U.S. Labor Market: Older, Poorer and Underutilized

January 6th, 2012
in econ_news

Econintersect: The Conference Board's director of macroeconomic research, Gad Levanon, has  2012 forecasts relative to the labor market in the USA.  In a nutshell, he sees yin and yang - low layoffs and low hiring.

This all works together to create an aging workforce and downward forces on wages for unskilled and entry level jobs.

His forecasts:

Follow up:

  1. Disappointing employment growth
    • Mostly in the structurally impaired industries: construction, finance, and state and local government.
    • Meanwhile, the rest of the workforce is growing at rates typical of periods of expansion.
    • Weak job creation but very low layoff rate.
  2. Gradual decline in a still very high (8.6%)unemployment rate
    • Part of the decline is a continuing increase in the percent of people who want a job but stopped looking for one (and are therefore not counted as unemployed.)
    • Much of the decline in the unemployment rate in the past year is in production, engineering and computer related occupations.
    • The overall high unemployment rate is likely to remain high for quite a while.
    • Long term unemployment at historical highs.
    • Tight labor markets are beginning to develop in the resource rich heartland.
  3. Lowest wage and salary growth in decades
    • Employers manage to keep slow growth rates in wages partly due to relatively low pay to new hires from both colleges and unemployment.
    • Benefits costs are rising. Not only healthcare, but also reinstituting other benefits that were cut during the recession.
  4. The workforce is getting older fast
    • Part of it is the large baby boom cohorts getting older.
    • Part of it is workers delaying retirement.
  5. Low labor turnover rate.
  6. Relatively low labor productivity growth in the past 6 quarters. What is the new trend in labor productivity?
  7. The higher unemployment in low paying occupations is leading to slower wage growth in these occupations and to rising wage inequality.

source: The Conference Board


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