The group, which had been formed in 1998 to study future work trends in the United States, projected a critical shortage of workers over the next 20 years, particularly in areas requiring higher education or skills training. It added that the gap between high- and low-wage earners would soon become a chasm. But the “wake-up call” the Aspen Institute said it was issuing went largely unheeded. Blame it on the timing. Americans were more focused on preparations for the anniversary of September 11, talk of impending war with Iraq and the release of more dismal economic reports confirming that the recession is not yet over. It’s not easy to contemplate a labor shortage when so many Americans are now out of work. But the Aspen Institute argues that now is precisely the time to think about the projected labor shortage and the growing wage gap–and to do something about it. NEWSWEEK’s Jennifer Barrett spoke with David Ellwood, a professor at Harvard University’s Kennedy School of Government and the executive director of the Institute’s Domestic Strategy Group, about the potential work crisis and what can be done to prevent it.
NEWSWEEK: You have said that as a labor economist, you were “stunned” by the changes in the work force and job market that are coming over the next two decades. Weren’t some of these trends already evident–particularly to someone who studies them? David Ellwood: I was certainly aware of the growing gap in wages and it was a concern of mine … I know, I’m a labor economist–and I study these things–and yet I was really shocked by how dramatic the change would be. We are going from 27 million new workers to zero in the next 20 years. That is a dramatic shift. People do realize that there has been a growing gap in wage inequality. What people don’t realize is just how different the next 20 years will be compared to that last 20 years. The wind was actually at our back before. The baby boomers were more numerous than their parents and their grandparents, and they were much better educated than their parents. So, as they came of age, we had this massive growth in native-born, prime-age workers who were also much better educated than the workers they were replacing. We had more and better workers just pouring into the labor market. But in the next 20 years, as baby boomers leave the work force, we have no new native-born 25-to-54-year-old workers being added–we’ll have no more workers than we have now.
Your report also says that the new workers will be less educated than their parents. What effect will this have on the labor market?
We found that the children of baby boomers are no more numerous than their parents–if anything, they are less numerous. And they are not any better educated. So the labor force will no longer be improving in quality, but will remain about the same. And the number of native-born workers under 55 will be unchanged. So, even as the economy continues to have more and more intense needs for skilled and technologically sophisticated people, there will be no improvement, or very small improvement, in the educational quality of the work force. The wind has shifted from being at our back to being in our faces.
So, what will this country look like in 20 years should we continue on our current course?
There are a lot of worries about our capacity to compete and our productivity. This also brings up issues in wage gaps and inequality. We already had a growing gap, even when workers on average were getting more skilled. Now, unless you believe the need for more technologically skilled people will decrease in the future, we are going to be seeing more pressure in that direction. The worry here is that we’ll have slower productivity, a tougher time competing, and increasing inequality if we’re not careful.
You’ve described this as “a creeping crisis in the work force that threatens our growth, productivity and international competitiveness and that could set off a new burst of inequality.” If it’s that serious, why aren’t we seeing more of a reaction?
One of the difficulties is that Americans tend to respond to instant crises. This is not something that tomorrow, all of a sudden, will show up in the headlines. This is a slow effect of changing demographics that is absolutely predictable but with profound implications. It means that if we take action now and work on these issues, we can turn it into an opportunity. But if we ignore it, we can find ourselves in a much more difficult position in the future. There will never be a moment where there is a massive crisis to call attention to this. If there is a crisis, it will be too late.
So it must be quite a challenge to get anyone to pay attention to this report now when we’re in the middle of a recession and contemplating military action against Iraq.
One of the ironies is that the report comes out right in the middle of a recession. So people say, job shortage? What are they talking about? But that is the way recessions are. The thing about demographics is that it’s very easy to figure out where we’re headed. This recession will pass and, when it does, the same problems we saw before the recession will be even more evident. This is actually a great time for people to work on their skills. People are going back to school. But we also need to focus on those in the lower-skilled and lower-paid jobs.
With the post-9-11 immigrant restrictions, do we stand the risk of keeping some skilled immigrant workers we need from coming here?
We have to recognize that we are going to need immigrants. I know that 9-11, in some ways, made us more scared of skilled immigrants. The way we’ve handled it in the past has been that we bring in workers when we need them–many of them under temporary visas, or illegally. Neither group is likely to integrate rapidly into the American mainstream. You have to remember that this is a country made of immigrants who did integrate into the mainstream. We think it is time to look hard at our immigration polices. Security is vital, but so is economic security. When immigrants do come here, we have to be much more conscientious in helping them become a part of the community and of the nation.
How crucial is it that we take action now on these issues?
It is easy to see this coming. This is absolutely predictable. And if we are smart we actually could all be made better off by responding to this problem rather than letting it overtake us. There is real opportunity here. If these employers want more and more skilled workers, if we can come up with a mechanism whereby less-skilled workers get the training and support they need to become more skilled, everybody can win. If we ensure that the changing economy means strong productivity and better job security for workers, we’ll be a better nation. But left to its own devices, the market may not respond the way we want it to.
When you say “we,” whom do you mean exactly? The government? Corporate America?
Everybody. This was a group of CEOs and labor leaders and government officials and community leaders and scholars. And our general view is that we need to find a way to work together to make work work for everyone.
Has there been any resistance from the government or from businesses to step up their efforts here?
Our fear is that neither government, nor the businesses, nor individuals–if left to their own devices–will be able to provide the kind of real, closely-related-to-work sorts of training that really make a difference. The government, left to its own devices, often trains people for jobs that don’t exist or are not sensible programs. But business left to its own devices don’t really want to train workers who will then move to another company–especially in our “new economy” in which employees spend less time at each company. We’ve actually made that situation worse. So why not find away to link government and business training, so employers and industries get the skills they need, and government helps to provide the support or at least subsidizes the nonprofit groups that can bring industries together to bring the training.
This seems so simple–why aren’t they doing that now?
The problem is that, as the pay for the lower-skilled workers has gone down, they are in a tougher position just to support their families. Training requires time and money both of which are in very short supply. Job flexibility should not mean worker insecurity. Part of the problem is also that we have short-term, classroom-oriented training programs that often are not well connected to the industry. We try to have businesses involved in the training program, but what we saw time and again was this disconnect where government got into its own direction and there was a build-up of a core of people who do the training. We have had careful and systematic evaluations of these, and they are not very promising. But we also came across examples of training entrepreneurs who have found ways to link up less skilled workers to industries where they desperately need new and skilled workers, and they make it happen.
Can you describe one program that you found that is really working?
One is program in the Bronx called Cooperative Home Care Associates. It takes women who have been on welfare and trains them to be home health-care workers. They actually join a cooperative that provides home health-care services. It was a phenomenal program. This extremely heterogeneous and high-powered group sat and heard home health-care workers talk about what they do. This woman described how this had changed her life, it gave her a new beginning. They were living a lot better than they were when they were on welfare. That’s a perfect example of how we can all win because all the baby boomers are getting older and they will need home health-care workers, and there will be a shortage. But this program was in danger of being shut down because New York state was telling welfare recipients that they needed to go straight to work–without training. We have to be smart if we are to continue to grow and be as productive and have the kind of unity as a nation for our economy and other battles we might face up ahead.
What changes would you like to see as a result of this report?
We are making some progress. There are some attempts to deal with worker training. And immigration is on the agenda, but it is not necessarily about this issue. A lot of this is a combination of common-sense ideas. We don’t propose some radical new changes. We know where to begin and where to go, but we are not doing it nearly enough or nearly fast enough. All we’re saying is, Why not figure out a way to deal with this creeping crisis now before it becomes much more serious.
