Unemployment Dropped, But Tech Bodes Workforce a Warning
Unemployment has dipped below four percent, but technology could shift the rate in the other direction, if the workforce fails to upskill.
While nearly two million jobs were generated by cities in 2017, a special breakout report on the Technology and the Future Labor Market shared at the U.S. Conference of Mayors 86th annual meeting revealed that various sectors and regions of the country are encountering severe labor shortages that could ultimately result in future unemployment.
It's all due to "a mismatch between required job skills in the context of disruptive technological changes and the available supply of those skills," according to the special report, which offers a literature review to help address the impact of technology on labor markets.
Technologies like automation could affect jobs in industries from manufacturing plants and warehousing to telemarketing, agricultural work, security, transportation and more. So perhaps more than ever, "workers need to continually invest in their careers in order to make them 'future proof,'" the report offers in its conclusion.
Overall key findings from the U.S Metro Economies Council include:
- US economic growth is projected to reach 2.8% in 2018 and 2019, its highest since 2015.
- Real GMP growth will exceed 3% per year in 72 metros (19%) in 2019-2020, and 2% per year in 239 (63%). In 2020, 81 metros (21%) will have unemployment rates less than 3%, and 247 (65%) less than 4%.
- Solid gains in employment, driven by robust growth in production, will contribute to a further 0.4-percentage point decline in the unemployment rate, to 3.5%, by early 2019.
- As US unemployment falls to 3.5% in 2018, 63 metros (19%) will have rates less than 3%, and 195 (51%) will have unemployment rates under 4%.
- Total employment gains are expected to average about 200,000 per month over the balance of this year, before slowing to around 100,000 per month in 2019 and roughly 70,000 per month in 2020.
- The labor force participation rate was 62.8% in April, a scant 0.3 percentage point below its expected recovery peak of 63.1%.
- With baby-boomers aging, participation rates will not return to their earlier peaks. Those small gaps leave little room between now and judgment day for labor force growth, when labor force gains are constrained by population growth.
- Growth of hourly labor compensation is expected to accelerate because of the further tightening in labor markets. The rise in the employment cost index is expected to increase from 2.5% in 2017 to 3.0% in 2018 and 3.5% by 2021.
- As baby boomers begin to retire, the share of the US population aged 65 years and over will jump from 16% in 2017 to 22% by 2048. The growth rate of the working-age population will slow more than that of the overall population. After increasing 0.9% annually over the past 30 years, the population aged 16–64 years will grow only 0.4% over this time period.
- The report projects that if the nation, over the next half-decade, could raise the labor force participation rate to its 2000 level, 67%, we would boost GDP growth by almost one-half a percentage point, from 2.0% to near 2.5%