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The Economic Challenge
Work and workplaces are changing in response to technological innovation and global competition. Employers need more workers with high-level skills. However, the U.S. workforce is aging, and the number of young skilled workers is not increasing. This points to a significant labor and skills shortage if steps are not taken now to counter this trend.





Labor shortage

The U.S. population is aging, and so is the labor force:
  • The number of people 55 and over will increase sharply by 2050, but their labor force participation will increase only slightly. This means the overall labor force will shrink. [source 1, slides 1-15]

  • By 2010, there will be a shortage of nearly 8 million workers. The U.S. will need to import skilled workers from abroad. [source 1, slide 28]

  • Already, immigrants are responsible for a large share of labor force growth (they account for almost ½ of the growth between 1996-2000). [source 1, slide 30]

  • A National Association of Manufacturers' survey found that eighty percent of responding businesses said they had a "moderate to serious" shortage of qualified job candidates. [source 2]

  • There are currently 44.2 million people in the 36-45 age group, compared to 39.4 million people in the 26-46 age group. Over the next 30 years, the percentage of Americans age 65 or older will increase to over 20 percent as the U.S. baby-boom generation turns 65.[source 9]

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Skills gap

The workforce of the future demands highly skilled workers:

  • By 2010, more than 42% of all jobs in the economy will require a vocational certificate, associate's degree, bachelor's degree or higher. [source 3]

  • 65% of the fastest growing occupations in the US require some form of postsecondary education (associates' degree, vocational certificate, bachelors' degree) [source 1, slide 32]

  • Between 2000 and 2010, jobs that require an associate's or bachelor's degree are projected to grow at a much faster rate than the average of all jobs: 21.7% v. 15.2%. [source 3]

  • Eight of the ten fastest growing jobs from 2000 to 2010 require some form of postsecondary education, and this trend will continue. [source 4]

  • Of the 30 fastest growing occupations, 21(or 70%) generally require a postsecondary degree or other training beyond high school. [source 3]

  • Only two of the 30 largest declining occupations require postsecondary education. [source 3]

  • By 2014, the workforce will have openings for 9 million more degree holders than will be available. There will be 3 million surplus openings for 2-year degree holders, 4 million for 4-year degree holders, and 2 million for advanced degree holders.[source 9]

  • Increasingly, U.S. employers are turning to foreign nationals for skilled work. In 2003, nearly 15 percent of employees in the U.S. workforce were foreign born.[source 9]
Those with more education and skills earn more:

  • In the year 2000, male and female college graduates earned 60 and 95 percent more, respectively, than students completing only high school or a General Education Development Certificate (GED). [source 5]

  • High school dropouts earned 27 and 30 percent less, respectively, than their male and female counterparts who had a high school diploma or GED. [source 5]
But the educational attainment of U.S. workers is not growing:

  • Over the last decade, between 347,000 and 544,000 10th- through 12th- grade students dropped out of high school each year. [source 6]

  • In 2000, there were 3.8 million 16-24-year-olds who were not enrolled in school and who had not yet completed a high school program. [source 7]

  • Only 21 out of a hundred high school students graduate and go on to receive a BA. [source 1, slide 46]

  • Growth in college degrees granted is expected to slow even further. [source 1, slide 37]

  • Almost half of this nation's current adult population reads at levels 1 and 2, which is below the literacy level expected of the average high school graduate. [source 8]

  • Adults with relatively few years of education are more likely to perform in the lower literacy levels than those who completed high school or received some type of postsecondary education. [source 8]

  • 39% of the workforce is in low-level jobs. These jobs are disappearing. This means those workers will need remedial education and training to get the more skilled jobs that will make up an increasing share of U.S. jobs overall. [source 1, slide 43]
And educational attainment varies significantly by race and ethnicity
(see Education Challenge for further discussion of this point):
  • The U.S. population is getting more diverse. By 2050, there will be no majority race, and the young workforce will be increasingly minority. [source 1, slides 15-20]

  • The labor force, therefore, will be increasingly made up of racial minorities who do not have the educational qualifications to obtain and succeed in the highly skilled jobs of the future. African-Americans and Hispanics could fall increasingly behind economically. [source 1]
It is clear that we must work now to ensure that all students get the quality education they need to function well as citizens and workers in the new economy.

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Key Reports:

Are We Still a Middle Class Nation? (Michael Lind, Atlantic Monthly, January/February, 2004)
Article exploring options for sustaining the American middle class as the economy changes from primarily manufacturing to primarily service jobs.

Digest of Education Statistics, (U.S. Department of Education, 1990-2002)
Publication that compiles "statistical information covering the broad field of American education from prekindergarten through graduate school."

Double the Numbers: Increasing Postsecondary Credentials for Underrepresented Youth (Richard Kazis et al., Harvard Educational Publishing Group, 2004)
"Double the Numbers highlights emerging strategies--at state, district, and school levels--for improving postsecondary outcomes… [by tackling] the dual problems of high school completion and postsecondary access and success."

Grow Faster Together, or Grow Slowly Apart (The Aspen Institute, 2002)
Report noting trends toward labor and skills shortages, and stagnant wages, and recommending that worker training, job security and stability, and immigration policy should be national priorities.

Projections of Education Statistics to 2015 (NCES, 2006)
Report that provides national and state-level projections for key education statistics to 2015, and describes the models and assumptions used to develop the projections.

Public High School Graduation and College Readiness Rates in the United States (Manhattan Institute for Policy Research, 2003)
Study that finds only 32% of all students leave high school prepared for college.

The Skills Gap 2001 (National Association of Manufacturers, 2001)
Study noting that US manufacturers face a persistent skills gap fueled by demographic, technological and global changes, and arguing for a concerted national policy response.

The Condition of Education (U.S. Department of Education, NCES)
Yearly report documenting various statistics and indicators that describe the state of education in the United States.

Tomorrow's Jobs (U.S. Department of Labor, Occupational Outlook Handbook, 2002-03 Edition)
Section of the Occupational Outlook Handbook that highlights projected characteristics of the future labor force and future jobs.

Towards a National Workforce Education and Training Policy (National Center on Education and the Economy, 2003)
Report that recommends "incremental improvements in workforce education and training" and proposes "several far-reaching 'system renovations.'"

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Links

Bureau of Labor Statistics
Federal agency charged with providing facts and analysis in the areas of labor economics and statistics.

Census Bureau
Federal agency responsible for conducting the nationwide census every 10 years, and analyzing the social, economic, and geographic data from the census and other interim surveys.

National Center for Educational Statistics
"[P]rimary federal entity for collecting and analyzing data that are related to education in the United States and other nations."

Occupational Outlook Handbook
Handbook that "describes what workers do on the job, working conditions, the training and education needed, earnings, and expected job prospects in a wide range of occupations."

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Sources

(1) The Economic Imperative Behind No Child Left Behind, Burt Carlson, OVAE, 2004.    MS PowerPoint    MS Word

(2) The Skills Gap 2001, National Association of Manufacturers, Center for Workforce Success, 2001.

(3) Employment Outlook: Occupational employment projections to 2010, Hecker, Daniel. U.S. Department of Labor, Bureau of Labor Statistics Monthly Labor Review, 2001.

(4) Tomorrow's Jobs, U.S. Department of Labor, Bureau of Labor Statistics. 2002.

(5) The Condition of Education 2002, U.S. Department of Education, NCES, 2002.

(6) Dropout Rates in the United States: 2000, U.S. Department of Education, NCES, 2001.

(7) Digest of Education Statistics 2002, U.S. Department of Education, NCES, 2002.

(8) Adult Literacy in America: A First Look at the Findings of the National Adult Literacy Survey, U.S. Department of Education, NCES, 1993.

(9) The Employment Policy Foundation's Ninth-Annual Workplace Report: The American Workplace 2004