Despite Current Jobless Recovery, Some Economists Warn Labor Shortage Coming

The Charlotte Observer, N.C

Amy Baldwin

January 12, 2004

Jan. 12--As the nation carries on with its jobless recovery, there's talk of an impending labor shortage. That may be difficult to imagine, especially for the millions of Americans still out of work, but some economists say it's a very likely scenario.

"We're headed toward a serious labor shortage, the most serious labor shortage this country has ever seen," said Roger Herman, head of The Herman Group, a Greensboro-based consulting and futurist firm that specializes in workforce and workplace issues. Herman fears that younger workers won't be prepared to replace an aging work force.

But the possibility of too many jobs and too few workers is a matter of debate, gaining even more momentum following a proposal last week by President Bush that would give immigrant workers temporary legal status.

"Immigration is certainly one answer. It seems to be where the Bush administration is going now, anyway. I think that sort of mitigates it," said Mike Wald, an economist for the Bureau of Labor Statistics, who covers the Southeast.

At issue, Herman said, will be trying to fill skilled positions, especially in the Carolinas where thousands have lost manufacturing jobs but don't have the training to work in the area's growing industries, such as banking, technology and biotech.

By and large, immigrant workers wouldn't fill such jobs, but rather would continue to flock to unskilled industries, such as housekeeping, Herman said.

Wald disagreed, saying immigrant workers could be trained to perform skilled jobs. He noted that along with immigrant labor, another consideration is the people not in the labor force. During the late '90s labor crunch, there were 68.8 million Americans not in the work force, he said, whereas now there are 75.3 million on the sidelines.

That's 6.5 million employable people, he said.

"Before you talk about a labor shortage, you have to talk about at least bringing those people back into the labor force," Wald said.

Still, some forecasters say there won't be enough skilled workers to meet employers' demand within the next 10 years and that a shortage could be long-lasting. The reason: the imminent departure of millions of baby boomers from the work force.

"The bad news is (a shortage) could persist for a full decade or more because of the retirement of baby boomers," said Ken Goldstein, economist with The Conference Board, an industry group in New York.

The oldest boomers, those 76 million Americans born between 1946 and 1964, will be 64 in 2010.

Goldstein foresees some areas, such as upper management, being harder hit than others. He noted that the number of white men ages 35-55, the demographic group where most top management comes from, is going to fall by 15 percent in the next 15 years.

So his message to companies is this: "You'd better get started on diversity. If you don't find (future managers) now and groom them, they are not going to be there.

"It is a problem," he added. "It is also an opportunity."

JOBLESS RATES

Average annual U.S. unemployment rates since the late 90s, when the nation last faced a labor shortage:

(Rates are seasonally adjusted.)

2003: 5.99 percent

2002: 5.78 percent

2001: 4.77 percent

2000: 4 percent

1999: 4.22 percent

1998: 4.5 percent

Source: Bureau of Labor Statistics Web site, www.bls.gov

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(c) 2004, The Charlotte Observer, N.C. Distributed by Knight Ridder/Tribune Business News