year. According to the Federal Reserve Bank of Dallas, about 2.6 million people who worked before the pandemic are now retired and not looking for work. Despite the severe pandemic recession, sharp increases in stock and house prices have made it easier for many older Americans to exit the workforce.
One of them is Eli Lilly & Co in Indianapolis. Jeff Ferguson, company doctor, retired in April at the age of 59 after working for the company for 22 years.
According to Ferguson, working from home during the pandemic eased the transition. But it was also encouraged by its strong return on investment and the strengthening of the local real estate market despite the economic uncertainty.
“Maybe it was a tailwind rather than a headwind,” he said. “If you felt a headwind, you might have delayed it.”
The pandemic has also given him a new perspective on life and retirement. Ferguson plans to travel the country with his wife, a pediatrician, to catch up with loved ones.
Gado Lebanon, an economist at the Conference Board, said the decline in the working-age population would be particularly noticeable among Americans without a college degree. As baby boomers reach retirement age, they are replaced by younger workers who are more likely to graduate from college. Fewer blue-collar workers – those without a four-year degree. This trend can lead to labor shortages in industries such as manufacturing, construction, retail, restaurants and hotels.
Lebanon predicts that despite the population decline, the number of university graduates will continue to grow by around 2% per year and the number of non-university bachelor’s degrees will decline. This can make it difficult for future college graduates to find a job that matches their level of education. Companies can also inflate their professional demands, for example requiring a bachelor’s degree in a job they did not need before.
“The number of people who are ready to work in blue collar and manual service jobs is declining,” Lebanon said.
The wages of low-wage workers are already rising rapidly. According to the Atlanta Federal Reserve, the hourly wage in May rose 4.2% year on year for a quarter of the employee’s minimum wage. This is more than double the rate of increase these workers received in the four years following the Great Recession of 2010-2014, or more than a quarter of the richest workers.
Scott Seaholm, CEO of Universal Metal Products, a 285 metal stamping company near Cleveland, is surrounded by an aging company and is desperate to focus young people on their careers in manufacturing. About 59% of Lake County, Ohio’s population was made up of working-age adults in 2015, according to Siholm. This percentage fell to 57% last year and is expected to reach 54% by 2025.
“It’s quite shocking,” he said. ” Nobody works. It’s a bit ugly.
He said more than half of the workers at his three factories were 55 or older and less than one in five between 20 and 34. He has an 81-year-old employee who is still punching.
Seaholm’s company is part of a group that encourages high school students to consider working in a factory. He opens the factory to high school students once a year on “Industry Day” and invites his parents to come.
“They want Johnny and Judy to go to college,” he said. “Everything is trapped in their head.
Globally, the workforces of most other countries are aging as well, including China, which was once seen as an inexhaustible source of workers. Japan’s population has been in decline for the past 10 years.
Pradan said this trend could potentially benefit American workers. Since the end of the Cold War in the early 1990s, hundreds of millions of people from China, Eastern Europe and India have joined the global workforce, reducing wages and salaries. price of unskilled workers.
Today, many aging populations around the world have the potential to reverse these trends. Former Bank of England economists Pradan and Charles Goodhart said last year: “Demographics Shift: An Aging Society, Declining Inequality and Resurgent Inflation”.
Pradan says that in Japan, where the population has shrunk by around 1% per year in 10 years, economic growth is on average only 1% per year. But that means the per capita growth is 2%.
If the United States can achieve this level of efficiency when the population is growing only 0.5% per year, the economy could still grow at a healthy rate of 2.5% per year, Pradan said.
Yet over time, he and other economists fear that slowing population growth could translate into lower consumer spending and a less vibrant economy.
Casey Buckles, professor of economics at the University of Notre Dame, said: “As the working-age population shrinks, fewer people are doing it. ”
AP business writer Anne D’Innocenzio contributed to this New York report.
Fewer people of working age can slow the economy. Does it increase wages? – WJET / WFXP / YourErie.com
Source link Fewer people of working age can slow the economy. Does it increase wages? – WJET / WFXP / YourErie.com