If you think our employment problem is bad now, consider this: the U.S. economy is on course for both a job shortage and a worker shortage.
So says McKinsey, the consultancy that just released a report on projected American job creation over the next decade. As you might expect, the outlook is not all that rosy.
A return to full employment, defined as 5% joblessness, “will occur in only the most optimistic job growth scenario,” McKinsey Global Institute concludes.
Donning those rose-colored glasses, the consultancy projects that the United States will return to robust growth and will manage to create 22 million jobs between now and 2020. We can do this, the firm says, by creating a health care jobs boom with innovative approaches in primary care and disease management.
But to call that projection optimistic is probably an understatement. The United States and Europe together created only 22 million jobs over the past dozen years, as European Central Bank chief Jean-Claude Trichet recently noted.
Under a less optimistic scenario, the U.S. economy might continue creating jobs at its recent tepid pace. Under this so-called pessimistic outlook, the economy would create just 9 million jobs or so – which would leave employment growing at just half the pace of the U.S. population. That is surely a recipe for widespread disillusion if not worse.
Under McKinsey’s central forecast, the economy will add 17 million jobs, but unemployment would remain high at 7%. Meanwhile, the skills mismatch that has been a growing problem for years would intensify, pressuring wages and living standards for those with less education.
Even in this middle-of-the-road forecast, by 2020 the United States would have a shortage of 1.5 million college-educated workers – while there will be 6 million more high school dropouts than available jobs.
Beyond that, America’s failure to demand a reasonable level of technical aptitude in its college graduates will become increasingly problematic, McKinsey says. It says companies report an acute shortage even now of applicants with skills in science, technology, engineering and math.
If that’s not bad enough, the trend is deteriorating. Over the next decade, the firm says, America is on track to produce twice as many college graduates in business and the social sciences as in the hard sciences – which could leave companies unable to fill key positions with yet another incentive to move jobs overseas. Not what the jobs doctor ordered, you’d have to say.