US – Widespread labor shortages ahead says the conference board

American workers have endured six years of depleted wealth, stagnant wages, and general insecurity. But their fortunes are about to change, according to a surprising new study from The Conference Board. From a Buyer’s Market to a Seller’s Market predicts unemployment in the United States — currently 6.7 percent and falling rapidly — will reach its “natural rate” of 5.5 percent by late-2015. The decline will continue well past this benchmark; over the next 15 to 20 years, U.S. unemployment may even dip below 3.8 percent, the lowest rate recorded since the 1960s. 

“While our conclusions may seem unlikely today, they rest on a simple fact: nearly all baby boomers will be out of the job market by 2030,” said Gad Levanon, Director of Macroeconomic Research at The Conference Board and a co-author of the report. “As working-age population expansion slows to a crawl, even modest job growth should steadily tighten the labor supply and force wages higher. In the short run, this will be good news for workers. But it could also become a major handicap on U.S. growth and competitiveness, which we must prepare for now.”

Among the report’s other key findings:

• Most of the millions who left the active job market during the Great Recession are unlikely to return. Many are retired or disabled, while “skill erosion” has made others uncompetitive in the eyes of employers. Thus the official unemployment rate is a broadly accurate measure of slack in the labor market, not misleadingly low as many commentators argue.
• Since 2009, unemployment decline has outpaced previous recoveries even as GDP growth lags behind. Meanwhile, wage growth, voluntary quit rate, and employers’ difficulty in filling positions are all trending up, suggesting the transition to labor shortages is underway.
• As baby-boomer retirement mounts, wage pressure will form a growing constraint on corporate profits and, ultimately, economic growth. Seeking to increase productivity and reduce costs, companies may raise prices and move operations to cheaper areas.

Chosen excerpts by Job Market Monitor. Read the whole story at Widespread Labor Shortages Ahead for the U.S. | The Conference Board.

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