By: James Overmoyer
In October, the US Department of Labor reported that the unemployment rate has dropped 0.4 percent over the year to 3.7 percent, its lowest in about two decades. The drop in unemployment comes during what economists are dubbing an inflationary period in the business cycle. While that may seem great, we now have 7.1 million job openings to 6.1 million unemployed Americans. Economists predict the extreme dearth of labour will cause slow growth in the economy.
While a labor shortage could be bad, there are also some positive effects. AP Macroeconomics and Government teacher Mr. Sostack noted, “Teenagers are directly benefiting [from the labor shortage] as they are receiving starting wages well over the minimum wage requirement.” In addition, the US Department of Labor reported that average hourly earnings have increased by 83 cents, or 3.1 percent.
However, the market will adjust to these shortages, probably through a combination of corporate consolidation and increased automated functions (hello McDonald’s ordering kiosks). Per Sostack, “Automation is ‘creative destruction’. The pattern of replacing labor with more efficient automated robots transforms the demand for certain skills but opens new opportunities.”
As technology expands with innovations like the new iPhone, employers need people skilled with new technology. Today, regardless of position, all employees need general computer knowledge and competency. As technology continues to grow, low-skilled professions will become more vulnerable to structural unemployment. Today’s workforce needs to adapt to the evolving market. Sostack notes, “Tailoring college degrees to market demands may benefit college students . . . [by] providing more internships for real world experience. A recent trend to focus on specific skills such as two year programs may be better suited to address what employers are seeking.” And a degree may not be necessary at all: Monster.com lists the top skill employers are looking for as problem solving.