McKinsey: Full employment by 2020 will only occur in the most rosy scenario
Some 7 million people remain out of work from the 2008–09 recession and reviving the jobs market could take a very long time, according to a new report from McKinsey Global Institute. At the recent pace of job creation, it will take more than five years for employment to recover, the consulting firm said, adding that some 21 million jobs are needed by 2020 to return to full employment. Only in the most optimistic scenario will the United States return to full employment before then, it said. Doing so would require sustained demand growth, rising U.S. competitiveness in the global economy, and better matching of workers to jobs. The U.S., McKinsey said, has been experiencing increasingly lengthy “jobless recoveries” from recessions in the past two decades. It took roughly six months for employment to recover to its prerecession level after each postwar recession through the 1980s, but it took 15 months after the 1990–91 recession and 39 months after the 2001 recession. The McKinsey report discusses three possible scenarios for job creation, based on sector analyses, that deliver 9.3 million to 22.5 million jobs by 2020. Health care, business services, leisure and hospitality, construction, manufacturing and retail pose the strongest potential for jobs growth. Together the sectors account for 66% of employment today, and McKinsey projects that they will account for up to 85% of new jobs created through the end of the decade. The report also said the U.S. won't have enough workers with the right education and training to fill the jobs likely to be created. "Our analysis suggests a shortage of up to 1.5 million workers with bachelor’s degrees or higher in 2020. At the same time, nearly 6 million Americans without a high school diploma are likely to be without a job." Another problem: College and vocational students aren't choosing fields of study that will give them the skills that employers are seeking. "Our interviews point to potential shortages in many occupations, such as nutritionists, welders, and nurse’s aides — in addition to the often-predicted shortfall in computer specialists and engineers." Other challenges also exist for the future work force, including employers' move toward part-time labor. "Ubiquitous digital communications and advanced information systems enable employers to disaggregate jobs into specialized tasks, which can then be performed remotely. This facilitates rapid growth in part-time and contingent employment and is also enabling companies to bring back some services jobs from abroad. Given these challenges, the United States will not return to full employment by simply following a 'business as usual' course," the report said. McKinsey said businesses, government leaders, educational institutions and workers themselves "will need the courage to consider bold new approaches and must work together for such approaches to succeed." The U.S. needs to encourage innovation, new business creation and the scaling up of industries in the United States, the report said. "Total employment from 2000 to 2007 increased by 9.2 million — less than half the rate of increase of preceding decades — and 1.2 million of those jobs were in sectors directly fueled by the credit bubble. The question now is whether this is the “new normal” or whether the economy can return to the job creation rate it experienced before 2000." Write to Kerry Curry. Follow her on Twitter @communicatorKLC.