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Issues and implications.

Issues and Implications

The projections presented on the preceding pages raise several important issues. These include the following:

* The relatinship of productivity growth to future increases in our standard of living and our global competitiveness.

* The educational preparation needed, particularly by minorities, for the types of jobs that our economy is increasingly generating.

* A general shortfall in the iducational attainment of the labor force and its connection with the two other issues.

What do the projections portray about the U.S. economy for the rest of this century? They could be seen as portraying a bright future. Among the reasons for an optimistic outlook is that the slower growth projected for the labor force, combined with an economy producing a large number of jobs, could result in unemployment rates lower than those of the past couple of decades. If this lower unemployment rate could be coupled with a faster rate of productivity growth, a number of problems faced by the U.S. economy could ease. For example, faster productivity growth and the resulting growth in the gross national product (GNP) would likely ease the task of lowering the Federal budget deficit. At the same time, this increase in our rate of productivity growth would be expected to lead to a more rapid growth in real disposable income per person. If this were accompanied by a faster rate of employment growth, as would be likely, it could mean more employment opportunities, in particular for minorities, older workers, and the disabled--groups that have not shared equally in past employment growth. In addition, this employment gain could be an important contributing factor toward narrowing the disparities in income that have widened over the past decade.

On the other hand, this bright future is far from certain. A number of problems are present in the U.S. economy. If these problems are not dealth with, the future many not be so bright.


One of the major issues facing the U.S. economy is productivity growth. The projections for the 1988-2000 period highlight it as a countinuing concern. Productivity has grown much more slowly in the past 10 to 15 years than in earlier periods. This has had an important effect on the rate of growth of real GNP and real disposable personal income.

Not only does not productivity growth have important implications for future increases in our standard of living, but it also is an integral factor in America's remaining competitive, or, in some cases, regaining competitiveness. Foreign trade is projected to continue to be the fastest growing category of GNP. The development of worldwide markets for goods and services means that we must remain competitive to sell products abroad or even at home, particularly in high-tech goods and services where we still have an advantage in many instances.

The prospects for productivity growth depend on many things--such as spending on research and development, spending on capital equipment, utilization of our productive capacity, and the cost of energy--but, clearly, the education and training of the labor force are important. We can only remain competitive through the participation of highly skilled and highly educated workers. Consequently, the potential imbalance between the educational preparation of those entering the labor force and industry's requirements raises an important concern.


The projections indicate that the managerial, professional, and technical occupations, which require the most education, will have faster rates of growth than occupations with the lowest educational requirements, some of which are even projected to decline. The difference between the educational requirements for some jobs and the educational proficiency of the population as a whole has led some to conclude that we have a shortage--or potential shortage--of educated workers, particularly college graduates. This shortage is best looked at separately in terms of the college-educated labor force and those who have other postsecondary training.

The latest BLS analyses of the supply and demand for college-educated workers show a significant easing of the competition that has characterized the job market for college graduates from teh early 1970's to the present. It should be noted, however, that the narrowing gap between the supply and demand for college graduates does not rule out some problems with the number of college graduates prepared for particular occupations.

The question remains, does the rapid growth of jobs for technicians with postsecondary training below the bachelor's degree level indicate a potential gap between supply and demand? In many instances, the institutions for this training or education are in place. Will they have qualified students? A shortfall may come about for three reasons. First, the proportion of high school graduates who go on to college has grown, rising nearly 10 percentage points over the last decade. Some of these college students would have been candidates for technical training in past years. Second, a substantial proportion of young people do not complete high school. Because Hispanics are the fastest growing component of the labor force, their strikingly low high school completion rate is particularly worrisome. It has not increased much over time nor shown any tendency to narrow the gap with non-Hispanic whites or blacks. Third, some individuals who have completed high school may not qualify for post-secondary training. The United States ranked in the lowest grouping in a recent comparison of mathematics proficiency among 13-year-olds from several countries. The results of similar comparisons of science and language proficiencies are equally discouraging. Many of America's young adults are unable to perform at a level very much above the lowest level of proficiency. This is true of all demographic groups but is particularly so for blacks and Hispanics. Such data heighten concerns about preparation for the more demanding jobs that clearly are continuing to emerge in the economy.

Labor Shortage

Another frequently discussed issue about the American economy is the reported "shortage" of entry level workers, particularly in geographic areas that currently have low unemployment rates. The difficulty experienced by employers in hiring entry level workers has resulted primarily from a very sharp drop in the number of workers age 16 to 24 entering the labor force. This decline is expected to continue until at least the mid-1990's. Thus institutions and firms that recruit primarily from this age group are going to be competing for a declining number of young people. This is expected to have an impact on colleges and universities, the military, and industries that recruit young entry level workers.

Another dimension of the competition for workers, particularly entry level workers, is added by U.S. immigration policy. A significant number of immigrants entered the American economy in the 1970's and 1980's. Most legal immigrants do not initially enter to fill this country's job-related needs. They enter under other immigration categories, such as family reunification. But many do seek jobs once they are in the United States. At the same time, better control of illegal immigration restricts the supply of entry level workers for some occupations in some geographic areas.


Blacks, Hispanics, and Asians and other races are all projected to increase their share of the U.S. labor force over the 1988-2000 period. Blacks and Hispanics currently are overrepresented in occupations with the slowest rates of projected growth, while they are underrepresented in occupations projected to have faster growth rates. At the same time, teh shortfall of educational attainment mentioned above is particularly pronounced among minorities. As a consequence, the question arises as to the extent to which minorities are preparing for occupations likely to represent good job opportunities. Given the lower completion rate from high school for blacks and hisapnics, it is evident that many are not being well prepared for the advanced education necessary in many of the rapidly growing occupations. Jobs are available for those without a high school education, but entry into better paying jobs is severely limited for such workers.

The low labor force participation of black men is an additional element of the problem of assuring the highest possible involvement of the whole population. The labor force participation rates for black men age 25 to 54 have only recently shown any evidence of leveling off after a long-term decline. In 1988, the labor force participation rate for balck men was still nearly 6 percentage points lower than that for white men.

The continuing high unemployment rates of blacks and Hispanics illustrate in another way the poor utilization of these population groups. The unemployment rate of black youth has been over 2 1/2 times that of white youth, and the gap has shown little sign of narrowing, even during the rapid job expansion from 1982 to 1988. Clearly, this is a large problem for the U.S. economy.

Data on discouraged workers -- workers who would like a job but have given up searching because they think none is available for which they could qualify--illustrate another dimension of the poor utilization of minorities. (Discouraged workers are not counted as unemployed in the official unemployment measures.) Blacks and Hispanics are much more likely to be found among those who have given up looking for a job than are whites and non-Hispanics. For example, blacks, who made up about 11 percent of the work force, constituted over 27 percent of the discouraged workers in 1988. This proportionately higher rate is even more pronounced among the young, those age 16 to 24. In 1988, young blacks made up over 37 percent of young discouraged workers, and young Hispanics made up nearly 16 percent; they accounted for only 2.2 percent and 1.8 percent of the labor force, respectively.

Constraints on Growth,

Effects of Decline

An analysis of the projected growth of employment by indsutry reveals other aspects of problems with educational attainment and the supply of workers. For example, health services and business services, which are both projected to have significant overall job growth over the 1988-2000 period--require many workers with specialized education or training, highlighting again the need for workers with sufficient educational preparation. Further, health services includes several occupations that women predominantly hold. In some of these occupations--nursing, for example--achieving the projected growth will require a sharp increase in the proportion of women entering them or a large increase in the number of men entering them.

Despite overall growth, the projections show both industries and occupations with projected absolute declines in employment. Individuals inddeclining industries or occupations who lose their jobs are often unable to find other suitable jobs. Further, they often do not have the training and education needed for jobs that are opening up in their geographic areas. This potential displacement has many contributing factors; among these are technological change, the substitution of foreign-made products for domestic ones, lack of competitiveness of U.S.-made goods or services, changing consumer tastes, and shifting governmental priorities. The potential for displacement add to the need to ensure that workers are trained and educated for the types of jobs most in demand. An additional complication is that while manufacturing will decline in employment, it will also continue to be an important source of jobs. It is projected to employ over 19 million workers in 2000. Further, the lack of expansion is manufacturing during the last decade means that many of its workers will retire and need to be replaced over the 1988-2000 period.

Many Problems or One?

All these issues are interconnected. The lagging rate of productivity growth is linked to the need for our economy to remain competitive, which demands the availability of a highly skilled and educated work force. Education and training requirements of future jobs increase the concern that many who will enter our labor force, particularly minorities, will not meet job requirements with regard to educational preparation. For us to attain the brighter future outlined earlier requires dealing with these issues not just separately but as interrelated problems.
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Title Annotation:Outlook 2000
Author:Kutscher, Ronald E.
Publication:Occupational Outlook Quarterly
Date:Sep 22, 1989
Previous Article:Occupational employment.
Next Article:The job outlook for college graduates to the year 2000: a 1990 update.

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