One of the sad facts of life is that businesses and economies have to monetize talent, toil, and time—the value of people—just as they monetize raw materials, components, and other economic “inputs.”
We need to be aware of supply and demand trends in human capital and to nticipate changes. If we don’t, we may find ourselves in a squeeze.
That’s one of the reasons I’ve been writing lately about a cluster of issues such as the aging of America’s skilled labor force, the short shrift that vocational education has received in recent decades, and, not least, immigration policy.
These shortcomings are the baggage the U.S. brings to the table. But the problem is global in scope. Virtually no country, no region of the world, is immune. And the mismatch between available labor and employer needs may get worse in many countries unless steps are taken to fix things.
Countries face two types of problems: Some face labor shortages (at least in certain key categories), which can undermine productivity and economic growth. Others face “surpluses”: Too many workers competing for too few jobs can produce unacceptably high rates of unemployment and similarly slow growth, not to mention significant fiscal and social problems as unemployed workers seek assistance from increasingly cash-strapped governments. Too many workers and too few are two sides of the same coin—equally destructive.
According to a new study by the Boston Consulting Group, the United States will have persistent worker surpluses, with some 17 to 22 million working-age adults without jobs by 2020, translating into an unemployment rate of 10 percent to 13 percent. This “surplus” will decline over the following decade, bottoming out by 2030 at a minimum of 7.4 million. The story is reversed in Germany and Brazil, while China will have a labor surplus in 2020 and a shortage by 2030.
What do these likely supply and demand mismatches, ranging from crippling shortages in some countries to chronic surpluses elsewhere, mean?
Globally, they will account for $10 trillion in unrealized gross domestic product, the authors found. In other words, if there were a better balance between supply and demand, the total GDP of the 25 countries studied would be that much greater over the next couple of decades.
On a more practical level, it means countries need to take action. Here in the U.S., we need to find ways both to better utilize our workforce and increase economic activity by repatriating more of the manufacturing we outsourced in recent decades, improving training and education programs, and encouraging entrepreneurship.
The laws of supply and demand are immutable. They also happen to apply to people, as well as to products.