Blue-Collar Worker Shortages: Navigating a Business Environment of Higher Labor Costs
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Blue-Collar Worker Shortages: Navigating a Business Environment of Higher Labor Costs

December 13, 2018 | Article

The threat of labor shortages is more acute in blue-collar and low-pay services occupations than in more highly educated white-collar occupations, the exact opposite of the prevailing trends in recent decades. We expect that by the end of 2019, the labor market will be historically tight. Industries that employ large shares of blue-collar workers, such as agriculture, mining, utilities, construction, manufacturing, transportation, accommodation and food services, repair, maintenance, and personal care services, are strongly affected by rising wages and shrinking supply. While the labor white-collar market is also tight, wage growth for the 40 percent of workers in management, professional, and related occupations is slow to accelerate. Sales and office workers, most of whom do not have a bachelor’s degree, are in shorter supply than management and professional workers.

With economic growth likely to continue at a relatively strong pace through 2019, an already tight US labor market is likely to get even tighter. But there is a twist—the threat of labor shortages is more acute in blue-collar and low-pay services occupations than in more highly educated white-collar occupations, the exact opposite of the prevailing trends in recent decades.

The main reason for the overall tightening is that the working-age population is barely growing at all, thanks to the aging of the large baby boom generation. However, it turns out that what growth there is in the working-age population differs by educational attainment: while the share of the working-age population with a bachelor's degree is solidly and uninterruptedly growing at about 2 percent annually, the share without a bachelor's degree is shrinking as they age out or leave the labor force due to the higher likelihood of disability. The US labor force

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AUTHORS

GadLevanon, PhD

Former Vice President, Labor Markets
The Conference Board

FrankSteemers

Former Senior Economist
The Conference Board


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