WASHINGTON (AP) — As America’s job market rebounds this summer and the need for workers intensifies, employers won’t likely have a chance to relax anytime soon. Worker shortages will likely persist for years after the fast-reopening economy shakes off its growing pains.
Consider that the number of working age people did something last year it had never done in the nation’s history: It shrank.
Estimates from the Census Bureau showed that the U.S. population ages 16 through 64 fell 0.1% in 2020 — a scant drop but the first decline of any kind after decades of steady increases. It reflected a sharp fall in immigration, the retirements of the vast baby boom generation and a slowing birth rate. The size of the 16-64 age group was also diminished last year by thousands of deaths from the coronavirus.
A year earlier, in 2019, the working age population had essentially plateaued.
It’s not entirely clear how population patterns will unfold once the pandemic fully fades. But even if the working age population resumes growing, it will almost certainly do so at an anemic pace. A continuing drop in that population, or even a tepid increase, would pose a problem for the economy. A healthy economic expansion has always depended on robust population growth to fuel consumer spending, justify business expansion and drive corporate earnings. Without a sizable influx of new workers, growth could stagnate.
Still, some economists foresee a silver lining for individuals: Fewer people of working age could compel companies to compete harder to hire and retain employees. And that could mean higher pay, better opportunities and other inducements to keep and attract workers, a trend already evident in the June jobs report the government released Friday. Average hourly pay rose a hefty 3.6% compared with a year ago, faster than the pre-pandemic pace.
“The workers would be doing better than the economy as a whole,” said Manoj Pradhan, the founder of Talking Heads Marco, an economics research firm, and formerly an economist for Morgan Stanley.
If wages were to rise sharply, it could also help narrow the vast inequality that has increasingly divided the most affluent Americans from everyone else and left the lowest-income households struggling to afford rent, food, child care and other essential expenses.
With population growth sluggish, economic expansion would hinge on whether companies could make their workers more productive. An increase in productivity, often made through investments in labor-saving technology, could further raise pay. Living standards would rise even if the economy struggled to grow at what’s normally considered a healthy pace.
Last year, the number of legal and unauthorized immigrants entering the United States fell for a fourth straight year to below 500,000 — less than half the level in 2016 — according to calculations by William Frey, a demographer at the Brookings Institution. The number of deaths jumped 8%, to above 3 million, reflecting largely the impact of the pandemic.
A fundamental long-term drag on the working-age population is the exit of the enormous baby boom generation from the labor force. The number of people ages 65 and over will likely jump 30% over the next decade, Frey said.
“We’ve never really been in this type of situation before,” he said. “There’s just not enough (young adults) to replace people who are leaving.”
The situation has been exacerbated this year by a spate of early retirements. Roughly 2.6 million people who were working before the pandemic now say they’re retired and not searching for a job, according to Federal Reserve Bank of Dallas. Sharp gains in stock prices and home values despite the deep pandemic recession made it easier for many older Americans to leave the workforce early.
One of them is Jeff Ferguson, a physician with Eli Lilly & Co. in Indianapolis, who retired in April at age 59 after 22 years with the company.
Having worked from home during the pandemic, Ferguson said, made the transition smoother. But he was also encouraged by his solid investment gains and by the strengthening of the local housing market despite economic uncertainty.
“I probably retired with a tailwind as opposed to retiring with a headwind,” he said. “If I had perceived a headwind, I might have delayed it.”
The pandemic also lent him a new perspective on life and retirement. Ferguson plans to travel around the country with his wife, a pediatrician, and catch up with relatives.
Gad Levanon, an economist at the Conference Board, said the drop in the working age population will be particularly evident among Americans without college degrees. As aging baby boomers retire, they’re being replaced by younger workers who are likelier to be college graduates. Blue-collar workers — anyone without a four-year degree — will become scarcer. That trend will likely create labor shortages in such industries as manufacturing, construction, retail and restaurants and hotels.
Levanon estimates that the number of college graduates will keep growing about 2% a year, despite the population slowdown, while non-college degree holders will dwindle. This could make it harder for future college grads to find jobs commensurate with their education levels. Companies may also inflate their job requirements, perhaps demanding bachelor’s degrees for jobs that didn’t require them before.
“The number of people who are willing to work in blue collar and manual service jobs is shrinking,” Levanon said.
Pay is already rising faster for lower-wage workers. For the lowest-paid one-quarter of employees, hourly wages rose 4.2% in May compared with a year earlier, according to the Federal Reserve Bank of Atlanta. That’s more than twice the percentage raises that these workers received in the four years after the Great Recession, from 2010 through 2014, and higher than the richest one-quarter of workers.
Scott Seaholm, CEO of Universal Metal Products, a 285-person metal stamping company near Cleveland, is surrounded by an aging population and is trying desperately to interest young people in a manufacturing career. A study found that roughly 59% of the population in Lake County, Ohio, where he’s based, was made up of working age adults in 2015, Seaholm said. That proportion fell to 57% last year and is projected to hit 54% in 2025.
“That’s pretty shocking,” he said. “There’s nobody out there to work. It’s kind of ugly.”
More than half the workers in his three factories are over 55, he said, with fewer than one in five ages 20 to 34. He has one 81-year old employee still working a punch press.
Seaholm’s company belongs to a group that encourages high school students to consider factory jobs. He opens his plants to high school students once a year on “industry day” and tries to get their parents to come, too.
“They want Johnny and Judy to go off to college,” he said. “That’s all locked in their heads.”
Globally, workforces in most other countries are also aging, including in China, which once seemed to offer an inexhaustible supply of workers. Japan’s population has shrunk for a decade.
Pradhan said that trend could potentially benefit American workers. Since the end of the Cold War in the early 1990s, hundreds of millions of people in China, Eastern Europe and India have joined the global workforce, thereby holding down wages for lower-skilled workers and keeping prices in check.
Now, the aging of much of the world could reverse those trends, Pradhan and Charles Goodhart, formerly an economist at the Bank of England, wrote in a book last year titled, “The Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation Revival.”
Pradhan notes that in Japan, whose population has declined about 1% year for a decade, economic growth has averaged just 1% annually. But that means growth per person has been 2%.
If the United States could achieve that level of efficiency while its population grows just 0.5% a year, its economy could still expand at a healthy 2.5% annually, Pradhan said.
Still, over time, he and other economists worry that sluggish population growth could mean less consumer spending and a less dynamic economy.
“Workers generate innovation and ideas — they invent things,” said Kasey Buckles, an economics professor at the University of Notre Dame. “When you have a dwindling working-age population, you have fewer people doing that.”
AP Business Writer Anne D’Innocenzio contributed to this report from New York.
Creating a transparent digital economy and rebuilding trust | World Economic Forum – World Economic Forum
- The digital economy in the US is expanding four times faster than the overall economy.
- Yet consumers remain concerned about the way data is collected and how it’s used to influence behaviour.
- Companies and regulators must strengthen data privacy and enhance transparency to build trust and protect the benefits of digital innovation.
The benefits of digitization are growing. Even before COVID-19 struck, digital goods and services were expanding four times faster than the overall economy in the US. Then video conferencing, online shopping, telemedicine and the like, enabled tens of millions of people around the world to adapt after the pandemic erupted last year. Today the five largest US technology stocks account for nearly a quarter of the value of the S&P 500 Index while China’s big three account for nearly a third of the value of the MSCI China Index.
Yet consumers worry about the way companies capture their data and influence everything from their news and music feeds to the advertisements suggesting what they should buy and where. The majority of consumers say they prefer to maintain their privacy and avoid sharing information with companies, according to Oliver Wyman Forum’s Global Consumer Sentiment Survey.
Without deep reform of the way companies treat data and governments regulate it, this mistrust threatens to become for the digital economy what carbon dioxide is for the physical world: an unseen pollution that threatens the sustainability of data ecosystems. And like carbon, those apprehensions have externalities that can cause societal harm. Willingness to share health information to contain the coronavirus declined as the pandemic worsened last year.
A tipping point in data mistrust?
According to a survey of US consumer attitudes toward 400 brands by Lippincott, the brand consultancy arm of Oliver Wyman, people rate major global social media brands lower than others in healthcare, finance, media, retail, and consumer products, on questions including whether the brand understands my needs, shares my values, always has my interests at heart, and does more good than bad for society. Consumers also express less willingness to share data with those companies than with firms in the other industries.
That finding may seem paradoxical given that people in practice share large amounts of data, some very personal, with social media companies. Yet each new breach or misinformation campaign erodes public trust and risks a tipping point in consumer willingness to share.
Political pressure is growing for tighter regulation. The European Commission has drafted legislation that would enhance consumer rights and protections and crack down on potential monopolistic behaviour by tech platforms. The CEOs of several big social media firms told a recent congressional hearing that they were open to reforms of the liability shield they enjoy under US law.
The pace and volume of data collection and sharing has accelerated, demonstrating the need for better mechanisms to protect citizens’ rights and inspire trust.
To that end, a new whitepaper explores a potential approach to tackling this issue and forging trust. The whitepaper, Data-driven economies: Foundations for a common future, identifies key enablers that can build multistakeholder data sharing frameworks.
It recommends creating new data governance models that combine data from various origins, including personal, commercial and/or government sources. It highlights use cases from industries and jurisdictions around the world to illustrate the possibilities data sharing unlocks for multiple stakeholders and the public good.
The paper was created in connection with the Data for Common Purpose Initiative, a first-of-its-kind global initiative formed to design a governance framework to responsibly enhance the societal benefit from data. The initiative aims to find ways to exchange data assets for the common good, while protecting individual parties’ rights and the equitable allocation of risks and rewards.
Focus on transparency, consumer choice and competition
Companies should take the lead in rebuilding trust, and that starts with transparency. A seven-country survey by the Oliver Wyman Forum found that providing transparency about how data is shared was one of the two top priorities of consumers, with 51% saying it would make them feel comfortable giving mobility companies access to their data.
Firms should be open about the types of information they collect, the steps they take to keep it secure, how the data will be used, what benefits consumers can expect, and whether data will be shared and for what purposes. Equally, firms should specify wherever possible what data they will not collect. These disclosures should be in everyday language, not dense legalese. And companies should consider working with nonprofits or civil society organizations to reinforce transparency by auditing data practices.
Data-sharing also should be reasonable. One way to ensure that would be to share only anonymous data. Fifty-one percent of respondents to the Oliver Wyman Forum mobility survey said this assurance would make them more comfortable sharing data. And given the ubiquity of information sources available, anonymized data is sufficient for many tasks, such as serving relevant ads to consumers.
Transparency needs to extend beyond data itself to the algorithms companies use to tailor news feeds, sell advertising, and make decisions on things like hiring and lending. Pressure is growing for new rules to enforce accountability and prevent algorithmic bias, but industry doesn’t have to wait for regulators or legislators to act. Reassuring consumers that the choices and information they receive are sound and fair should promote responsible data-sharing and build trust.
Finally, companies should reinforce transparency with empowerment. That means giving consumers the ability to access their data, to decide whether it can be shared with third parties, and to request that data be deleted or made portable so a customer can take it to another service provider. Companies also might work with other organizations to foster the creation of data trusts or cooperatives, which would store data and give consumers greater control over how it is used.
Pressure is growing for new rules to enforce accountability and prevent algorithmic bias, but industry doesn’t have to wait for regulators or legislators to act.
—Lorenzo Miláns del Bosch.
For policymakers, building trust and ensuring a level playing field should be the guiding principles of any new regulatory initiatives. Existing measures like Europe’s General Data Protection Regulation and the California Privacy Rights Act have strengthened privacy protections but don’t address issues like misinformation or algorithmic accountability.
Filling that gap won’t be easy considering today’s political polarization and the sensitivity and lack of global standards on issues like free speech. But a few key principles should guide policymakers.
Start by measuring the effectiveness of existing regulations in building trust. Then ensure that new regulations are designed to promote greater choice. Measures that empower consumers or require algorithmic accountability should have enforcement mechanisms proportional to the size of the firm. Imposing the same burdens on start-ups as on tech giants can stymie innovation and competition.
Rebuilding trust won’t be easy, but the risks of inaction are far greater. It’s time for technology companies and policymakers to get to work.
License and Republishing
Biden approval ratings on Covid and economy fall in new CNBC All-America survey – CNBC
President Joe Biden held on to his overall approval rating in the latest CNBC All-America Economic Survey but showed weakness in two key areas as the public’s views on the economy and the outlook for the virus soured.
In the poll of 802 American adults nationwide, 48% approved of the job Biden is doing as president, up a point from the first quarter. But his disapproval numbers grew to 45% from 41%.
The biggest change came in views on his handling of the coronavirus, where approval dropped 9 points to 53%; Biden’s economic approval fell to 42%, a decline of 4 points, or just beyond the poll’s 3.5-point margin of error.
“I think it all comes down to COVID,” said Jay Campbell, a partner at Hart Research Associates and Democratic pollster for the survey. “If the COVID situation had continued to improve the way it was improving in the first quarter, all of these numbers would look very different. And ultimately, someone has to be responsible for that. And right now it’s Joe Biden.”
The president’s ratings declined along with worsening views on the economy and the virus. The poll, conducted at the end of July, shows 51% of the public pessimistic about the economy and the outlook, the highest level since 2015. Just 22% give the economy positive marks and are optimistic.
“Surging Covid and rising inflation are creating a bleaker outlook throughout the next 12 months than we’ve measured since the 2008 recession,” said Micah Roberts, partner with Public Opinion Strategies and the Republican pollster for the survey. “Forty-three percent say the economy will get worse in the next year, tied for the highest we have measured since June 2008.”
Inflation also a concern
A bright spot: 59% said they believe they can find another job in the area where they live at similar or better pay. The confidence was evident across racial, income and age groups but was especially strong among 18-to-34-year-olds, a sign of a tight job market.
Asked about the most pressing two issues, respondents chose the coronavirus as their top concern, followed by a tie between immigration and inflation and then a tie between climate change and crime. Infrastructure, where the president has focused considerable efforts, is the least most important issue, chosen by just 4%.
The top priorities of the public overall mask substantial differences by party. While the virus and climate change are the main issues for Democrats, neither ranks in the top five for Republicans. Instead, Republicans says immigration, crime and inflation are their top issues. Independents said the virus was their top area of concern, followed by immigration, crime and inflation.
When it comes to the virus, Americans say that because of the delta variant they are concerned the nation could implement new restrictions: 73% said they are concerned there could be new lockdowns, 68% worried about a new surge in deaths and hospitalizations, 55% worried about mask mandates and 50% said it could delay the return of workers to their offices.
Inflation looks to be taking a bite out of spending. Eighty-six percent of respondents said they have taken at least one step to combat the rise in prices. The most frequent means has been to reduce spending on discretionary items, like eating out, but respondents also said they were driving less, traveling less and saving less money.
Economic Growth Looks Good For Now, But Families Need More – Forbes
The economy is in a good spot right now, but Congress needs to act quickly to strengthen the recovery further. Millions of people are still looking for a job and face financial hardship such as evictions without continued strong economic growth. At the same time, the pandemic has changed face again with the Delta variant ripping through the country, creating a lot uncertainty over the future path of the economy. Amid these challenges, Congress can enact additional measures to ensure a continued strong recovery that benefits all households.
The economy grew at a strong pace in the first half of 2021. Gross domestic product (GDP) growth amounted to an annual rate of 6.5% between March and June 2021. This was slightly faster than the already fast annual growth rate of 6.3% in the first three months of 2021. GDP in the second quarter of 2021 had finally caught up to and exceeded, by about one percent, the inflation-adjusted GDP level recorded for the last three months of 2019 before the pandemic started. The accelerated recovery in the first half of 2021 helped to regain the losses of economic activity associated with the pandemic faster than would have otherwise been the case.
Faster economic growth in the first half of 2021 came about in large part because of President Biden’s American Rescue Plan enacted in March 2021. Gross domestic product has exceeded what analysts forecast for 2021 prior to passage of the American Rescue Plan, for instance. In particular, Harvard University’s Jason Furman, former chair of President Obama’s Council of Economic Advisors, and Wilson Powell III report that the U.S. economy grew as much in the first half of the year as analysts had predicted for the entire year 2021. The massive relief bill enacted in March did exactly what it was supposed to do by putting the economy on a path to a quicker recovery, while helping struggling families deal with the ongoing fallout from the pandemic.
The economy still has room to grow in the short term. Supply chain bottlenecks in particular held back economic activity in the spring of 2021. Businesses, for example, depleted inventories as they often found it difficult procure intermediate and final products to sell. The depletion of inventories reduced economic growth by 1.1 percentage points. GDP growth would have been 7.6% instead of the reported 6.5% between March and June 2021 if businesses had not reduced their inventories. Similarly, new housing activities fell amid lumber and other material shortages, reducing GDP growth by another 0.5 percentage points. As supply bottlenecks gradually ease, the economy will likely overcome some of these headwinds and boost growth.
This short-term momentum will not be enough to address the looming challenges. Congress still needs to invest more in a prolonged strong economic recovery that benefits all American families, even in the context of these recent good news. First, millions of Americans are still out of work. Second, the economy would have likely grown after 2019 absent the pandemic and thus need to go some ways to catch up to where it would have been. The Congressional Budget Office predicted in January 2020 that the economy would be 1.8% larger in the second quarter of 2021 than it actually was. Third, modest productivity growth and massive inequality marked the economic performance prior to the pandemic. Households struggled with paying their bills, even amid low unemployment before the pandemic hit. Building on the current strong performance to ensure a continued robust recovery also means correcting these imbalances that persisted after the Great Recession from 2007 to 2009. Congress’s work in building a strong, inclusive recovery is not yet done.
Passing the Bipartisan Infrastructure Framework (BIF) currently making its way through Congress and the $3.5 trillion budget resolution are key to achieving robust, equitable growth. Those measures will provide public investments in a wide range of infrastructure that has been neglected for too long and that the private sector will not fully finance. Roads, bridges, and access to affordable internet are just some of the investments that will translate into faster innovation, lower costs and higher productivity and economic growth. Congress will also tackle climate change and thus reduce costs of extreme weather events for people and businesses. Lower costs will again translate into faster economic growth over time. It is good to know that the administration and many members of Congress understand that their work is not done with two quarters of remarkably strong growth. American families have waited too long for a return to strong, inclusive long-term economic growth.
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