|Trends and Challenges for Work in the 21st Century|
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AN OVERVIEW OF ECONOMIC, SOCIAL,
AND DEMOGRAPHIC TRENDS
AFFECTING THE US LABOR MARKET
Robert I. Lerman
Stefanie R. Schmidt
The Urban Institute
This report was prepared at the Urban Institute for US Department of Labor, Office of the Assistant Secretary for Policy, under DOL Contract No. J-9-M-0048, #23. The views expressed are those of the authors and should not be attributed to the Department of Labor, the Urban Institute, its trustees, or its funders.
This paper offers an assessment of broad social, economic, and demographic trends affecting the US labor force nowin this time of strong economic growthand in the future. The focus is on demographic trends, work and family issues, health and pension patterns, technical change, adjustment to low unemployment, globalization, and the plight of low-skilled workers. The paper identifies several important trends and patterns, including: 1) the largest demographic shift relevant to the job market is the impending decline in the share of prime-age workers; 2) over 60 percent of workers do not have their own children in their home, but an increasing share of workers care for elderly relatives; 3) the impact of the substantial shift from defined-benefit (DB) to defined-contribution (DC) pension plans on workers is unclear, but some estimates suggest that the typical worker will gain financially; 4) while investment in computers is spurring technical change, the impacts on productivity in firms vary a great deal because of the varying organizational responses to technology; 5) the labor market has adjusted surprisingly well to low unemployment, partly because college-educated workers have accounted for over 90 percent of the net growth in employed adult workers during the 1992-99 expansion; 6) globalization of production is unlikely to have weakened the position of US workers because overall foreign investment in the US has exceeded US investment abroad and foreign direct investment has been nearly as high as US direct investment; 7) while the economic expansion greatly reduced unemployment and expanded job opportunities for low-skill workers, many less-educated men who left the labor force in earlier years have not reentered the job market.
This paper offers an assessment of broad social, economic, and demographic trends affecting the US labor force nowin this time of strong economic growthand in the future. The focus is on demographic trends, work and family issues, health and pension patterns, technical change, adjustment to low unemployment, globalization, and the plight of low-skilled workers.
Keywords:Labor Market, Jobs, Economic, Social, Demographic
Table of Contents
Table 1: The Changing Mix of the US Labor Force by Age, Ethnicity, and Sex: 1976-2006
Table 2: Participation in Job-Related Education and Training by Age Group in the US and Other Selected Countries
Table 3: Percent of Women in the Labor Force in Various Types of Families: Second Quarter of 1998
Table 4: Percent of men in the Labor Force in Various Types of Families: Second Quarter of 1998
Table 5: Annual Work Hours of Husbands and Wives with at Least One Child
Table 6: Gains in Employment-Population Ratios and Unemployment Rate Reductions by Age, Ethnicity, and Education: 1992-1998
Table 7: Distribution of Net Employment Growth of Population, Ages 25 and Over, by Educational Status: 1992-1998, 1st Half
Table 8: Relationship Between Changes in Wage Rates and Weekly Earnings and State Labor market Conditions: 1995 to 1998
Figure 1: Relationship Between Unemployment Rate, Consumer Price Index (CPI), and Employment Cost Index (ECI): 1980-1998
Figure 2: Trends in Unemployment Rates and Labor Force Participation Rates: 1970-1998
Figure 3: Distribution of Unemployment Rates by State: 1998
Figure 4: Average of Exports Plus Imports as a Share of Gross Domestic Product: 1959-1998
The recent performance of the US job market has proved surprisingly strong Unemployment rates are at a 30 year low and far below what most macroeconomists predicted could be reached without substantial increases in inflation. Job growth has been strong. Employers have expanded their recruitment to reach large numbers of youth, low-skilled workers, mothers heading families, and other groups generally not favored in the labor market. Even wages, which had been rising only slowly, have been increasing more rapidly.
In the context of todays good times, it makes sense to step back and assess the broader trends affecting the job market of today and the future. One rationale is to put in place policies that can help sustain the economic expansion without spurring a new round of inflation. A second rationale is to improve our understanding of the interactions between the job market, emerging social, economic, and demographic trends, and public policies. What forces will policymakers have to confront in the future? Is wage inequality likely to increase in the future? How can we best meet employer demands while giving priority to the needs of low-skilled workers and their families?
The purpose of this paper is to contribute to the dialogue about these and related questions. We review seven broad social, economic, and demographic trends affecting the US labor force now and in the future. The seven topics deal in turn with demographic trends, work and family issues, health and pension patterns, technical change, adjustment to low unemployment, globalization, and low-skilled workers. The purpose is first, to set the context for new research by bringing together existing knowledge and second, to provide some initial ideas relevant to public policy. Clearly, government policies have a considerable influence on the job market. If new policies are derived informed by the latest research, better policies may materialize.