Corporate Talent: Where the US Labor Market is Going

One of the important things senior business and HR leaders must consider is the availability of labor – that is not just “people” but “the right people.”  Right now, with a 6.1% unemployment rate, the US labor market has undergone some major changes…. and such changes in the availability of work directly affect the skills and capabilities of people.  For example, when I graduated from college in 1978, there was a dearth of engineers and a tremendous interest in energy (as there is now).  So, I studied Mechanical Engineering.  In the decades since, that particular area of study dropped out of favor – but now it’s back.

Consider the following changes which have happened in the last 9 months:

  • The number of jobs in construction has dropped by 4.3% (323,000 jobs lost)
  • The number of jobs in manufacturing has dropped by 2.7% (366,000 jobs lost)
  • The number of jobs in natural resources/energy has increased by 8.6% (64,000 jobs gained)
  • The number of jobs in education and health services has risen by 2.1% (394,000 jobs gained)
  • The number of jobs in government has grown by 1.1% (254,000 jobs gained).
So what we have experienced is a fairly dramatic drop in the need for manufacturing and construction roles and a very dramatic increase in the demand for energy, education, healthcare, and government roles.  Interestingly, working for the government is more popular among young people now than it has been since the 1960s.

 

US Labor Market by Industry October 2008
Fig 1:  US Labor Market by Industry, Bureau of Labor Statistics

 

This data shows what a “non-manufacturing” economy we really are.  The largest industries by employment are business and professional services, healthcare, and retail (and government).  We truly have become an industry of shoppers who are trying to remain healthy.  The fact that 17% of all employees work for some form of government is also alarming.

 

The second economic factor to consider is where industry growth is occurring.  Today, despite the recent drop in the stock market, some industries continue to be doing very well:  our new TalentWatch® research (to be published this month) shows that many Aerospace, Business Services, Defense, High Technology, and Healthcare companies are still growing rapidly.  And when we ask business leaders what roles they need to grow, companies tell us that their biggest shortages are in:
  • Line Managers:  43% of organizations cite severe or major shortages
  • Engineering / technical professionals:  42% of organizations cite severe or major shortages
  • Skilled labor:  30% of organizations cite severe or major shortages
  • Sales:  30% of organizations cite severe or major shortages
  • Top executives:  yes, believe it or not, 34% of organizations cite severe or major shortages.
As our Talent Management Factbook® research supports, organizations are still suffering from shortages in their leadership pipelines, shortages in technical skills, and a never-ending need to find the right sales and executive roles to run their businesses.
 
What does this mean to you?  Despite the dire economic news, more than 40% of the companies we surveyed told us they are limited by the inability to hire key people.  And based on the information above, our economy is slowly but surely shifting to one of services, government, healthcare, and energy workers. 
 
Further supporting this trend is the following data.  According to the Bureau of Labor Statistics, the fastest growing jobs over the next five years will be: 
  • Network systems and data communications analysts – 53% increase
  • Home health aids – 49% increase
  • Software engineers and applications programmers – 45% increase
  • Financial advisors (!!! really?  yes) – 41% increase
  • Medical assistants and nurses – 35% increase
  • Substance abuse and other counselors – 34% increase (I wont even try to guess the reasons for this).

Bottom line is this:  if your organization needs technical, managerial, or healthcare workers to grow, you should plan ahead.  You are likely going to need to further invest in career development, tuition reimbursement, and increases in training in order to obtain the skills you need.  Our research shows a fevered interest in complete career development programs among corporations – programs which help young workers build their skills in professional, technical, and service roles – not only leadership.

I personally believe that the next administration in Washington is going to wake up to these shifts in labor skills and availability and start a massive emphasis on technical, energy, and health training and education in the US.  WIthout such a shift our businesses are going to be increasingly forced to invest in these skills internally.  Either way, we have no choice but to watch these trends – it’s a critical part of our role as strategic talent managers in our organizations.

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  • Josh

    Great post…

    I’ll add two notes… (1) four generations in the workforce demand more attention by practitioners and vendors. We tend to talk about workforce related issues one dimensionally – IMO, each generation needs to be managed (read: recruited, retained, etc.) differently. (2) the baby boomers are NOT going to retire in droves like everyone would like for them to. The upside of this is these talented folks are still available to add value. That said, I do not think they all need to be full-time to add said value. I think we need to re-think what full time employment might be for these folks.

    Keep up the good work.

    Best,

    William
    starrtincup.com || jpie.com