Economic and Workforce Conditions: Present Situation and Outlook

III. Global, national, and statewide economic and workforce trends are of particular significance for universities, given both the rising expectations of students and their families and the growing difficulties of preparing the student population for successful workforce experiences.

GLOBAL:

The following four findings are from the 2017 report of the U.S. National Intelligence Council:

1. The global economy is shifting.

Weak economic growth will persist in the near term. Major economies will confront shrinking workforces and diminishing productivity gains while recovering from the 2008-09 financial crisis with high debt, weak demand, and doubts about globalization. Developed and developing alike will be pressed to identify new services, sectors, and occupations to replace manufacturing jobs that automation and other technologies will eliminate — and to educate and train workers to fill them.

2. The rich are aging; the poor are not.

Working-age populations are shrinking in wealthier countries like China, and Russia, but growing in developing, poorer countries, particularly in Africa and South Asia, increasing economic, employment, urbanization, and welfare pressures and spurring migration. Training and continuing education will be crucial in developed and developing countries alike.

3. Technology is accelerating progress but causing discontinuities.

Rapid technological advancements will increase the pace of change and create new opportunities but will aggravate divisions between winners and losers. Automation and artificial intelligence threaten to change industries faster than economies can adjust, potentially displacing workers and limiting the usual route for poor countries to develop. Biotechnologies such as genome editing will revolutionize medicine and other fields, while sharpening moral differences.

4. Climate change, environment, and health issues will demand attention.

A range of global hazards poses imminent and longer-term threats that will require collective action to address — even as cooperation becomes harder. More extreme weather, water and soil stress, and food insecurity will disrupt societies. Sea-level rise, ocean acidification, glacial melt, and pollution will change living patterns. Tensions over climate change will grow. Increased travel and poor health infrastructure will make infectious diseases harder to manage. xvi

Global economic growth will continue to put pressure on a number of highly strategic resources, including energy, food, and water — with demand outstripping supplies over the next decade or so. Demand for food alone will rise 50% by 2030, according to World Bank projections, as a result not only of population growth but also of rising affluence. Access to clean water, already stressed in areas of rapid population growth (especially in Africa) will become an even greater challenge as population continues to grow. Climate change is expected to exacerbate resource scarcities. Although new technologies could provide solutions, much will depend on the pace of innovation. Conflicts over resources—rare in recent decades—could re-emerge.

The projected tempo for growth of the world’s working-age population in the next two decades will be half of what it was in the past two decades, and nearly half of the expected growth will occur in sub-Saharan Africa, Pakistan, and Bangladesh. In modern economies, younger workers bring higher levels of education and technical skill to the workplace, but in the next 20 years sub-Saharan Africa will account for almost all the total growth in the age 15-29 population. Japan will have more octogenarians and nonagenarians in 2030 than children under 15, and despite in-migration, Europe’s manpower pool will also shrink.


PACIFIC RIM:

Established in 1989, the 21-member APEC forum encompasses virtually all of the Pacific Rim. Since its inception, APEC has worked to reduce tariffs and other trade barriers across the Asia- Pacific region, creating more efficient domestic economies and dramatically increasing exports. APEC economies are the most dynamic, fastest growing in the world, and they were considered the engine of global economic recovery after the 2008 recession. APEC’s 21 member economies today account for 60 percent of global GDP, purchase 58 percent of U.S. goods exports, and comprise a market of 2.7 billion consumers. Seven of America’s top 15 trade partners are in APEC.

APEC nations had in 2017 a combined GDP (in current U.S. dollars) of $48 trillion, up from $31.7 trillion in 2009 and $25.4 trillion in 2005. This translates per capita to $16,606, up from $9,620 in 2005. The labor force participation rate was 66.4% overall, and almost 58% for females, and the unemployment rate in 2017 was 4.2%, down from 7% in 2009. In 2017 there were 60.1 internet users per 100 population. Thanks to individuals with multiple subscriptions, cell phone subscriptions in the APEC countries were 119 per 100 people (up from 67.2 in 2008).

The most drastic drop in young manpower will occur in China — a fact that raises serious doubts about China’s ability to continue high growth rates indefinitely. As demographer Nicholas Eberstadt put it, “how China’s coming tsunami of senior citizens is to be supported remains an unanswered question.” xvii


UNITED STATES:

Economic outlook.

In January, prior to the outbreak of the coronavirus pandemic in the U.S., the Congressional Budget Office (CBO) projected that, if current federal tax and spending policies remained in place, the economy would expand by 2.2 percent in 2020 and then grow at an average annual rate of 1.7 percent over the next decade, largely determined by underlying trends in the growth of the labor force and productivity The then-current pace of job gains was expected to remain solid. The unemployment rate was near its lowest point in five decades, and wages had shown modest growth. Nationally, the labor market was expected to continue to grow at a healthy, albeit slower, pace over the next several years. CBO projected that the unemployment rate would average 3.7 percent in 2020 and then steadily rise to 4.6 percent by the end of 2023 as output growth slowed. In CBO’s projections, wage growth would pick up further as employers bid up the price of labor to recruit and retain workers.

According to the CBO’s January report, a number of international factors did pose significant risks to their economic outlook over the next five years. For instance, a disorderly exit of the United Kingdom from the European Union or a government debt crisis in Europe could weaken the U.S. economic outlook by disrupting the international financial system, interfering with international trade, and weakening domestic business and consumer confidence. Slower growth in China—relating to the ongoing trade disputes with the United States and other issues within the country, including the coronavirus pandemic, could worsen China’s credit markets, sparking even larger declines in the demand for U.S. exports. xviii

In the months since this report was issued, the pandemic and associated social-distancing measures to contain it (uneven and sporadic though they were) “ended the longest economic expansion and triggered the deepest downturn in output and employment since World War II.” CBO’s mid-summer report on the outlook for the U.S. economy projected that from 2020 to 2030 annual real GDP would be 3.4% lower, on average, than it projected in January. The annual unemployment rate was now projected to average 6.1% over the coming decade.

However, in July CBO was expecting that, “if current laws governing federal taxes and spending generally remain in place, the economy will grow rapidly” at a 12.4% annual rate and would recover to its pre-pandemic level by mid-2022. The agency noted that “these projections are subject to an unusually high degree of uncertainty” — not only about the course of the pandemic itself, but about the effectiveness of monetary and fiscal policy and the reaction of global financial markets to the substantial increase in federal budget deficits and debt. xix

A report issued in September on the 2020 long-term budget outlook was much more sobering: even after the effects of the pandemic fade, budget deficits would be at historically high levels, increasing from 5% of GDP in 2030 to 13% by 2050 (compared to an average deficit of 3% of GDP over the past 50 years). Thanks largely to these escalating budget deficits and the interest payments required, debt held by the public would reach 98% of GDP by the end of 2020, 107% of GDP by 2023, and a whopping 195% of GDP by mid-century. xx

Few if any economists would argue that this level of deficit spending and national debt is sustainable. On the revenue side, while the White House was still speculating about the need for a “middle class tax cut,” former Vice President Biden and the Democrats were offering various plans for effectively rolling back the 2017 measure that produced large cuts in taxes paid by corporations and high-income individuals. On the expenditure side, neither political party appeared to want to engage in serious discussions about cutting back on entitlements. As a consequence, discretionary domestic spending programs (including student aid and research grants) as well as defense budgets will surely continue to be closely scrutinized by the next Congress.

Whereas the enormous fiscal stimulus enacted by a bipartisan majority in Congress in the spring of 2020 had aroused hopes for an imminent “V-shaped” recovery, the failure of the Congress to agree on a second round of stimulus prior to the November election wiped out hopeful signs of economic activity, leading a senior economics correspondent for the New York Times to warn in October that “The Pandemic Recession Has Just Begun.” Closely examining new government employment data, Neil Irwin saw “a jobs crisis that penetrates deeply into the economy.” It was no surprise that sectors such as travel and tourism, arts and entertainment, and education had lost large number of jobs as a result of lockdowns and social distancing. But Irwin found that even if those jobs are excluded, the number of jobs in the U.S. was 4.6% lower in September than in February — close to the 5.3% contraction that occurred during the entirety of the Great Recession. His conclusion posed a Third-Decade challenge not only to policymakers but also to educators:

When the economy does get back to full health, many jobs will no longer exist, and American workers will need to find other types of work — and historically, those kinds of readjustments take time … what makes a recession a recession is that the initial economic pain, whatever its source, transmits broadly to affect nearly every industry and drive millions of people not into newer and fast-growing sectors but onto the rolls of the unemployed. The challenge for economic policymakers is not to prevent these structural adjustments. It is to ensure that, as public health concerns wane, there is strong enough demand for goods and services across the economy that even as some jobs disappear forever, new ones are being created and the pain is short-lived. xxi

The two figures below, drawn from Bureau of Labor Statistics data, are shown in Irwin’s article to illustrate this last point. Figure 5 depicts the incomplete recovery from the sharp drop in non-farm total employment in the first half of 2020. Figure 6 provides the data to document Irwin’s point that industries across the economic spectrum have suffered job losses in the first half of 2020 that rival in size the losses during the entire Great Recession.

Figure 5

Employment in total nonfarm January 2010 - October 2020 Seasonally adjusted, in thousands
Month-Year Jobs
Jan-10129,790
Jan-11130,841
Jan-12133,250
Jan-13135,263
Jan-14137,548
Jan-15140,568
Jan-16143,170
Jan-17145,627
Jan-18147,672
Jan-19150,134
Jan-20152,212
Apr-20130,303
Oct-20142,373

Source: Bureau of Labor Statistics, Current Employment Statistics survey. November 30, 2020.

Figure 6: How the Job Losses Compare

Many types of employers not directly affected by the pandemic have cut jobs at rates similar to those seen in other deep recessions.
Type of Employers COVID Recession (2020) Great Recession (2008-2009)
Temporary help services-16%-31%
Printing and related activities-12%-15%
Advertising and related services-10%-11%
Heavy and civil engineering construction-8%-16%
Automobile dealers-7%-18%
Membership Associations and organization-5%na
Truck transportation-5%-11%
Publishing industries (except internet)-5%-11%
Management of companies and enterprises-4%-2%
Real estate-3%-5%
Computer system design and related services-3%na
Office of physicians-3%2%
Telecommunications-3%-6%
Accounting and bookkeeping-2%-6%

Source: Bureau of Labor Statistics – The New York Times

Prior to the pandemic, U.S. states had showed increasing signs of fiscal stability by 2019, with estimated general fund expenditures rising at their fastest rate since before the Great Recession, according to a June 2019 report released by the National Association of State Budget Directors (NASBO). States were also increasingly reserving revenue in rainy day funds, with 37 states growing fund balances in fiscal 2019 and 32 governors projecting increases in fiscal 2020 through their recommended budgets. NASBO’s survey offered a positive assessment of gains states had made since the Great Recession but cautioned that progress has not been felt evenly across all fifty states.

The Pew Charitable Trusts found state spending in areas like public education and infrastructure was still lagging behind where it stood before the recession took its toll. According to the NASBO report, states spent $883 billion from general funds in fiscal 2019, an estimated 5.8 percent increase from 2018. That marked the greatest single-year increase since fiscal 2007, when spending jumped 9.4 percent. xxii

Although the Democratic majority in the U.S. House proposed legislation in the summer and fall of 2020 that would have provided a sizable additional boost in federal funds to states and municipalities, the Trump Administration and the Republican majority in the Senate resisted what they termed a “bailout,” and the states were left to confront huge deficits that sharply limited available funding for public education.

Workforce outlook.

Of the now-developed nations, only the U.S. will age slowly; America in 2035 will be more youthful (average age 41) than either Japan or Western Europe today, and its ratio of working age manpower to senior citizens (3.2:1) will be significantly higher than either of theirs. But supplying the right mix of workers and ensuring the continuing productivity of the American workforce will depend critically on the quality of the K-12 public education system and the support and incentives given to research and development.

In 2018 more than three out of four jobs in the U.S. economy were in the service sector; this dominance is expected to persist in the coming decade. (In 2018, 1.42% of the workforce in the US was employed in agriculture, 19.44 percent in industry and 79.14% in services.)

As shown in the chart below, the Occupational Outlook Handbook of the Bureau of Labor Statistics projections state that six of the ten fastest growing occupations in the U.S. are related to healthcare, due in part to the aging of the baby-boom generation. But as healthcare costs continue to rise, work is being shifted to lower-paid workers. Two others in the fastest growing occupations are in the field of renewable energy: solar photovoltaic installers and wind turbine service technicians. Of the 20 fastest-growing occupations, twelve require an associate degree or higher; eleven of these occupations earn at least $10,000 more than the national annual median wage. All are in the service sector.

Figure 7: Fastest Growing Occupations

20 occupations with the highest percent change of employment between 2018-2028
Occupation Growth Rate 2018-28 2018 Median Pay (annual)
Solar photovoltaic installers63%$42,680
Wind turbine service technicians57%$54,370
Home health aides37%$24.200
Personal care aides36%$24,020
Occupational therapy assistants33%$60,220
Information security analysts32%$98,350
Physician assistants31%$108,610
Statisticians31%$87,780
Nurse practitioners28%$107,030
Speech-language pathologists27%$77,510
Physical therapist assistants27%$58,040
Genetic counselors27%$80,370
Mathematicians26%$101,900
Operations research analysts26%$83,390
Software developers, applications26%$103,620
Forest fire inspectors and prevention specialists24%$39,600
Health specialties teachers, post-secondary23%$97,370
Phlebotomists23%$34,480
Physical therapist aides23%$26,240
Medical assistants23%$33,610

Source: U.S. Bureau of Labor Statistics, Occupational Outlook Handbook, at https://www.bls.gov/ooh/fastest-growing.htm

Appendix A-3 below, authored by Dr. Fiorella Penaloza, provides a more detailed examination of the characteristics of the fastest growing occupations in the healthcare industry and renewable energy industry, as well as a closer look at the new analytical occupations that will span a variety of industries.

Interestingly, only three of the twenty fastest growing occupations (home health aides, medical assistants, and computer software application engineers) are also projected to be among the twenty occupations with the largest numerical increases in employment. Moreover, the educational categories and wages of occupations with the largest numbers of new jobs are significantly different: just eight will require any postsecondary education, and nine of the twenty earn less than the national median wage. Of the twenty industries with the fastest decline, fourteen are goods-producing industries, the demand for which is reduced by plant and factory automation. Very few of these declining occupations require any postsecondary education.

The educational services sector (teaching, administrative, and support positions in schools and colleges) is expected to add nearly half a million jobs by 2028; professional and business services will add one and two-thirds million. In 2010 the industry group that was expected to be the largest source of output growth in the service sector was information services. In fact, however, employment in this sector is not expected to grow at all between 2018 and 2028. U.S. information technology jobs have in fact been outsourced to developing countries. (In 2010, some Indian IT leaders estimated that 350,000 U.S. jobs had moved to India over the preceding decade, but American experts say the number was much higher.)

Women constitute a majority of the workers in the service industry. However, in 2019, women in the service sector earned a median weekly salary that was only about 80% that of their male counterparts. In 2019, for the first time, college-educated women matched the number of college-educated men in the work force (though college-educated women have outnumbered college-educated men in the general population since 2007); however, women constitute only 25% of college-educated workers in computer-related occupations and only 15% in engineering occupations.

Figure 8

Projected Annual Rate of Change in Industry Employment 2018-2020
Industry Rate of Change
Health care & social assistance (service providing)1.6%
Educational services, private (service providing)1.2%
Construction (goods producing)1.1%
Leisure and Hospitality (service providing)0.9%
Professional and business services (service providing)0.8%
Mining (goods producing)0.6%
Transportation and Warehousing (service providing)0.6%
Financial activities (service providing)0.3%
Other services (service providing)0.1%
State and local government (service providing)0.1%
Information (service providing)0.0%
Retail trade (service providing)-0.1%
Wholesale trade (service providing)-0.2%
Utilities (service providing)-0.3%
Federal government (service providing)-0.5%
Manufacturing (goods producing)-0.5%

Total nonagricultural wage and salary annual growth = 0.5%

Source: U.S. Bureau of Labor Statistics, Occupational Outlook Handbook

Figure 9: Industries with the most job losses

Numeric decline in employment of wage & salary workers by detailed industry, projected 2016-26
Industry Type Workers
Wired telecommunications carriersservice producing-102,500
Newspaper, periodical, book, and directory publishersservice producing-88,000
Postal serviceservice producing-80,700
Printing and related support activitiesgoods producing-73,200
Apparel, leather and allied product manufacturinggoods producing-48,200
Textile mills and textile product millsgoods producing-44,200
Plastics product manufacturinggoods producing-43,700
Semiconductor and electrical component manufacturinggoods producing-37,700
Navigation, measuring, electromedical, and ctrl. instrument manufacturinggoods producing-35,500
Other miscellaneous manufacturinggoods producing-25,800
Foundriesgoods producing-25,100
Communications equipment manufacturinggoods producing-23,700
Computer and peripheral equipment manufacturing, ex. digital camera manufacturinggoods producing-23,100
Rubber product manufacturinggoods producing-21,500
Pulp, paper, and paperboard millsgoods producing-20,800
Travel arrangement and reservation servicesservice producing-20,700
Civic, social, professional, and similar organizationsservice producing-20,500
Radio and television broadcastingservice producing-19,900
Converted paper product manufacturinggoods producing-17,700
Ventilation, heating, air-conditioning, and refrigation equipment manufacturing.goods producing-17,000

Source: U.S. Bureau of Labor Statistics

In general, federal statistics show that occupations in a category requiring some postsecondary education will experience higher rates of growth than those in an on-the-job training category. The same studies show that occupations in the master’s degree category and in the doctorates and first professional degree categories will grow the fastest — underscoring the continuing importance of supporting graduate and professional schools — and occupations in the bachelor’s and associate degree categories will grow well above the average. However, occupations in the high school diploma and on-the-job training categories will fall well below the 7.4% average growth. One-third of U.S. adults 25-and-older are college-educated, but they generate 57% of the economy’s earnings, according to a 2019 Pew Research study.

Figure 10

Projected 2016-26 growth rate in occupational employment by typical 2016 entry-level education
Educational level Projected growth, 2016-26
Average, all occupations7.4%
Doctoral or professional degree13.10%
Master's degree16.70%
Bachelor's degree10.10%
Associate degree11%
Postsecondary nondegree award11.10%
Some college, no degree4.20%
High school diploma or equivalent5.10%
No formal educational credential6.40%

Source: U.S. Bureau of Labor Statistics

What these forecasts about educational requirements of various occupations cannot measure, however, is the current mismatch between jobs and educational attainment. A recent study by Burning Glass Technologies examined some four million resumes of persons who graduated from college between 2000 and 217 and found that, on average, 43% of college graduates are underemployed in their first jobs. Of those, roughly two-thirds remain for five years or more in jobs that do not require a college degree. xxiii

Moreover, although it has long been true that persons with a college degree are only half as likely to be unemployed as persons with only a high school diploma, other studies have shown that many available (and relatively well-paying jobs) require some “post high-school credential” short of a four-year degree. A study by the Harvard Graduate School of Education, conducted a decade ago, stressed the need to abandon the single-pathway “college for all” mindset and instead promote alternative pathways to further education beyond high school.xxiv The report urged better career counseling, more diversified high school curricular requirements, more opportunities for work-linked learning in high school, all developed through partnerships between schools and businesses. Colleges should offer both high school graduates and adults who are changing careers options other than just two- or four-year degrees.

The rapid advance of automation makes this greater flexibility more urgent. The World Economic Forum estimates that machines will perform almost half (42%) of all task hours in the workplace by 2022, compared to 29% today, leading to some seventy-five million jobs being displaced while simultaneously creating an even larger number of new roles for those with proper skills. Micro-credentials, or badges, designed in cooperation with industries looking for certain skills and competencies, can often better address the needs of this population of displaced workers.

Credential Engine, a nonprofit group supported by former Secretary of Education Arne Duncan and former Florida governor Jeb Bush, has counted almost three-quarters of a million distinct credentials currently being offered in the U.S. As shown in the chart below, about half of these are offered through post-secondary educational institutions (including a large number of for- profit schools), most of which are eligible to offer Pell grants. Many others are offered through employers, and almost 50,000 are available through secondary schools.

Figure 11

Count of U.S. Postsecondary and Secondary Credential Programs
Credential Type Program Count Nature of Current Count Method and Sources
Total738,428--
Postsecondary Educational Institutions370,020--
Title IV Schools - Degrees212,802EnumerationCount - IPEDS
Title IV Schools - Certificates111,941EstimateCount - IPEDS plus Extrapolation from 8 states' lists
Non-Title IV Organizations - Degrees3,188Rough EstimateCount - IPEDS plus Extrapolation from 8 statesʻ lists
Non-Title IV Organizations - Certificates42,089Rough EstimateCount - IPEDS plus Extrapolation from 8 states' lists
MOOC Providers7,132--
Microcredentials629EnumerationCount - Class Central
Degrees from Foriegn Universities28EnumerationCount - Class Central
Course Completion Certificates6,475EnumerationCount - edX, Coursera, FutureLearn, Kadenze
Non-academic Organizations315,067--
Occupational Licenses11,837EstimateCount - ETA License Finder plus Extrapolation from 10 states' lists
Industry-recognized Certifications6,724EstimateCount - ETA License Finder and program accreditors plus Extrapolation from 3 industry lists
Military Certifications1,378Partial EnumerationCount - COOL (accredited certificates not in Certification Finder)
Registered Apprenticeships22,488EnumerationCount - ETS Apprenticeship Registry
Unregistered Apprenticeships50Partial EnumerationCount - German- and Swiss-American company programs (less Registered Apprenticeships)
Coding Bootcamp Course Completion Certificates1,014EstimateCount - Coursereport.com (less programs not available in U.S.)
Online course Completion Certificates80,117EstimateSums provided by Udemy, Lynda, SkillSuccess
Digital Badges191,459EnumerationCount - badge vendors (Badgr, Credly, Acclain, LRNG, MyMantle, Participate)
Secondary Schools46,209--
Public School Districts - Diplomas33,540EstimateCount of number of public school districts, by state — CCD Count of number of diploma options, by state — Achieve
Private Schools - Diplomas12,669EstimateCount of number of private schools — PSS (Assume one diplona option per school)

Credential Engine: Counting Post-Secondary and Secondary Credentials, https://credentialengine.org/wp- content/uploads/2019/09/Counting-US-Postsecondary-and-Secondary-Credentials_190925_FINAL.pdf

Karen Stout, CEO of Achieving the Dream, an NGO focused on improving outcomes for community college students, stresses that colleges should not only pinpoint which industries are in demand when designing their programs but also look to what skills and competencies those jobs require so they can offer specific credentials that will encourage employers to hire their graduates. xxv

A recent article by Professor David Deming of the Harvard Kennedy School argued that U.S. workforce training requirements in the aftermath of the 2020 pandemic should especially lead to a significant expansion of public investment in community colleges. He pointed out that the previous surge in unemployment, in the wake of the Great Recession, spurred a large increase in demand for job training at a time when states were imposing deep cuts on funding for community colleges. “Many people who were turned away or placed on long waitlists found their way to for-profit colleges, which nearly doubled their total enrollment from 2007 to 2010. We are already seeing a reprise of this pattern in the last few months.”

The results were far from ideal, as many of the new enrollees incurred heavy debt without gaining employable job skills. “Community colleges,” Deming argues, “should be the main place to train America’s workers, because they are mission-oriented and well trusted. They can do so in close partnership with local employers and, yes, private providers.

As a promising model he cites the example of Broward College in Florida, which “has built industry certifications into its curriculum, along with internships and other work-based learning opportunities provided by local employers.” It was funded by the U.S. Department of Labor’s Trade Adjustment Assistance Community College and Career Training program, part of the 2009 economic stimulus, which spent $1.9 billion to fund work-based learning credentials for more than 350,000 students. Deming also cites Google’s public-private partnership with more than 100 community colleges to offer training in IT support careers, a model combining private- sector innovation and market responsiveness with the support system and local knowledge of community colleges. “The lesson is clear. In the aftermath of the Great Recession, the United States outsourced job training to for-profit colleges, and many students are still suffering the consequences. Community colleges need to be at the center of talent development for millions of American workers.” xxvi

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