Focusing on Louisiana’s labor force

As is usually the case, the media were full of stories this Labor Day about the status of the labor force in America. On balance, the news for workers was good. The unemployment rate was holding steady at around 4.5 percent, and workers’ real wages (salaries adjusted for inflation) are on the rise.

According to the National Association of Manufacturers (NAM), 82 percent of American workers received real wage gains last year – the highest amount in the last seven years.

The productivity of the American workforce continues to out-pace the rest of the world. According to NAM, a recent United Nations report shows that the average U.S. worker is producing over $63,000 of wealth per year, and our manufacturing employees are generating almost $105,000 per employee per year.

Ireland comes in a distant second at approximately $56,000 of wealth produced per employee.

The bad news is that fewer employees -especially in the manufacturing sector – are maintaining those high levels of productivity.

NAM’s “Manufacturing Economy Daily” report for Sept. 4 quotes The Washington Post as reporting that manufacturing employment has plummeted to a current total of 14 million workers, the lowest since 1950.

While productivity increases are resulting in higher pay for workers with the skill levels to compete in the global marketplace, too many workers lack those skills. What technology won’t be able to overcome is the sheer deficit in the number of available workers as the Baby Boom turns into the Baby Bust.

Manufacturing isn’t the only industry facing this problem. The American Petroleum Institute estimates that the oil and gas industry will need 5,000 additional engineers by 2010.

In Louisiana alone, thousands of highly paid chemical plant operators will be needed over the next few years as senior workers continue to retire in large numbers.

What is becoming increasingly apparent is that our young workers on the cusp of entering the workforce today are in a worker friendly market. Finding a job – a good-paying job – will be easier to do in the future than it has been in the recent past-with one caveat: an increasingly higher skill level will be needed to cash in on those opportunities.

There appear to be three options available to meet the huge demand for skilled workers that is now challenging our economy in America.

First, our education and training institutions must do a much better job of recruiting and training individuals for the skill sets needed to land one of the high-paying jobs that will be in abundance in this country. The jury is still out on this option. There is a tremendous amount of inertia and attachment to the status quo in postsecondary education in America. If that continues into the future, more highly skilled jobs will find their way overseas and, eventually, more American companies will follow them.

A second approach will center upon keeping older workers in the workforce longer or luring them back from retirement. This avenue is already being pursued in many industries, but it has its limits. At some point, workers want to retire, and even lucrative offers will not keep them on the job.

The third and least attractive option is the continuation of the massive outsourcing of jobs overseas and more domination of the workforce by robotics. Some of this is going to happen, but the degree to which it becomes the primary option for workforce shortages will largely determine how high the standard of living will be for the next generation of American workers.