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Posted on 08/20/2003 3:56:23 PM PDT by Luke Skyfreeper
THE COMING JOB BOOM
Judy Reed is a buyer in a buyer's market, and frankly, that has its advantages. The vice president for human resources at Stratus Technologies, a Maynard, Mass., maker of high-reliability servers, Reed never lacks for attention at parties and dinners in this employment-starved economy. When she does post a job, she gets four times the volume of responses she got three years ago, and some job seekers even follow up with Christmas cards. If she wanted to, she could fill every opening at a salary 15 percent below the going rate -- as, in fact, many of her competitors do.
But that's one advantage Reed won't take. She recently hired an engineer with more than 10 years' experience for nearly six figures -- the same wage she paid at the height of the bubble. Reed isn't just being kind. Sheasserts that any other course of action is asking for trouble down the road. "The buyer's market we're in now is temporary," she warns. "Maybe it'll last another year or two." And then? "Companies that haven't taken care to build worker loyalty," she says, "will find themselves in the same predicament as in 1999 and 2000."
At this particular moment in history, that is quite a statement. Two million workers have been downsized or displaced since the recession of 2001. At 6.2 percent, the national unemployment rate is the highest it's been in nine years, and the number of new jobless claims has sat above 400,000 for 20 weeks.
But Reed isn't alone. Executives at Cigna, Intel, SAS, Sprint, Whirlpool, WPP, and Adecco... have told Business 2.0 that they, too, worry that the supply of labor is about to fall seriously short of demand. Former Treasury Secretary and current Harvard University president Larry Summers regards a skilled labor shortage as all but inevitable. Economists... have issued warnings to the same effect. And in April, the country's largest and most influential trade group, the National Association of Manufacturers, added its voice to the chorus. The association released a white paper based on research by labor economist Anthony Carnevale, former chairman of President Clinton's National Commission for Employment Policy, that forecast a "skilled worker gap" that will start to appear the year after next and grow to 5.3 million workers by 2010 and 14 million 10 years later... "By comparison, what employers experienced in 1999 and 2000 was a minor irritation," Carnevale says. "The shortage won't just be about having to cut an extra shift. It'll be about not being able to fill the first and second shift, too."
The cause of the labor squeeze is as simple as it is inexorable: During this decade and the next, the baby boom generation will retire. The largest generation in American history now constitutes about 60 percent of what both employer and economists call the prime-age workforce -- that is, workers between the ages of 25 and 54. The cohorts that follow are just too small to take the boomers' place. The shortage will bemost acute among two key groups: managers, who tend to be older and closer to retirement, and skilled workers in high-demand, high-tech jobs.
"People think we're going to have plentiful workers forever, but that's not so," explains David Ellwood, a Harvard University professor who recently led an Aspen Institute study of the problem. "If you want to hire somebody who has traditionally been the bread and butter of the labor force, you're soon going to have to hire them away from somebody else."
No sentient adult could have made it through the past decade without developing a healthy distrust of forecasts like these. But... when Carnevale's model, for instance, shows that within seven years 30 million people now in the workforce will be older than 55, that's not a guess. It is virtually a certainty.
The result [will be] an unprecedented mismatch between the workforce and the demands of a growing high-tech economy. Projections by the Labor Department's Bureau of Labor Statistics indicate that the seven fastest-growing occupations this decade will all be in technology. Demand for applications software engineers and tech support specialists, for example, will double by 2010, according to the BLS... Even the seventh-ranked category, database administrators, is projected to grow by a stunning 66 percent. These high-demand tech fields will be the first to feel the labor crunch. By 2005, Carnevale says, "we'll start to see spot shortages all over the place." ... By the following decade... a broad swath of corporate America will be scraping the bottom of the barrel for white-collar workers.
[The article then deals with several objections of skeptics, including outsourcing:]
For the most part, economists say, [the hand-wringing over future outsourcing estimates] is mere hysteria. India, China, the Philippines and other newly industrialized countries simply haven't enough capacity to prevent the US labor squeeze, particularly in IT...
And what of the 3.3 million jobs that Forrester predicts will move offshore by the end of the next decade? Most experts in the field put little faith in that number; they say there's not yet enough data to make any credible projection... Martin Kenny, a professor at the University of California at Davis who has just released a study on outsourcing in India, guesses that the true figure will be only half that many and that most of those will fall into lower-skilled categories like call centers. But even if Forrester's prediction came true -- and even if each of the 3.3 million exported jobs would otherwise have been filled by a US manager or skilled worker -- that still represents only a fraction of the shortage that Carnevale andother economists foresee. In other words, the long-term tragedy of off-shoring isn't that it's snatching away skilled American jobs. It's that it can't possibly snatch enough of them.
[Companies are going to be raising wages and introducing other means to lure workers.] Anticipating the shortage, some companies have already put the process in motion. For example, Gail Doughtie, a vice president at Cigna Systems, has begun preparing for a shortage of database administrators by training other Cigna workers for the job; on big projects she looks for chances to pair veteran database administrators with junior IT workers in their 20s and 30s....
SAS... has used the current downturn to staff up, hiring more than 800 new employees. "We've been using this downtun to buy loyalty with these people, in the hope that we can ride them through the decade," Chambers says. "If you lost your job at Dotcom Inc. but got hired at SAS and prospered, you're probably not going to move when a competitor comes calling..."
Hard as it may be to picture in the midst of today's employment gloom, the coming squeeze could be as big a bonanza for skilled workers as 1999 was -- and as big a headache for employers. The only difference is, you can see this one coming. Whether you prepare for it or let it catch you by surprise is up to you.
For those here who (like me) have been going through economic hard times, hang in there. It may last another year or two, but it's not going to last forever. Good times are coming again.
They and Microsoft, Oracle, Cisco etc can kiss my @$$. TODAY over a million foreigners are in the US on H1-B an L1 visa taking jobs from unemployed Americans. Support of these visa programs has decimated the high-tech graduate programs that are the seed-corn for our future.
Students who were considering majoring in comp sci are going into business or law (shudder). Anything except the wage depressed high tech market.
I also buy some of this --- you look at countries like Mexico which we are becoming more and more alike with and you see there are a shortage of high skilled workers, a very dire shortage of doctors and nurses and teachers to serve a very large indigent and uneducated population. The problem is the skilled jobs don't really pay all that well because of the type of economy they have and the large portion of poverty stricken.
Agreed. The baby boomers found themselves in a new business paradigm. No more retirement with a company provided pension. That was painfully obvious around 1980. The boomers opted to deal with the problem using IRA, 401K or stock investments in hope of stashing enough money for retirement. Most of that nest egg was wiped out by fraudulent management at various large companies. Now, the boomers have no nest egg. Most will have to work until they die.
I'm turning 47 next week. My mortgage is paid off. I have about $10,000 of debt left between a single car loan and a credit card. Could I retire? No way. I'm still a long way from having enough investments in place to cover my basic living expenses without working. The only good news is that I wouldn't have to work very hard to cover the basics. I'm still putting kids through college too. My youngest son turned 16 today. Soon I'll have 3 attending college simultaneously. Ouch.
My father retired from the Navy after 27 1/2 years as a Commander. He was age 47. He hasn't had to work another day in his life. His Navy retirement pay was more than adequate to finish paying off his home mortgage, car payments and daily living expenses. Few baby boomers will ever have that kind of experience.
What is to stop the government from expanding this program to allow 3 million in, to depress wages in our market even further?
There is a point here. We haven't sent enough jobs overseas yet for there not to be enough work here in these sectors. We have instead invited guest workers in at the expense of americans.
Anybody who believes in the great pie in the sky, must have a job that is very secure.
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Even in a place with a comparatively high unemployment rate like New York, the biggest problem that the region faces in the long term is a serious labor shortage. The problem is not just a function of retiring Baby Boomers, but of a society that has gotten so complex that our gene pool is having an increasingly difficult time keeping things working.
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