Over the next 15 years, the U.S. will have a problem that plenty of other countries would love to have: too many workers for the jobs available. That’s according to a report released today by the Boston Consulting Group.
Idle labor isn’t a good thing, especially for the unemployed workers. But you could argue that it beats the alternative, which is having so few workers that jobs go unfilled and economic output falls short of potential. That’s the problem that most other major nations, from Germany to Brazil to South Korea, will face between now and 2030, according to the BCG report.
A relatively high birthrate and liberal immigration policy give the U.S. an advantage in labor supply:
“While a labor surplus invariably attracts more attention, a shortage is just as problematic,” the report says. Having too few workers impedes growth and ultimately “threatens a country’s competitiveness,” the report says—though the opposite problem, a labor surplus, raises “the risk of social instability.” In an interview on Tuesday, the report’s lead author, Rainer Strack—a senior partner who is Europe and Africa leader of BCG’s people and organization practice—said: “A high [labor] surplus is bad. A high shortfall is also bad.”
The report, called The Global Workforce Crisis, projects the amount of labor a country would need if its gross domestic product and labor productivity continued to grow at the same rates as in the recent past. Then it compares that hypothetical demand for labor to the International Labor Organization’s projections of labor supply, which are based on population growth and labor force participation rates.
The report says what countries would need to do in order to bring labor supply and demand into balance. For Germany, the suggested measures for dealing with its projected labor shortfall are extreme. It would need to increase the share of people aged 65 and over who are in the labor force to 10 percent from 4 percent; increase the labor force participation rate for females 15-64 to 80 percent from 71 percent; increase immigration to 460,000 people a year from 369,000; and increase labor productivity growth to 1.15 percent a year from 0.87 percent.
By contract, the U.S., in order to put more people to work, needs to increase entrepreneurship, “in-source” jobs that have gone overseas, and upgrade workers’ skills, the report says.