The future of the American economy comes down to jobs, just not the jobs people are ready for now.
According to Linda Duessel, senior equity strategist at Federated Investors, the labour market will hold the key to the success or failure of US economic growth for the foreseeable future.
Keep people employed, spending, and economically stable and you’ll see growth in the broader US economy.
While this is not particularly revolutionary, the continued employment of Americans is a focus of nearly every economic watcher. Duessel believes that the constraints facing the labour market are going to make it difficult to sustain the kind of labour force growth necessary to get the economy out of it’s growth “malaise.”
“It is true that there are a record number of job openings in this country,” said the strategist, whose firm manages just under $370 billion in assets. “It is also true that there are many, many CEOs and employers are saying ‘I can’t find people with the right qualifications or that fit my needs’.”
As we’ve noted before, job openings are hitting all-time highs in the US, but the number of people being hired for new jobs remains well below the pace expected from those openings. Additionally, the days that it takes for a company to fill a position have hit the highest point in the data’s history.
This seems to indicate that companies are either being slow in their hiring process, or alternatively, that the pool of labour that the firms have to select from isn’t meeting their needs. To Duessel, it’s the latter.
The major problem, according to Duessel, is that this sort of a problem isn’t going be solved anytime soon. It takes time and investment to re-train someone that is unemployed for the jobs that are available, and many of the jobs these mis-matched workers may be qualified for are no longer expanding
“It used to be, back in my father’s day, that if you graduated from high school and went to work, you could just go to the steel mill or something,” Duessel told Business Insider. “That’s not the case anymore, those kind of jobs don’t exist, and the people that need those kind of jobs simply aren’t going to find them.”
Duessel said that while it will be a long-term shift needed to address these discrepancies, it will eventually happen.
“It’s going to take about 7 years for the transition to occur and to get the large number of workers with the skills required for the jobs we are creating,” said Duessel.
The combination of better, more forward-thinking education and fiscal policy focused on jobs that aren’t “digging a hole and then filling a hole,” as Duessel put it, could help close the gap.
Additionally, Duessel said she believes the younger Millennial generation will, in time, figure out where the jobs are and be ready for them.
“I have very, very high hopes for the Millennials generation,” said Duessel. “I’m very happy to move off the center-stage to [the Millennials], because they are the most tech-savvy generation and will be the most education generation we’ve ever seen.”
While the outlook is bright for the younger generation, there will be a transition period as Baby Boomers and older members of the workforce shift out fo the labour market and more and more millennials hit working age. This will mean that the giant gap between experienced workers with the skills for the new jobs America is creating and those available in the labour pool will remain wide for a while.