The JOLTS data also showed that the number of unemployed persons per job opening moved even lower to 1.32 persons per open job. There are a couple of reasons why this may be the case. First is that there is an increasing shortage of labor for the various forms of employment. This is likely to be at least part of the reason as the employment picture continues to improve after the great recession. However, a contributing factor is likely that the skills job seekers have do not align with the skills that employers desire.
While the employment picture has improved considerably since the great recession, the skills mismatch will likely dampen wage inflation and potentially create a long term structural drag on the US economy. In their “Closing The Skills Gap” report compiled in 2014, JP Morgan Chase recognized that there were 1 million middle-skill jobs in New York City with a median hourly wage of $31.88. Importantly, at the time, they anticipated 44,000 new middle-skill job openings every year for the following 5 years for positions such as registered nurses, computer programmers and graphic designers.
Absent the implementation of an “employer-led, sector-based workforce development system”, many of these jobs would not be filled. JP Morgan pledged an investment of $250m globally over 5 years to “prepare youth and adults for careers in high demand, middle-skill occupations”. This would involve retooling the public education system to offer career paths in technical education both through high school and the City University network of New York City.
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While this is an encouraging initiative, refocusing the nature of our education system to meet future demand likely needs to occur on a national level. A private/public partnership appears to be a good model to generate efficient outcomes. However, it seems like more urgency is needed both from private employers and government entities to adapt to the significant changes taking shape in the employment landscape.
Hafeez Esmail is the Chief Compliance Officer at Main Management, a participant in the ETF Strategist Channel.
A pioneer in managing all-ETF portfolios, Main Management LLC is committed to delivering liquid, transparent and cost-effective investment solutions. By combining asset allocation insights with smart implementation vehicles, Main Management offers a unique approach that translates into distinct advantages for our clients, including diversification, cost efficiency, tax awareness and transparency. http://www.mainmgt.com