Diversity Trends Changing the Workplace

The population will be increasingly diverse. Over the next 40 years, the white population will decline by about 10% while the Hispanic population will more than double. By 2043, the nation will be majority-minority; by 2050, Hispanics will account for 28% of total population, compared with 47% for non-Hispanic whites.

diversity in the workplaceWhile women now make up nearly half of the workforce, only 4.8 percent of Fortune 500 and 5.2 percent of Fortune 1000 CEO positions are held by women.  Mary Barra at GM is the highest ranking female CEO. Currently people of color and women only represent about 14.5 percent and 18 percent, respectively, of corporate boards among the senior management of Fortune 500 companies. (Source: Catalyst)

A McKinsey & Company study found that the increase in women’s overall share of labor in the United States—women went from holding 37 percent of all jobs to nearly 50 percent over the past 40 years. That has accounted for about a quarter of current GDP.

Census data tell us that by 2050 there will be no racial or ethnic majority in our country. Further, between 2000 and 2050 new immigrants and their children will account for 83 percent of the growth in the working-age population.

According to the Census Bureau, people of color own 22.1 percent of U.S. businesses. Moreover, women own 28.8 percent of U.S. businesses, and Latina-owned businesses in particular are the fastest-growing segment of the women-owned business market. Women of color own 1.9 million firms.

According to the National Gay and Lesbian Chamber of Commerce, gay or transgender individuals own approximately 1.4 million (or approximately 5 percent) of U.S. businesses.

Read more about Generational Diversity

Generation diversity: elephant in workplace?

The mere mention of diversity in the workplace ignites a passionate and varied reaction from … let’s say a diverse group of people.

diversity in the workplaceWhat was once a topic isolated to differences in color and gender now extends into age, ethnicity and even sexual preference.

Whatever your position, world view or personal bias, one thing is for sure: the workplace is more diverse and changing rapidly.

To remain competitive, viable and profitable, companies must continue to capitalize on the growth of women, people of color, ethnicity and gay and transgender people in the labor force.

But many discussions about diversity tend to leave out what is becoming the elephant in the workplace – generational diversity.

For the first time in history, we have five generations working side by side:

• Veterans or traditionalists – born before 1946.

• Baby boomers – 1946 to 1964.

• Generation X – 1965-1980.

• Generation Y (or millennials) – 1981-1998.

And now we have Generation Z, or the “homelanders,” – born after 1998 – coming of work age.

This diversity of age and more importantly world views is something executives and business owners have never had to deal with.

There is no precedent at managing a workforce ranging from 16 to 90 years old. There are no proven management models to follow.

Being the pioneer is risky business but ignoring the reality can be fatal. Each company needs to understand generational dynamics and devise a plan that fits marketplace reality and company culture.

Talent management is no exception.

Each generation is different from its predecessors in a number of ways that affect how employers recruit, manage and retain employees.

While all generations share similar basic needs, motivating and engaging each generation differs. While many companies got away with one-size-fits-all management for the last 50 years, that approach isn’t working anymore.

Even while baby boomers hang on to their jobs longer than expected and the oldest Gen X-ers reach 50 next year, millennials and now Generation Z will make up more than 75 percent of the workforce within the next decade. What works to retain baby boomers won’t attract or retain their replacements.

And these younger generations are the most diverse in history when it comes to color and ethnicity. This isn’t a wave that will hit the front doors of business, but a tsunami that will alter permanently the labor market.

It will be wise for every business to analyze its workforce composition by asking the following questions:

(1) What is the generational composition of your existing workforce (and customer base)?

(2) What will be the composition in five years?

(3) Does the proportion of generations in your workforce reflect the proportion in your industry, your profession and your customer base?

(4) Is there a concentration of one particular generation staff/associate vs. management positions?

(5) Is there a higher attrition rate among members of one generation?

(6) How does the present and future generational composition change the way you will do business?

(7) How will the three- to five-year employment outlook for our region affect our ability to execute your business plans?

Published in Lehigh Valley Business Journal – September 8, 2014

 

Jobs Disappearing at Accelerating Rate – Is Yours at Risk?

Nearly everyone agrees the world will look different in years to come.  For many, the future has arrived. Robots and other forms of automation are not just destroying jobs at an accelerating pace but driving many occupations into extinction.

For nearly 15 years I warned of a Perfect Labor Storm, a time when work, the workplace, and consequently the workforce would see revolutionary change at an unprecedented pace. I wasn’t the first to forecast the changes we are experiencing now. I wasn’t the loudest voice either. But I was a steady, reliable messenger of a daunting prediction that unfortunately has come true.

I did however underestimate the changes on two accounts.

First, my use of the word “storm” apparently erred on the side of conservatism. While disruptive and often devastating, storms pass. People pick up the pieces and move on. Life is disrupted but not devastated.  Most people go back to living the way it used to be.

But what we are experiencing is not a storm but a “Job Apocalypse”.

Up until now technological progress produces two competing effects: job destruction and increased production. While new technology often replaces workers, the new technology improved productivity, which tends to lower the cost of production, which creates more demand, which creates new jobs.

These new jobs for the most part require new skills. The skills are typically acquired through more advanced education. Workers who acquired the education and skills have been rewarded with good jobs and higher wages.

At least that’s the way it has worked for the past several centuries.

But now technological progress threatens to alter the course of history.

Oxford University researchers Carl Benedikt Frey and Michael A. Osborne in their daunting landmark study give a taste of what’s to come. They estimate that 47 percent of U.S. jobs are at “high risk” of being taken over by robots in the next decade or two. And we’re not talking about just production jobs requiring more low-level skills.  Affected jobs include accountants, physicians, lawyers, and architects Loan officers, tax preparers, paralegals, and even roofers are at risk. Even more susceptible are low-skill-level jobs such as retail cashiers and salespeople, telemarketers, toll booth operators, and postal workers. Even professional drivers (truck, bus, taxi) are at risk. (If you are suspicious, then you are ignoring how the Google car is changing transportation.)

They wrote in their paper:

Our model predicts that most workers in transportation and logistics occupations, together with the bulk of office and administrative support workers, and labor in production occupations, are at risk… More surprisingly, we find that a substantial share of employment in service occupations, where most US job growth has occurred over the past decades (Autor and Dorn, 2013), are highly susceptible to computerization.

robots taking jobWhile the trend in recent decades has been towards a hollowing out of “middle-skill” jobs and an increase in low-paying service sector jobs and high-paying, highly educated jobs, Frey and Osborne expect that automation in the future will mainly substitute for “low-skill and low-wage” jobs.

What’s most troubling about all these changes are that advances in technology and computerization have outpaced our ability to find new uses for labor. In other words, automation has replaced people at a faster rate than demand for products and services has grown meaning the demand for skills has lagged. Since the number of workers with higher education degrees has exploded, many of these higher-skilled workers are accepting jobs traditionally performed by less educated, low-skilled workers.  The minimally-education, low-skill worker is subsequently pushed further down or out of the workforce entirely.

No one knows for sure what the careers of the future will look like. But the people at the cutting edge of workplace and workforce trends are already watching old jobs disappear at an accelerating rate.

Sources:

The Future of Jobs

Jobs That Will Be Lost to Robots

 

More about Moms Married with Children

married with childrenMoms married with children hardly fit the Peg Bundy type portrayed in the hit TV show Married with Children.  Here are more stats following a recent post about how Stay-at-Home Moms are presenting yet another challenge in employer’s quest to find skilled workers.

Almost three in 10 mothers with children under 18 living with them are stay-at-home moms.

  • 20 percent of all married mothers with children under 18 stay home — half what it was in 1970.
  • One in five children in the United States today lives with a stay-at-home mother married to a working husband. In 1970, 41 percent of children did.

Married mothers accounted for much of the increase in total labor force participation during the post-World War II period (1946-2000).

  • In 1948, only about 17 percent of married mothers were in the labor force
  • In 1985, 61 percent of married mothers were working or looking for work
  • By 1995, their labor force participation rate had reached 70 percent.

Married mothers aged 25 and older with infants are well educated, on average.

  • Nearly half (47 percent) had a college degree, compared with 35 percent of all married mothers of that age group.  
  • Another 26 percent of married mothers of infants had completed 1 to 3 years of college, compared with 29 percent of all mothers. 
  • After peaking at 71 percent in 1997, the participation rate of those women married with infants and holding a college degree had fallen by about 9 percentage points by 2000.
  • In comparison, the participation rate for mothers with less than a high school diploma fell by 8 percentage points, as did the rate for those with some college.

Sources: Bureau of Labor Statistics, Pew Research Center

Stay-At-Home Moms: Another Skilled Worker Hurdle?

At a time when skilled labor is scarce, stay at home moms point to yet another challenge that management faces when it comes to filling open positions, according to new research from Pew Research Center.

stay at home MomAlmost three in 10 mothers with children under 18 living with them are stay-at-home moms. In the past that would not have been such a big deal. But the education of women has risen dramatically in the post-World War II period. For example:

  • Among all women aged 25 and older, the proportion with at least 1 year of college more than tripled, rising from about 15 percent in 1960 to 53 percent in 2005.  (Among men, this proportion almost tripled, going from 18 percent to 53 percent.) 
  • The participation rate for women with a college degree rose from about 57 percent in 1962 to 73 percent in 2005, while the rate for women with some college (but not a bachelor’s degree) went from 42 percent to 67 percent.

As more jobs require advanced skills and nearly all new jobs require at least some post-secondary education, companies can ill afford to lose even a single skilled worker. But over the past few decades, a critical trend went largely unnoticed. It is now having a major impact on recruitment:

There are more women than men that have been going to and graduating from college.

Women now enroll in greater numbers than men in both undergraduate and graduate institutions. Women age 25 to 34 are now more likely than men of that same age group to have attained a college degree, reversing the norm of 40 years ago.

Among women age 25 to 64 in the labor force, 36 percent held college degrees in 2009, compared to 11 percent in 1970 – nearly 325% increase. In contrast, the share of men with a college degree increased by one-half. By 2019, women are projected to account for nearly 60 percent of total undergraduate enrollment.

Over the same period, the proportion of women workers with less than a high school diploma fell from 34 percent to 7 percent.

The trend in graduate school is similar. In 2008, women accounted for 59 percent of graduate school enrollment. As recently as 1998 more doctoral degrees were conferred to men than to women. A decade later, more doctoral degrees were conferred to women than men.

With more women than men holding the skills needed to do today’s skilled labor, stay-at-moms pose a significant threat for business. 

One industry impacted tremendously by women is healthcare. At one time, men were the doctors, women were the nurses.

In 1965, only 8 percent of medical school students were women. By 2012, nearly half of all students and graduates were women.

Companies need to figure out a way to lure these moms back to work with personalized and innovative compensation, benefits, and perk packages. Flexibility and telecommuting for many of these moms will be more important than money. 

But while those changes may be a magnet for the new mom, it creates another management problem – how do you treat these moms differently than your male workers, your young, unmarried Millennials, and your Baby Boomers who are looking to cut back but still keep working?

Enticing these married with children women back to work will not be that easy.  Married women with college degrees typically have husbands with similar levels of education. These husbands are likely to be earning good paychecks, providing their wives with options about whether to work after the birth of children. So while these college-educated mothers invested heavily in their careers, they are often more able to be leave the work force, at least temporarily.

Unemployed Workers – Unlucky Victims or Just Not Ready for Jobs?

Last week I wrote an article titled Why Many Unemployed Workers Will Never Get Jobs .It was published on the Huffington Post. It kicked up quite a firestorm with over 4,600 Likes on Facebook, nearly 1200 emails, and as of this writing, almost 500 comments.

paradigmaIn the article I wrote that “we have a huge problem on our hands that runs much deeper than the unemployment figures reveal.” Based on the passionate, angry, and sometimes profanity-laced comments I received, I touched a nerve. I underestimated the problem – it’s much bigger than huge! 

Comments ranged from “Ira Wolfe is a stupid motherf—-r” to “best article ever published on Huff Post.” Many people – largely unemployed and under-employed workers – seem to have perfected the art of character assassination and finger pointing. They may not have work skills but they sure can write a mean letter.

More specifically and one purpose of the article, I wrote about why traditional job training programs wasn’t working. In fact, all many programs seems to do is establish false hope and promises, a situation confirmed by many of the responders,.

The problem with traditional job skill training in many cases is that you can walk a horse to water but you can’t make it drink. Far too many workers — employed and unemployed — don’t seem interested in finding water on their own. They want and expect someone else to find the water, make sure the journey isn’t too arduous, and get someone to pay for it.

Hundreds of people took offense to this. Their push-back only confirmed that I was right – to a point. It wasn’t that they wouldn’t drink but many can’t find the well on their own.  

To be fair many comments opened my eyes to circumstances I had not considered. There is old saying that goes something like this – when you listen, two people learn.

Here is one thing I learned – some unemployed workers simply got the short end of the stick. They shared personal stories how they went back to school to get a certificate or degree at their own expense. That took the initiative and made the investment of time and money to better themselves.

Unfortunately they were victims twice-over. Someone changed the rules mid-stream and didn’t tell them. 

First they were either laid off, terminated, outsourced, downsized, or stuck in a stagnant wage job. They did the right thing or at least thought they were doing it by going back to school. But many unemployed were sold a bill of goods. Despite personal investment and hardship, nothing changed for them except many are deeper in debt, thanks to receiving training or education for jobs that are headed to the low-wage dumper or toward extinction.

The only beneficiaries in many job training programs are the schools, organizations, and the trainers.

Many unemployed were duped to believe that a certification or degree guaranteed a good paying job…or any job for that matter. With slow job creation, an overabundance of “overqualified” workers, and a lack of skills required for more competitive wage jobs, these workers feel like they have “sucker” written across their foreheads. The problem is that the current labor and job market is anything but traditional and many programs still teach like nothing has changed.

Aside from these workers and many with similar bad luck stories, I’m sticking to the premise of the article:

Thanks to years of economic prosperity, government entitlements, union contracts and most recently a generation of helicopter parents, many workers from aging Baby Boomers to the young adults known as Millennials don’t have the motivational skills to achieve their own success, to keep themselves safe, to avoid a personal crisis, and to get themselves out of a jam.

Many readers took what I wrote and inferred that I called them lazy and unmotivated. That’s just not true. I never wrote that many of the unemployed were lazy and unmotivated. I did write that many lacked the skills to get a job or switch careers in today’s world and I don’t mean just the technical skills and experience.

When I refer to motivational skills, I mean basic life skills. The skills we used to learn as children that carried us through the trials and tribulations of adulthood. Children learned to entertain themselves. When we fell, we were told to get up, dust ourselves off, and try again. We learned there was a difference between winning and losing. Just playing the game was an opportunity, not a guarantee.

Joblessness is a very complex problem. Many people are caught between the proverbial rock and hard place. With outdated skills, homes “under-water,” aging parents, rising tuition, and a host of other factors, jobs may be available but the workers are just in the wrong place at the wrong time. It’s an incredibly tough cycle to break when you’re poor and/or homeless, too.

Despite popular belief, I wasn’t blaming the unemployed and under-employed for their predicament. I was merely stating the fact that many workers -both employed and unemployed – lack the basic skills to create their own success and future. The lack of skills doesn’t make them bad, lazy or unmotivated people. They are just dependent on other people to create their future and rescue them. Ironically that’s a motivational skill too which has worked well for decades, if not longer.

The solution offered by many people is run faster and harder, juggle multiple jobs, and make an honest effort to get ahead. Unfortunately more activity and intensity does necessarily translate to a good paying “permanent” full time job in this hyper-competitive, dynamic, fast paced, complex workforce.

It comes down to this. Knowing where, when, and how to find a job opportunity these days and competing successfully for it is a skill many workers lack. Job search is no longer as simple as applying and interviewing these days. You don’t get paid for submitting a hundred resumes and performing well in interviews. There is only viable metric of success when it comes to getting offered a good paying job these days – you’re hired! Joblessness and unemployment is not always due to a lack of initiative or effort or motivation. It’s the person’s inability to escape a bad situation and build a new future.

(Companies aren’t blameless either. Many managers lack the skill required to find, identify, and retain talent when they see it or have it. Even when the right person with the right skills shows up on their doorstop, they often times don’t see recognize it until it’s too late.)

Read the full article Why Many Unemployed Workers Will Never Get Jobs here. 

Free PDF – What Job Won’t Return

Meet Generation Flux: Change Agents Extraordinare

Are you a member of Generation Flux?  This isn’t just another name for the generation to follow the Millennials (although it could be.) Unlike all the others generation descriptions, Generation Flux has no age requirement.

leadership change managementGen Flux is less a demographic designation than a psychographic one, focused solely on interests, attitudes, and opinions. What defines Gen Flux is a mind-set that embraces uncertainty and ambiguity. It tolerates, if not embraces, recalibrating careers, continuous innovation, fluid business models, and vulnerable assumptions.

Up until recently, change progressed at such a steady, almost rhythmic pace that it allowed the innovator and entrepreneur to co-exist in a world of moving forward while retaining its hold on the past. Whether he created a new product, strategy, service, or developed a specialized skill, he created an asset that could sustain itself for decades. Often times, the innovation survived multiple generations, allowing the creator to pass the business or royalties from a product or service on to his children and their children.

But within the past few decades and especially since the turn of the century, this paradigm shifted.

The life expectancy of a typical business or product model has shrunk from decades to years. In many industries and businesses, the life of a model is now measured in terms of an Internet year, approximately 90 days. That means while delivering this year’s model to customers, you need to simultaneously prepare for its extinction while creating and preparing a newer, improved model for next year. That shifts the entire course of strategic planning

This unprecedented confluence of innovations has compressed the time between creation to extinction. Change is not only constant, but constantly accelerating. Nostalgia is dead. Status quo is eventually lethal. What we perceive as normal is subject to the blinders we’ve grown accustomed to – inherited from and grown in the past. For any business so in love with its past that it can’t imagine a future without it, its own demise is set in motion. Management feels the ship moving but ignores signs it is sinking.

Change itself isn’t the only cause of self-induced extinction because change is something that has existed since the beginning of time. What is different this time is the almost exponential increase in the velocity of change. For example, it took 38 years for 50 million people to adopt the radio but only 13 years for 50 million people to own a television.  It took Facebook less than 5 years to acquire 50 million users and by 2013, nearly a billion people signed on.

Years have no move to days.  When the Palm introduced its Pilot hand-held device, it took 18 months to sell 1 million units.  It only took Apple 24 hours to sell its first 1 million 4S phones.

The business climate, it is turning out, is a lot like the weather. If you don’t like what you see, wait a few hours.  But once a storm passes, it doesn’t mean things go back to the way they were. Just like the earth around us, every weather event changes the environment and landscape. The same goes for business.

The problem is that our ability to see and predict the future accurately is declining, fueled by all the complex interactions set in place by the intersection and interaction of technology and globalization. Predicting what will happen next has gotten exponentially harder. Ambiguity and complexity has invaded management’s boardroom and worker’s cubicles.

Any business that ignores these transformations does so at its own peril. Despite recession, currency crises, and tremors of financial instability, the pace of disruption is roaring ahead. The frictionless spread of information and the expansion of personal, corporate, and global networks have plenty of room to run. And here’s the conundrum: When businesspeople search for the right forecast–the road map and model that will define the next era–no credible long-term picture emerges. There is one certainty, however. The next decade or two will be defined more by fluidity than by any new, settled paradigm; if there is a pattern to all this, it is that there is no pattern. The most valuable insight is that we are, in a critical sense, in a time of chaos. (Fast Company)

To thrive in this new normal requires a whole new approach.  Not everyone will join Generation Flux, but to be successful, businesses and individuals will have to work at it. Unfortunate for many, the vast bulk of business, institutions, and organizations are not built for flux. Few traditional career  tracks or educational curriculum train us for an era where the most important skill is the ability to acquire new skills.

Future-focus is a signature trait of Generation Flux. Trying to replicate what worked yesterday only leaves you and your business vulnerable. There is no question that we are in a new world. Therefore only some people and some businesses will thrive.

Will you be among them? Do you have the right management and workforce to steer your ship through the uncharted and unpredictable future?

What’s Up with the Attitude of Millennials These Days?

Confusion Millennial over his futureThere are few places I go that I don’t hear comments about the attitudes of Millennials. It is also the most common question I hear from clients these days.  It is so common in fact that it prompted an interview with the senior editor of Chief Learning Office magazine a few weeks ago. The article was just published last week. The editor asked me about what makes each generation different, if Baby Boomers felt the same way when they were young or have times changed, what Millennials want, how the generations respond to technology and more.

So let me give you a sneak peek into the interview.

Here’s a hard cold fact and yet a very simple but critical premise: the attitudes of each generation are different, not good or bad. (Yes, individuals in each generation have good and bad attitudes but collectively they just see the world a bit differently than their predecessors and successors.)

Without a doubt each older generation has viewed its younger successor as brash and uppity. Younger generations always look upward and see gray and staunchy.

But despite this loud roar of near-apocalyptic differences in attitudes between generations cited by the media, research is on the fence whether these differences are based on one generation’s perspective defined by events or concerns expressed by all generations at similar states in life and career.

Regardless of the cause, the notion that one generation’s attitude is good or bad is just bad business. Yes, there are individuals in each generation that have good and bad attitudes about work. But bad attitudes don’t infect an entire generation of tens of millions of people. In fact, I’m often embarrassed by the negative and disparaging attitudes of many of my peers (baby boomers) toward work and excited by the holistic and fresh outlook that millennials offer.

There is no question that historical events such as Pearl Harbor, landing on the Moon, the death of key leaders and great recessions imprint indelible messages in the minds of young people. These messages shape the lives of these young adults as they enter adulthood. They influence how they see the world and how the world sees them. But they don’t create an entire generation with a single universal attitude. We’re talking about millions of humans, not robots. Society and the marketplace that responds to these life-changing events likely have a greater impact on the life and times of each generation than the events themselves. For example, the Internet surely had a more pervasive and permanent effect on how a generation of young people will live and work as adults than the terrorist attack on 9/11.

Want to read more about the Millennials, technology, work and what companies need to do to recruit, hire, and retain the generation that will soon make up 75 percent of the workforce?Click here.

Download a free chapter about What You Need to Know About the Millennial Generation  from Geeks, Geezers, and Googlization

Retention and Hiring Woes Mount in 2014

Each year PayScale conducts a survey of compensation best practices to take a look at what transpired in the year just ended and predict trends for the upcoming year.  In addition to compensation trends, respondents reveal how employee retention and skills gaps are impacting the recruitment, selection, and management of top performing employees. 

Here are a few highlights from the compensation best practices report that was just released.

Retention

In 2009 only 28 percent of companies listed retention as their top concern, but by 2013 that number more than doubled, increasing to nearly 60 percent.  Only 10 percent thought it not a concern at all.

retention trends 2014

The top two reasons for people leaving an organization in 2013 are the same as 2012 and 2011: personal reasons and seeking higher pay elsewhere (21 percent).

For small companies, poor performance was the most important reason for someone leaving an organization (23 percent), and 56 percent of small companies said it was one of the top three reasons.  For medium and large companies, seeking higher pay and advancement opportunities elsewhere were the two most common reasons.

79 percent of respondents agree pay is often not the primary reason people first start looking for a new job.

Companies of all sizes in all industries should expect to see an increase in employee turnover.

Skills Gap

Half of respondents agree with the statement: “There is a lack of qualified applicants for our open job positions.”

Half of companies surveyed cited they are struggling to fill skilled job positions with nearly two-thirds of companies in the Information, Media and Telecommunications industry and Manufacturing companies reporting concerns.

Companies are growing.

Despite headlines to the contrary, many sectors of the economy are improving.  The combination of growth, retirements, and skill gaps means that recruitment and retention will become significant problems for companies that take a wait-and-see approach.

change in workforce size

Of the 52 percent of organizations that reported increasing the size of their workforce, 46 percent reportedly grew up to 10 percent.

Things are looking up for small business.

Small businesses are most optimistic about financial performance in 2014 with 75 percent expecting improvement compared with 72 percent of medium companies and 66 percent of large companies.

Salaries will go up.

For 2014, 88 percent of companies say they plan to give pay raises, with the average raise expected to be 4.5 percent.

Companies plan to recruit and retain high-performing employees with merit-based pay plans and additional learning and development opportunities.

Source: payscale.com  To download the full report, click here.

U.S. Unemployment Stats: Fantasy vs. Reality

The December 2013 Bureau of Labor Statistics (BLS) Unemployment Report showed that only 74,000 people found new jobs. Of these, 31,000 were part-time. Yet, the U.S. unemployment rate fell from 7 to 6.7 percent. You ask, how can this happen?

The answer lies in the fact that about 500,000 Americans quit looking for a job. They removed themselves from the BLS unemployment rate calculations.

What is going on? The U.S. stock market has been booming. Interest rates remain very low. Federal Reserve economists and Wall Street pundits keep telling us that the recession is over. If you don’t have a job, however, this seems pure fantasy. The share of the U.S. population available to work is now at a 35 year low – a 62.8 percent labor participation rate. This is the same rate as in 1978. It includes all people who are not infirm, in the military, or locked up somewhere. These workers are either employed or still seeking a job today.

At the same time those workers not in the labor force, or who have given up looking, rose in December 2013 by 525,000 persons to 91.8 million! If this increase had been zero, the U.S. unemployment rate would have remained unchanged at 7 percent! Those BLS numbers don’t lie, they just distort reality.

There are those economists and pundits who claim that the swelling number of Americans who have dropped out of the labor force is due to the massive number of baby boomer retirements and more young people going to school. These claims lack credible proof.

A comparison of BLS labor participation rates from 1999 to 2013 for different age ranges shows a dramatic workplace shift is underway. There has been a major decline in workers under 45, while there has been a significant increase in the percent of people over 60 who are at work.

U.S. workers aged 30 to 59, the prime age group for employment, comprise 50 percent of the potential workforce. They account for most of the decline in the U.S. labor pool since 2007 and 75 percent of the decline for 2013. If you zero in on workers aged 45 to 54, their labor participation rate is 79.2 percent, the lowest since 1988! “It just keeps dropping and dropping,” states Julia Coronado, chief U.S. economist at BNP Paribas. “It’s depressing, as it’s not just older workers retiring.”

At the end of 2007, when the recession began, 66 percent of Americans were at work. To return to that level in 2014, 8 million Americans would have to be added to the workforce. If this occurred, the current U.S. unemployment rate would rise to 11.2 percent!

All of the above suggests that the pool of potential U.S. workers is substantially higher than the BLS unemployment rate indicates. What is keeping these workers on the sidelines?  It’s clear to me: A growing labor mismatch between vacant jobs and the skills of unemployed American workers. It’s a structural unemployment problem has existed for the past decade, and it is now becoming more critical.

An Accenture 2013 Skills and Employment Trends Survey of 400 U.S. executives found that 46 percent are concerned that they will not be able to find workers with the needed skills. A 2014 McKinsey survey of business and education providers in the European Union found that about a third reported difficulties finding workers with the right skills.

Clearly the U.S. education to employment pipeline is broken. There are approximately 7.2 million vacant jobs in the United States that currently can’t be filled. My latest published research on the skills-jobs mismatch, Future Jobs: Solving the Employment and Skills Crisis (Praeger, 2013), estimates that the lack of workers with appropriate skills for a 21st-century workforce in the United States, and in nations worldwide, could result in 14 to 25 million vacant U.S. jobs by 2020. Future Jobs, however, does point to reform efforts underway in regions of the United States, as well as overseas, that have the potential to substantially alter this dire scenario, if they are rapidly brought to scale.

The realities of this skills-jobs collapse will trigger a major economic crisis for many Americans. As the pain increases, we can expect a rising public demand for meaningful action by business and government at the regional and state levels to fix the jobs and skills disconnect, instead of the current fantasy that the U.S. unemployment problem is ameliorating.

          

Edward E. Gordon is an internationally recognized researcher, author, speaker, and consultant on the future of America’s and the world’s workforces. His previous books include: Winning the Global Talent Showdown, The 2010 Meltdown: Solving the Employment and Skills Crisis, Skill Wars, and FutureWork. Ed can be contacted at 760.346.6364 or imperialcorp@juno.com.