Editor’s note: Dr. Mike Walden is a William Neal Reynolds Professor and North Carolina Cooperative Extension economist in the Department of Agricultural and Resource Economics of N.C. State University’s College of Agriculture and Life Sciences. He teaches and writes on personal finance, economic outlook and public policy.
RALEIGH, N.C. – Two reports recently crossed my desk that focused on the number one issue in the economy today — jobs. They both give some much-needed perspective and direction to today’s challenging labor market. Let me summarize the reports and let you decide how useful they are!
The first publication is the new 10-year employment forecast from the U.S. Department of Labor. It’s jam packed with all kinds of numbers and projections about jobs over the next decade. Of course, it’s a forecast, so there’s no assurance the projections will come true, but the numbers do represent the best thinking of many economists.
The Labor Department expects 20 million payroll jobs to be created in the nation during the next 10 years. While this sounds like a lot, it boils down to 167,000 per month, which is sub-par in the eyes of most experts. So, if anything, the Labor Department appears to be cautious in its forecasts.
And where will those jobs be created? According to the report, the top five industries for job gains are expected to be health care, professional and business services, construction, retail trade and state and local government, each adding more than 1.5 million positions.
Perhaps the most important part of the government’s projections is the training and educational requirement of future jobs. Here, there may be to some a couple of surprises.
Jobs requiring a high school degree or less will continue to constitute the majority of all jobs. However, jobs requiring a worker with a four-year college degree or more will expand faster, increasing about 25 percent faster than jobs requiring a high school degree.
But what really stood out to me in the report was what it predicted for jobs requiring a technical or vocational degree; that is, training beyond high school but less than a four-year college degree. The government economists projected jobs needing this kind of training would increase, and, indeed, would grow at a rate faster than for all jobs.
The second report — from the consulting firm McKinsey — takes a more global approach to the future job market. The report first notes that most of the labor market trends observed in the U.S. economy — like machines replacing workers in factories, increasing demand for college educated workers and rising income inequality — are also happening worldwide.
Where the McKinsey publication breaks new ground is in public policy recommendations for addressing the expected labor market trends. The firm makes three suggestions, each addressing one of the three levels of training: high school, technical/vocational schools and four-year colleges and universities.
To meet the increased demand for college graduates, especially during times when public budgets are tight and tuitions are rising, McKinsey argues for an increased use of information technology — such as online education, distance learning and digital platforms — to reach more students more efficiently. The firm sees lower costs, wider access and individualized learning as pluses for this approach.
The big challenge for technical and vocational colleges, according to McKinsey, is aligning programs, certificates and degrees with rapidly changing business needs. Tech and vo-ed institutions will need to keep in constant contact with firms in their region to monitor how specific job outlooks are changing. It will also be important for the institutions to communicate to students where the job openings, with the associated training requirements, are occurring.
At the same time, McKinsey thinks expanding technical training options in high schools has two advantages. First, for students who know they want a technical career, it will get them trained and into the workforce faster. Second, for high school students unsure of their vocational future, it will broaden their training options in high school and perhaps lead to heightened interest in school and reduced drop-out rates.
Still, the reality is that millions of students for a variety of reasons won’t finish high school or acquire technical or academic skills. Therefore, McKinsey says, it’s important the economy creates as many jobs for these individuals as possible. To do so, both federal and state regulations should be studied for statutes that inhibit job creation, especially for unskilled workers. Also, social safety net programs should be analyzed to make sure they preserve incentives for employment and self-improvement.
Together, these two reports present a challenging future for the job market. Still, we shouldn’t throw up our hands and conclude nothing can be done. While tactics and perspectives may have to be changed, there are some credible ideas and paths for job creation that are worthy of consideration. But you decide if they should be followed.