Getting better at getting better is what Rise With Drew is all about.
Monday through Thursday, we explore ideas from authors, thought leaders, and exemplary organizations. On Friday, I share something about myself or what we are working on at PCI.
1: Two Fridays ago, we looked at why companies that strive to be great places to work regularly outperform their competition. It’s a simple formula: Happy associates = Happy clients. If we want happy clients (and all organizations do!), it begins with building a team of engaged associates who love their jobs and believe in the organization’s purpose.
Currently, unemployment in the U.S. is at its lowest point since the experts started counting. And the long-term trends suggest this reality is unlikely to change. In his Wall Street Journal article titled “Welcome to the Full-Employment Recession,” James Piereson analyzes the long-term trends in U.S. employment.
“The Bureau of Labor Statistics has reported monthly since 1948 on the size of the civilian labor force in the U.S.,” James writes. “This is a comprehensive measure of the labor force that includes all people over 16 who are either employed or seeking employment.”
The bottom line, according to the research? “The civilian labor force grew at uneven rates from 61.6 million in 1950 to 163 million in 2021, but growth has slowed substantially since the late 1990s,” James writes.
During the decade of the 1950s, the U.S. workforce grew at an average rate of 1.1% a year, with 600,000 to a million workers being added annually.
The workforce grew at a faster 1.7% annual pace during the 1960s, adding about 13 million new workers, a nearly 20% overall increase during those ten years.
“The annual expansion of the workforce peaked during the 1970s with an average gain of 2.7% a year as the baby boom generation entered the workforce, with substantial increases in female workers adding to the overall totals,” James writes. “During that decade the labor force expanded by more than 24 million workers, or nearly 30%.”
Starting in the 1980s, however, the U.S. workforce began growing at slower rates: by an annual average of 1.8% in the 1980s and 1.3% in the 1990s, due to lower birthrates from the late 1960s through the 1970s. Overall, the workforce added 18 million workers in the 1980s and about 16 million in the 1990s.
“At that point, expansion of the labor force fell sharply, to an average of 0.9% a year from 2000 to 2009, or by 13 million new workers during the decade, and 0.6% a year from 2010 to 2019, or 11.3 million new workers,” James notes.
Stepping back and looking at the overall trend, during the past twenty years, the workforce has expanded by less than half the rate of the 1980s and by less than a third the rate of the 1970s. James writes that this trend is “an important cause of slowing economic growth.”
2: This shift has been exacerbated by a decline in the labor force participation rate. “The percentage of the adult population working or actively looking for work increased steadily from 59% in 1965 to 67% in the late 1990s, followed by a steady drop-off to 62% in 2022,” he writes. “With the current labor force at around 163 million workers, a 4% decline represents about six million jobs.”
The labor force participation rate has fallen for men from 88% in 1950 to 70% today. This shift was initially counter-balanced by women entering the workforce during the second half of the 20th century. The percentage of women working increased from 35% in the 1950s to 60% by the late 1990s. In recent decades, female participation has stopped growing and has now declined slightly to 58%. “This element in American economic growth appears to have run its course,” James observes.
What are the factors leading to declining labor force participation? One driver is the aging of the U.S. population. The percentage of the U.S. population aged 65 or older has increased from 8% in 1950 to 12.5% in 1990 to 16.9% in 2020. The percentage is projected to hit 21.6% by 2040.
What is the impact of these demographic changes?
“The growth of the labor force has gradually slowed over the past few decades, with obvious effects on overall economic growth,” James observes.
There are no clear-cut solutions to this problem. He writes: “Rising wages should draw more workers into the labor market. A rational immigration policy might bring skilled workers from abroad into the labor force. New information technologies may improve worker productivity, but no such payoffs are yet visible in those statistics.”
3: And these trends impact not only the overall economy but organizations as well. The “war for talent” is unlikely to change over the long term.
Being a great place to work is not just about building a strong workplace culture to encourage innovation and customer service excellence. It will also be a clear differentiator in attracting and retaining the best talent.
More next week. I hope you have a GREAT weekend!
Reflection: Is my organization able to attract to retain the right type of talent? What changes could we make to make us more competitive?
Action: Discuss a colleague or with my team.