Big Picture

The United States is facing a labor gap. Since January 2015, job openings have surpassed the number of hires. According to the Bureau of Labor Statistics, in April 2019, there were 7.4 million job openings but only 5.9 million hires. The main reasons for the labor gap are the aging workforce, decreasing labor force participation, and a slowing growth of the labor force population. This data suggests that states are going to face a shortage of eligible workers with the skills and education needed for a job, costing the American economy approximately $1.2 trillion per year in lost economic output in 2029. We need to close the labor gap.

Operative Definitions

1. Surplus Industries: Industries that have more workers than job openings.
2. Worker shortages: Situations in which there are fewer job hirings than there are job openings.
3. Labor Gap: When there is a difference between the number of job openings and the number of job hires.

Important Facts and Statistics

1. Based on the current trajectory of the United States labor market, almost every state will have a shortage of workers with an advanced education by 2029. This will lead to a $1.2 trillion loss in economic output in 2029. 
2. Over the next 12 years the American labor force will face a shortage of 765,000 needed workers with some advanced education, and 8.62 million with a bachelor's degree or higher – approximately 5.6% of the estimated 2029 labor force. 
3. The COVID-19 pandemic has worsened shortages in the manufacturing, wholesale, retail grade, education and health service industries with a loss of roughly 1.4 million jobs. However, there is a surplus of workers in transportation, construction and mining that could be transferred into struggling industries if there was adequate and accessible access to training. 

Six-Point Plan

(1) Create training programs for instructors. Creating programs specifically for instructors guarantees the quality and efficacy of the instructors teaching industry transfer skills, as well as providing a cohesive education to future students. 

(2) Set up online training programs for students. Online training programs are more accessible to students who are using that program to transition into different fields of labor. An online program will ensure the student has the flexibility to work on their own schedule and timeline. 

(3) Align courses to existing certifications or provide new certification programs based on necessity. Set up courses to have certification testing if the program does not have certification testing already available, or tailor courses to train students for pre-existing certification courses.

(4) Provide access to testing and certification facilities. Provide online and/or in-person access to testing and certification facilities to students by waiving or providing financial aid for testing and certification fees. 

(5) Market courses through unemployment offices to reach citizens in surplus industries. By advertising the courses through unemployment offices, the target audience of unemployed laborers will be reached. Furthermore, it will provide those who are in surplus industries with information on courses and training to transition into a different industry. 

(6) Providing placement into the industry after training and certification completion. Providing placement for those who graduate the program ensures that those people are able to have experience with their training, as well as prove that their training has been sufficient and effective. 

Why This Initiative Is Important

If this labor gap persists, it could do considerable harm to the US economy. With the current trend of the labor gap, the demand for skilled workers will most likely exceed the supply. By 2029, the educational and skill shortages will most likely result in approximately $1.2 trillion in lost economic output. This proposal presents some educational initiatives that can be adopted to avoid such economic damage.

Acknowledgements

The following student worked on this nonpartisan proposal: Nidhi Yadalam, University of Massachusetts Boston.

Sources

Agarwal, Aditi. “Skill India Mission and the Potential Impact of Its Implementation.” The Policy Observer, 26 May 2021, https://thepolicyobserver.in/skill-india-mission-and-the-potential-impact-of-its-implementation/1849/.

Ferguson, Stephanie. “Understanding America's Labor Shortage: The Most Impacted Industries.” U.S. Chamber of Commerce, U.S. Chamber of Commerce, 15 July 2022, https://www.uschamber.com/workforce/understanding-americas-labor-shortage-the-most-impacted-industries.

Holtz-Eakin, Douglas, et al. “Projecting Future Skill Shortages through 2029.” AAF, 17 Sept. 2019, https://www.americanactionforum.org/research/projecting-future-skill-shortages-through-2029/.