Old Jobs, New Jobs: Here's the Difference

By Anthony P. Carnevale Jan 1, 2012
December Cover

At the moment, human resource professionals work in an environment where there seems to be plenty of skilled workers and not enough jobs. This will not last for long. Underneath the current surplus, there are relentless technological and demographic forces that guarantee U.S. employers will have to make their own skilled workers or pay a lot more to buy them in the future.

HR professionals will have to pay more attention to aligning what people learn in school to their employers' needs, they will have to help design compensation packages and benefits to retain aging onboard talent, and they will have to compete for scarce new talent. Moreover, with fewer young workers entering the workforce, training and retraining the workers already on board will become much more efficient than simply hiring talent from outside.

There are at least five workers seeking jobs for every job opening. This hardly seems a recipe for shortages among skilled workers. Yet even in the midst of a huge labor surplus, there is information that suggests a mismatch between jobs in particular occupations and available workers' skills. These stories can be traced to the aggressive restructuring and up-skilling of the economy that has actually accelerated underneath all the gloomy jobs numbers.

The root cause of restructuring is a process economists call "skill-based technology" change. The signature technology of our time is computers that automate repetitive physical and mental tasks. By definition, tasks that cannot be automated are nonrepetitive and more sophisticated, and they require highly skilled workers to perform them.

These relentless structural changes affect the distribution of workers within industries and occupations. In general, occupations with repetitive tasks tend to decline and occupations with high levels of nonrepetitive tasks—in technical, professional and managerial jobs, for example—tend to grow in relative terms.

Manufacturing is a prime example of these technology effects. Manufacturing is still the industry with the highest level of overall output in the U.S. economy, but it has fallen from the largest to the sixth-largest employer since 1979. The iPod is an example of a typical post-industrial manufactured product. Only 20 percent of the value added in the iPod comes from manufacturing. The remaining 80 percent comes from highly skilled service functions such as design, marketing, finance and management.

There is good reason to speculate that the economy will need many more of these highly skilled workers as relentless technology change continues and as we add about 10 million new jobs by the time we reach full recovery after 2017.

The demand for skill and experience will grow as we recover, but it isn't clear whether the supply of skilled and experienced workers can keep up. After a decade of recession and anemic economic performance, the lack of hiring opportunities may dry up the pipeline of educated and experienced workers for the most-skilled jobs. In addition, we know that the overall growth in the labor force will continue to slow from a high of 2.6 percent in the 1970s to a new low of 0.2 percent from 2015 to 2025. We can also expect to need even more new skilled and experienced workers to replace the 37 million Baby Boomer retirees during the next decade as the recovery proceeds and 401(k)s get back on track.

It is human nature to waste anything that seems abundantly supplied. At the moment, there appears to be an overabundance of U.S. workers. Our economy seems to be overflowing with the unemployed, the underemployed and expendable people who have given up on the American job machine. We are told that labor-saving machinery will soon make us all redundant. The boogeyman of technology is on the loose again.

With time, the apparent excess of U.S. workers should prove illusory. In the future, there are likely to be too few workers and there will certainly be too few healthy, spirited, well-educated, well-trained workers to satisfy the nation's economic needs.

The author is director of The Georgetown University Center on Education and the Workforce in Washington, D.C.


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