Will encouraging people to go into blue collar jobs vs. going to college to pursue white collar jobs, resolve our labor needs?
As the economy continues to grow, labor is needed to sustain expansion. The current unemployment rate of 4.1%. It is 1% below the natural unemployment rate of May 2018. Growth suffers when qualified labor is difficult to find.
Some people blame the lack of labor on a growing social safety net, but Scandinavian countries with high social benefits and tax rates have a proportionately larger labor force than the United States.
Firms have barely increased wages from February 2017 to February 2018. Wage growth only increased by 0.4%. This is unusual because labor supply shortages are supposed to place upward pressure on wages.
80% of construction companies report difficulty finding skilled labor, and 69% report difficulty in completing jobs on time. It is estimated that the industry needs 143,000 construction workers to fill demands, which has directly contributed to a shortage of houses, causing increasing home prices which impact the economies ability to expand. The Chief Economist at the National Association of Realtors says that the United States Gross Domestic Product was held back 0.7% solely due to housing shortages.
The American Trucking Association reports a shortage of 36,500 drivers in 2016 and estimates this number continue to grow dramatically. 90% of the truck load carriers cannot find enough experienced drivers.
3.5 million new jobs in manufacturing are predicted to be opening in the next decade, but only 1.5 million of those are expected to be filled.
A lot of this is the result of a growing skills gap and decline in technical education at the high school level. The percentage of high school graduates enrolling in universities is the highest it has been since (69.7%).
A lack of middle skill labor is causing structural unemployment and there is a need to taylor student education towards the demands of middle skilled careers.
However, the question needs to be raised, is encouraging people to go to blue-collar jobs as an alternative to college diploma required careers a solution? With an unemployment rate at the lowest it has been in 18 years, who will fill those white-collar jobs?
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