by Alfredo Ortiz
The American workers and the entrepreneurs that employ them are the heartbeat of our country’s economy. Through their hard work and innovation, the U.S. has become an economic powerhouse. This is what we celebrate this Labor Day.
Recent efforts made by the Trump Administration and Congress have unleashed this economic capacity even further. The Tax Cuts and Jobs Act – passed and signed into law late last year – and numerous additional efforts to reduce burdensome regulations have thrown economic growth into high-gear. As a result, both businesses and individuals have more money in their pockets to invest and spend.
The outcome has been incredible. The unemployment rate has reached historically low levels, job creation remains strong and the gross domestic product – or the value of all goods and services produced in a given year – is on track to grow by more than three percent.
However, this advancement does not come without repercussions. While past macro-economic concerns have focused on job creation and too much unemployment, the contemporary equivalent is the exact opposite: too many unfilled jobs and too few available workers.
In fact, as of earlier this year, there were more job openings available than there were unemployed Americans to fill them. While this may seem like a good problem to have and is preferred over the alternative, it’s a quandary nonetheless.
The lack of available labor dampens economic improvements that the country could be experiencing. While the economy is growing, it could be growing much faster if businesses were able to access the employees they need to keep up with their expanding operations. In fact, business owners have labeled labor shortages as one of their top concerns.
The solution is to institute public policies that match available jobs with qualified workers who are either currently looking for a job or have dropped out of the labor force altogether due to the economic turbulence experienced over the past decade, which is affirmed by the lower than usual labor force participation rate.
The best strategy to accomplish this goal is to encourage those who don’t have a job or are under-employed to gain the necessary skills required for many of the currently open positions, which shouldn’t be a difficult task considering that roughly half of the jobs pay $50,000 or more per year. The best part is many of these jobs don’t even require a bachelor’s degree, but simply an education from a trade or vocational school, which is much cheaper and takes less time to complete.
Not only will this help businesses fill available positions, but it will also drive up wage levels for employees. When Americans have more skills to offer and the labor market is tight, employers will compete for qualified job candidates by using higher wages, better benefits and even more flexible working hours as bargaining chips.
So this Labor Day, take a moment to appreciate the economic progress we’ve made over the past year as well as ponder the solutions to the new challenges we must now confront.