The Conference Board later this morning will issue a report on the outlook for labor markets in 2018. With the U.S. jobless rate at a 17-year-low of 4.1%, tight labor markets have become a top-tier concern for many businesses. Strong economic growth–fueled by the tax cut–combined with an aging population and shrinking labor force participation will continue to exacerbate the problem.
CEO Daily got an early look at the report, and can share a few key insights:
- Businesses will likely invest more in automation around the globe in the coming year, to relieve labor shortages.
- Employers are compromising by hiring workers with lower educational qualifications than in the recent past.
- The trend toward teleworking is accelerating, and now stands at an all time high.
- The demand for independent contractors, temporary workers, on-site workers, and outsourcing companies is also increasing.
- Employers globally are likely to increase their available labor pools by hiring more women and older workers in the coming year.
The conundrum in all of this is that global wage growth has remained so slow, in spite of tightening labor markets. The report says both low inflation and low productivity growth have had a depressing effect on wages. And in the U.S., the composition of the workforce also has held down average wages, as a large baby-boom contingent of high-wage, experienced workers retires while younger, less experienced workers replace them.
But the report concludes that pressure to increase wages is growing: “Companies holding back on raising compensation will increasingly experience higher labor turnover, lower success in recruiting, and less worker satisfaction.”
You can read the report later today at conference-board.org. Incidentally, the Conference Board, which has been providing business with research and insights for just over a century, chose a new CEO last week–Steve Odland, former CEO of Office Depot and AutoZone. Most recently, Odland has been running the Committee for Economic Development, which merged into the Conference Board in 2015. He’ll take over in September.
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