9/10/07 6:30 AM

U.S. Workforce ‘Vibrant’ but Faces Skills Gap, Chao Says

By Kathy Gurchiek

The U.S. labor market is strong and resilient, employment has reached record heights, and the economy is creating jobs and expanding output, but there are challenges ahead as that market transitions to a knowledge-based economy, according to a U.S. Department of Labor (DOL) report.

“Despite recent challenges, including a declining housing market, financial market volatility and high energy prices, the fundamentals of our economy remain positive,” writes U.S. Secretary of Labor Elaine L. Chao in a letter accompanying the 55-page report, America’s Dynamic Workforce 2007.

“America’s labor market is vibrant,” she writes. She pointed to the first half of 2007, when the unemployment rate averaged 4.5 percent, compared with the 4.6 percent average of 2006 and the 5.7 percent average unemployment rate of the 1990s.

The country enjoyed 46 months of uninterrupted job growth by June 2007, the latest month for which data for the report was available, she noted, and more than 8.2 million net new jobs have been created since August 2003.

U.S. workers also clocked in more hours than those in other countries—an average 1,713 hours in 2005 vs. 1,594 hours by workers in European Union countries—a difference of nearly three weeks of full-time work, according to the DOL report.

Released two days after Labor Day 2007, the report highlights major trends in the American labor market and the importance of education and skills training to maintaining U.S. competitiveness. Nearly half of private-sector employers, for example, made work-related education benefits available in 2006, up from 41 percent in 1999, according to the report.

“What our country does face is a skills gap,” Chao said in a press release. “The majority of new jobs created over the next decade will require more skills, higher education and pay above average wages, so it is important to ensure that workers are able to get the education and training they need to access these growing opportunities.”

The report notes that “as the unemployment rate has fallen over the past two years, the number of unfilled job openings has steadily risen” to 4.2 million at the end of May 2007. The DOL called this “another sign of a strengthening labor market” and said that the rising trend of openings “suggests that job opportunities may be growing faster than qualified candidates are being found to fill them.”

The report, which reflects updates and revisions published through July 31, 2007, includes a chapter that highlights two trends the DOL says will affect the shape of the labor force significantly throughout this century—an aging population and increasingly racial and ethnic diversity.

Another chapter provides a global context for understanding the U.S. labor market compared to other countries with similar market indicators.

The DOL report comes two days after the International Labour Organization (ILO) issued its Key Indicators of the Labour Market report, showing that the United States remained the front-runner “by far” in labor productivity per person in 2006, although South Asia, East Asia, and countries in Central and South-Eastern Europe that are not part of the European Union have begun to catch up.

The productivity gap between the United States and most other developed economies continued to widen in 2006, the ILO reported. The acceleration of productivity growth in the United States has outpaced that of many other developed economies, it says.

“Americans work more hours per year than workers in most other developed economies,” the ILO reports, “but were not the most productive per hour. For added value per hour worked, Norway posted the greatest productivity level ($37.99), followed by the U.S. ($35.63) and France ($35.08).”

The Geneva, Switzerland-based ILO went on to report that “increase in productivity is mainly the result of firms better combining capital, labour and technology. A lack of investment in people (training and skills) as well as equipment and technology can lead to an underutilization of the labour potential in the world.”

Kathy Gurchiek is associate editor for HR News. She can be reached at kgurchiek@shrm.org.

Related Articles:

Skill Gaps Are Fact of Life, but Businesses’ Non-Response Doesn’t Have To Be, SHRM Online Staffing Management Focus Area, November 2006

Report Shows New Workers Aren’t Ready for Prime Time, HR News, Oct. 3, 2006

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