RALEIGH – For the U.S. to ensure long-term economic growth, it must grow its labor force. Future growth depends on the number of people working and their productivity. This was the message from the President of the Federal Reserve Bank of Richmond, Thomas Barkin, at the Raleigh Chamber’s Economic Forecast 2019

In 2018, the economy was strong. Barkin pointed to metrics including GDP growth of 3.3 percent for the third quarter, robust consumer spending, on-target inflation and an unemployment rate that, at 3.9 percent, is at a 50-year low. This growth will continue in 2019 but at a slower rate.

But what about longer term? For Barkin, the key is in high-end growth.

“Stronger growth is the sign of a healthy economy,” said Barkin. “Stronger growth creates revenue to reduce the federal budget deficit at time when it seems unlikely to be addressed otherwise. Stronger growth improves everyone’s living standards.”

Thomas Barkin

How can the U.S. ensure strong, long-term growth? According to Barkin, there are opportunities to grow the nation’s workforce, including policies to support women in the labor force, legal immigration and workforce development.

Bringing Women Back into the Workforce

Barkin pointed out that the number of women in the U.S. workforce has been declining since 2000.

“Women’s labor force participation, after rising steadily for four decades, leveled off and then began to decline around 2000,” said Barkin. “This is a divergence from other developed countries. If the United States had the same participation rate as Canada, an additional 5.2 million women would join the labor force.”

Despite global uncertainty, economist paints bright picture for Raleigh’s future (+ video)

What can be done to draw women back into the workforce? Policies must be developed to support their participation, said Barkin.

“One of the biggest differences between the United States and other developed countries is the availability of paid leave and subsidized child care, both of which have been shown to increase women’s labor force participation.”

Immigration Policy and Workforce Growth

Fertility rates in the U.S. and other developed countries continue to fall, said Barkin, directly impacting the country’s future workforce.

“Since the 1990s, immigration has driven about half of the growth in the labor force, but that trend is under threat as there are proposals to reduce even legal immigration,” said Barkin.

However, legal immigration should be seen as an opportunity, he said.

“Legal immigration is a huge opportunity to grow our workforce and increase our country’s human capital and entrepreneurial energy,” said Barkin. “I empathize with concerns that immigration could be detrimental to the employment and wages of Americans. But the economic research shows that immigration creates consumers and boosts productivity and start-up rates.”

The Urban/Rural Divide and Workforce Development

“Our country’s largest metro areas are thriving, while many smaller cities and rural areas are struggling,” said Barkin.

Workforce development opportunities can help workers in rural areas develop their skills, resulting in more workers entering the labor force.

“It starts with programs to help adult workers acquire in-demand skills,” said Barkin. “But workforce development needs to start much earlier at the K-12 level or even in early childhood.”

Early education sets the groundwork for the future, preparing students for success in college or introducing them to other career paths.

“The workforce can grow if students who enter college can graduate, and young people have, and know about, viable alternatives to four-year colleges,” he said.

If the U.S. chooses not to address issues related to women in the workforce, legal immigration and workforce development, economic growth will suffer.

“In sum, the United States faces a slower growth trend that isn’t in any of our interests,” said Barkin. “Changing the slope is doable via initiatives to expand the workforce and boost productivity growth. Its an opportunity the country can afford to pass up.”

Despite HQ2 and Apple rejection, Raleigh Chamber reflects on stellar year