ARTICLE
There is a lot of noise in the economic ethers for our country, our state and our county as we hit the Fall season of 2023. Let’s start with the unsettling movement (or lack thereof) where the United States House of Representatives can’t seem to get out of their own political ideological way in producing a 2023-2024 Budget by passing the 12 appropriations bills that fund our Federal Government. Without a federal budget, our government will shut down. I won’t go into any specifics now as negotiations are still possible by the deadline of September 30. What about the latest news articles describing the cheers of success about the end of the Writers’ Strike and the subsequent agreement? We haven’t seen the final document yet but it appears to be a happy ending to a 5 1/2 month strike. SAG-AFTRA members voted to authorize a strike against video game companies while hotel workers in Southern California continue to strike. And the United Auto Workers strike against three of the largest American automakers to improve wages, hours and labor regulations. Why do we have such a variety of headlines that describe a changing labor and economy market nationwide? That leads to the comment, “Why America has a long-term labor crisis.” Here are some data points to consider: The U.S. Economy has been running an unemployment rate under 4% for the past two years. That isn’t just a holdover from the pandemic when employers let millions of people go and then struggled to find workers when demand roared back. It is a storm that has been brewing for decades, flaring up most recently in the form of worker strikes at automakers and airlines and others noted above. Labor shortages are turning into a long-term labor crisis that could push wages and turnover higher. Economic experts have noted for years that the combination of baby boomers' retirements, lower birth rates, shifting immigration policies and the possibility of worker scheduling preference is leaving the U.S. employers with too few workers to fill job openings. While we acknowledge that the labor market is softening there is no evidence that the employment market will change in the years ahead. So we have a talent supply chain that can leave us with three issues: Workers choosing new arrangements of work such as part-time, flexible or remote work or employers to shift the role of the work. We understand total employment probably will grow at 0.3% a year through 2032 according to the U.S. Labor Department projections — this is much slower than the 1.2% rate the past decade. The baby boomers were the largest generation of Americans with 76 million children born between 1946 and 1964. (age range 58 to 77). It is projected that by the end of 2028, the youngest of the Baby Boomers will be near retirement at age 64. The next largest generation (millennials) reached 62 million births in the U.S. from 1981 to 1996 per a Pew Research Center study. We know that Baby Boomers who have led the labor market for years pulled back during the pandemic. Many have retired or decided not to return to the regular workforce. The percentage of people living in the U.S. who are/were in the labor force peaked at 67% in 2000. (Baby Boomers) were between 54 years old to the youngest at 35 years old. At that time the U.S. was in a short-term economic expansion (dot.com boom) which quickly disappeared. Participation hasn’t fully recovered from pandemic-era losses, though there have been signs of growth for prime-age workers—those between ages 25 and 54. The overall participation rate is expected to drop to 60.4% in 2032, according to the Labor Department, mainly because of baby boomer retirements. Labor shortages could possibly be eased by funneling more people into the labor force or making the current workforce more productive. That can be done through immigration; outsourcing more work overseas; tapping underutilized labor pools such as people with disabilities and the formerly incarcerated; and improving productivity through automation, training and refining business and production processes. As a general rule, an economy is able to grow about as quickly as its workforce expands, plus any gains in how productive the workforce is. Productivity is difficult to measure, and in the past few years, the numbers have been muddled by shocks from the pandemic. Overall, productivity growth has been modest, rising about 1.4% a year over the past decade. What about the innovative use of AI? At today’s pace, it is unknown how effective and to what degree technology can be applied to a business plan or labor work setting. Offshoring manufacturing has been one solution but that lost reliability when the global supply chain was resulting in massive delays in bringing products to market. Immigration has been suggested as a viable option. The question is — Can an immigration population fulfill the labor shortage? So what is the solution? Let’s bring us back to our own community. A couple of weeks back, we reported on the Santa Cruz Workforce Development report which highlighted the past five years of our economy and workforce. We commented, “When Santa Cruz County released its State of the Workforce, it offered concrete figures behind a demographic shift locals have been talking about for years: Santa Cruz County is going gray. Nearly 30% of the total workforce is at least 55 years old. Between 2017 and 2022, the 65-and-older crowd grew by 18% countywide, while the population younger than 65 shrank.” We are at a crossroads where it is time to look closely at our housing and job market numbers and find a way to stimulate our economy through job creation and housing production to meet our next generation economic needs.
There is a lot of noise in the economic ethers for our country, our state and our county as we hit the Fall season of 2023.
Let’s start with the unsettling movement (or lack thereof) where the United States House of Representatives can’t seem to get out of their own political ideological way in producing a 2023-2024 Budget by passing the 12 appropriations bills that fund our Federal Government. Without a federal budget, our government will shut down. I won’t go into any specifics now as negotiations are still possible by the deadline of September 30.
What about the latest news articles describing the cheers of success about the end of the Writers’ Strike and the subsequent agreement? We haven’t seen the final document yet but it appears to be a happy ending to a 5 1/2 month strike.
SAG-AFTRA members voted to authorize a strike against video game companies while hotel workers in Southern California continue to strike. And the United Auto Workers strike against three of the largest American automakers to improve wages, hours and labor regulations. Why do we have such a variety of headlines that describe a changing labor and economy market nationwide?
That leads to the comment, “Why America has a long-term labor crisis.” Here are some data points to consider: The U.S. Economy has been running an unemployment rate under 4% for the past two years. That isn’t just a holdover from the pandemic when employers let millions of people go and then struggled to find workers when demand roared back. It is a storm that has been brewing for decades, flaring up most recently in the form of worker strikes at automakers and airlines and others noted above. Labor shortages are turning into a long-term labor crisis that could push wages and turnover higher.
Economic experts have noted for years that the combination of baby boomers' retirements, lower birth rates, shifting immigration policies and the possibility of worker scheduling preference is leaving the U.S. employers with too few workers to fill job openings. While we acknowledge that the labor market is softening there is no evidence that the employment market will change in the years ahead. So we have a talent supply chain that can leave us with three issues: Workers choosing new arrangements of work such as part-time, flexible or remote work or employers to shift the role of the work.
We understand total employment probably will grow at 0.3% a year through 2032 according to the U.S. Labor Department projections — this is much slower than the 1.2% rate the past decade.
The baby boomers were the largest generation of Americans with 76 million children born between 1946 and 1964. (age range 58 to 77). It is projected that by the end of 2028, the youngest of the Baby Boomers will be near retirement at age 64. The next largest generation (millennials) reached 62 million births in the U.S. from 1981 to 1996 per a Pew Research Center study.
We know that Baby Boomers who have led the labor market for years pulled back during the pandemic. Many have retired or decided not to return to the regular workforce. The percentage of people living in the U.S. who are/were in the labor force peaked at 67% in 2000. (Baby Boomers) were between 54 years old to the youngest at 35 years old. At that time the U.S. was in a short-term economic expansion (dot.com boom) which quickly disappeared. Participation hasn’t fully recovered from pandemic-era losses, though there have been signs of growth for prime-age workers—those between ages 25 and 54. The overall participation rate is expected to drop to 60.4% in 2032, according to the Labor Department, mainly because of baby boomer retirements.
Labor shortages could possibly be eased by funneling more people into the labor force or making the current workforce more productive. That can be done through immigration; outsourcing more work overseas; tapping underutilized labor pools such as people with disabilities and the formerly incarcerated; and improving productivity through automation, training and refining business and production processes. As a general rule, an economy is able to grow about as quickly as its workforce expands, plus any gains in how productive the workforce is. Productivity is difficult to measure, and in the past few years, the numbers have been muddled by shocks from the pandemic. Overall, productivity growth has been modest, rising about 1.4% a year over the past decade.
What about the innovative use of AI? At today’s pace, it is unknown how effective and to what degree technology can be applied to a business plan or labor work setting. Offshoring manufacturing has been one solution but that lost reliability when the global supply chain was resulting in massive delays in bringing products to market. Immigration has been suggested as a viable option. The question is — Can an immigration population fulfill the labor shortage? So what is the solution?
Let’s bring us back to our own community. A couple of weeks back, we reported on the Santa Cruz Workforce Development report which highlighted the past five years of our economy and workforce. We commented, “When Santa Cruz County released its State of the Workforce, it offered concrete figures behind a demographic shift locals have been talking about for years: Santa Cruz County is going gray. Nearly 30% of the total workforce is at least 55 years old. Between 2017 and 2022, the 65-and-older crowd grew by 18% countywide, while the population younger than 65 shrank.”
We are at a crossroads where it is time to look closely at our housing and job market numbers and find a way to stimulate our economy through job creation and housing production to meet our next generation economic needs.