According to a recent report from the Washington Post, unemployment in the US just dropped to a mere 3.6 percent in May—its lowest point since 1969.
In the report, economists indicate that the main driving factor behind these ultra-low unemployment rates has been steady, month-after-month job creation. In the month of April, 263,000 jobs were added to the U.S. economy, marking 103 consecutive months of new jobs being created. And despite previous, pessimistic speculations of an impending recession, many economists say that economic growth and job creation will continue far beyond 2020.
Currently, corporate profits are at an all-time high and private markets are enjoying an abundance of capital, the likes of which has never been seen before. With painful memories of the 2008 recession still fresh in our minds, it ‘s hard to imagine how record low unemployment and strong economic growth could possibly pose a problem. Yes, we ‘re all aware that we could be due for another market crash and that the bubble could eventually burst if growth remains unchecked. However, as many economists and business leaders have concluded, the greatest looming threat to our nation ‘s economy is not the possibility of another recession—it ‘s an ever-shrinking labor pool that ‘s bound to soon dry up.
Wages Are Climbing
At the moment, the number of available jobs greatly outweighs the number of unemployed people, a situation often referred to as “full employment” in economics. As a result, low unemployment rates have already put upward pressure on wages, causing them to rise well beyond inflation. Last year, average hourly rates rose by 3.2% and companies have begun offering larger salaries, more benefits, and generous sign-on bonuses to attract talent. Many states have even raised the minimum wage in an attempt to fill job openings and prevent economic growth from slowing down.
Unfortunately, a good number of state governments have failed to recognize that the current epidemic of unfilled jobs is a supply-side problem, rather than demand-side. While workers are certainly enjoying the raise in pay, hundreds of thousands of jobs in the US still remain unfilled despite increasingly attractive wages. And while unemployment statistics don ‘t take into consideration those that aren ‘t actively seeking a job, it ‘s very unlikely that enough new jobseekers will be created to solve the problem through increasing wages. This leads us to conclude that simply throwing money at the problem isn ‘t going to fix it. We must consider that the labor shortage goes much deeper than a mere lack of motivation on behalf of those not currently seeking a job.
A Question of Both Quantity & Quality
In fact, employers in all industries have reported that quality is equally as big of a problem as quantity when it comes to hiring. When surveyed, top business leaders responded that their number one challenge was finding qualified talent, which posed a serious threat to completing company objectives. This drop in both the quantity and quality of labor has continued to exasperate employers, and traditional methods of hiring are no longer producing the same results they once did over a decade ago. This should come as no surprise, as nearly eleven years have passed since the 2008 recession and the job market simply isn ‘t the buyer’s market that it once was. Additionally, it ‘s no longer an issue of just searching harder to find applicants and providing more monetary incentives to create jobseekers, but solving a supply-side problem. And one of the greatest causes of the decline in qualified talent is a failure on the part of our educational system to prepare graduates for the future.
According to a study titled, “Higher Education, Low Skills” from Wharton Business School, Americans are graduating at record levels, but leave college lacking the basic skills they need for work. Tests performed by the Program for the International Assessment of Adult Competencies (PIAAC) showed that U.S. adults greatly underperformed in the three areas of literacy, numeracy, and problem-solving. Nearly half (46%) of adults (ages 16-34) were unable to successfully complete moderately complex literacy tasks. Regarding numeracy, nearly half (48%) of associate ‘s degree holders and roughly one-third (30%) of bachelor ‘s degree holders fell below Level 3 proficiency.
Most frightening of all were results of proficiency in digital problem-solving. More than half (52%) of associate ‘s degree holders and one-third (34%) of bachelor ‘s degree holders failed to meet Level 2 proficiency on digital problem-solving tasks of moderate difficulty (e.g., downloading music files on a portable music player). This poses a huge threat to our country ‘s future if our population is unable to keep up with current technology, let alone what will come in the future.
Therefore, despite the inability to control the number of job seekers in our country, we must do whatever we can to improve the quality of labor by improving education at every level. And that ‘s exactly what we at Woz U have set out to accomplish with our “K-to-Career” pipeline, which we ‘ll explain further in another article. To solve this epidemic of unqualified candidates, we must equip the next generation of learners with relevant skills and help them grow key competencies at the earliest stages of their development.
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