The American Workforce Advantage

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The American Workforce Advantage

Recent research from Harvard Business School indicates that skilled labor is a significant, but deteriorating, source of America's competitive advantage. Meanwhile, research by the OECD comparing the competency of U.S. and foreign workers in terms of literacy, problem-solving, and numeracy found that the advantage held by U.S. Baby Boomers and prior generations has largely disappeared among Xers and Millennials. This is due to the rapid rise of education standards elsewhere, coupled with deteriorating U.S. K-12 performance.1

At the same time, the United States is going through a paradoxical period in which it faces both a surplus of workers and a surplus of unfilled jobs. As highlighted in prior issues, this paradox exists because there are too many people with the wrong skills in the wrong places, and too few with the right skills in the right places.

One factor is a lack of physical mobility. Workers are unwilling to pick up and move to the places where the job growth is occurring. That's one reason why legal or illegal immigrants have filled all of the net new jobs created since 2000.2

To understand the competitive implications for America's workforce, it's useful to compare the evolving supply of talent with the evolving demand for talent. The Boston Consulting Group recently looked at 25 major economies around the world and found that while many countries will have a surplus of workers in 2020, there will a "massive worker shortage" as soon as 2030.3 If managed properly, this dynamic represents a huge competitive opportunity for North America.

Three countries in particular are likely to have huge workforce shortfalls:4

  • Brazil's labor supply was projected to increase at a 1.26 percent annual growth rate between 2012 and 2020 and at 0.5 percent annually between 2020 and 2030. If this is the case, Brazil will have a shortage of up to 8.5 million workers in 2020; and by 2030, that figure could increase nearly five-fold to 40.9 million people.

  • China is slated to have a labor surplus of between 55.2 and 75.3 million workers in 2020, but that is likely to reverse sharply, turning into a shortage of up to 24.5 million workers by 2030. A major problem for China is that it is the world's fastest-aging country due to its one-child policy, and this will mean it will have very few opportunities to replenish its workforce...

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