The shortage of skilled workers in the United States is a challenge, and the situation is about to get worse. Recent supply chain disruptions and doubts over China’s manufacturing dominance are likely to boost domestic industry and exacerbate an existing shortage of workers.
Growing scarcity, however, may come with a long-term silver lining. If we rethink our attitudes and approaches to physical industries, we could pave the way not only to boost the supply of skilled labor, but also to rebalance jobs, incomes and productivity in the world. entire US economy.
Over the past 30 years, the global shift of manufacturing to Asia and other developing regions has dramatically reduced request for skilled labor in general. Manufacturing jobs, for example, have grown from about 18 million in 1990 to about 12.5 million today. Globalization offers many benefits, but not without concentrated costs. And now many are wondering if we haven’t overdone it.
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In recent decades, educational and social trends have also emphasized services and information work rather than physical work. Jobs in health care, education and non-profit organizations have exploded. High-paying jobs in finance and software have also increased. But not always fast enough to offset job losses in traditional industries.
This centuries-old rush to soft industries has also eroded the to supply of skilled labour, probably even faster than demand. When industrial clusters evaporate and culture turns its back on physical labor, skills erode and new workers fail to show up in disadvantaged industries. Homebuilders and construction companies in the United States and manufacturers that have survived the Asian transition have struggled with this shortage for many years.
Declining labor force participation rates over the past two decades – particularly among men – have exacerbated these shortages. The employment rate for men aged 25 to 54 has fallen from nearly 92% in the late 1970s to less than 85% by the end of 2021. These are the people who once made up the bulk of the skilled trades.
What part of the fall in the work rate represents the results less skilled physical work, or cause? Do some skilled workers, who prefer physical labour, drop out of the labor force altogether when skilled jobs evaporate? Or are companies and industries, unable to find skilled workers, looking elsewhere? Probably a little of both, and the effects are probably stronger. There is no doubt that cultural factors also apply.
At least two large swings will boost efforts – already underway – to bring more manufacturing ashore.
New rotations now amplify these shortages. At least two large swings will boost efforts – already underway – to bring more manufacturing ashore.
First, supply chain disruptions, in part due to the “sudden stop and restart” of the pandemic, have exposed the inadequacies of our mostly hyper-efficient global goods markets. The second effect is probably larger and more important: growing trade, diplomatic and military tensions with China are causing many to rethink the decades-long massive relocation of manufacturing to Southeast Asia.
We cannot simply order industries and investors to build domestically. Nor can we subsidize our path to a more rebalanced economy. Private industries that depend on a skilled workforce must lead their resurgence through mentoring and skills development programs to train and advance a new generation of skilled workers.
Skilled trades jobs are good jobs that become careers when workers are given the tools and support they need to gain gainful employment and the financial independence, stability and opportunity that brings. Organizations like SkillsUSA – and its partners like Invitation Homes, Home Depot and John Deere – that train students for careers in trades, technical trades and skilled services are needed more than ever as the demand for skilled labor s ‘accelerated.
We also need to make domestic investment worthwhile – to make it profitable. The 2017 tax reform was a good start. Many investments under the old tax code were simply financially prohibitive. Reducing the corporate tax rate and allowing immediate capital expenditure was therefore necessary if we want massive new domestic investment. However, the 2017 tax reforms are not sufficient. We need even more aggressive fiscal policy and a series of new regulatory, energy, environmental, education and infrastructure policies that make physical industries attractive.
At the same time, we are not turning away from the digital economy. In fact, injecting more information technology into physical industries is the main way to transform the old low-value-added industries that we have pushed abroad into the high-value-added industries that we want here at home. In other words, robots are the friends of skilled labor. Without them, we cannot build at home profitably at all.
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The use of robotics, computer vision, additive printing and artificial intelligence to enhance our building and factory capabilities will be central to any industry resurgence. As I have said before, “The goal is not to bring back old industries and old jobs with old capital goods. The goal is to help traditional industries – manufacturing, transport, sales retail, wholesale, healthcare, food, education, energy, etc. – to transform and create new jobs, using a mix of physical capital and advanced technology.”
Our financial and cultural gaps are largely the result of an information technology gap, a political gap, and an understanding gap between soft and hard industries. A renewed appreciation for the hard work that fuels the economy, too often taken for granted, can revitalize all facets of the economy and generate booming jobs for those who need them most.
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