◆ That tightening sound you hear in the economy is coming from the labor market.
And you soon may hear a more ominous sound – the US economy choking, unless policy makers begin addressing the regulatory and education constraints on labor.
The Evidence Is Increasingly Clear
◆ Commercial real estate contractors told the Wall Street Journal Monday (May 8) that major building projects are soaking up huge gulps of available electricians, carpenters and other subcontractor laborers.
Those labor-hungry projects include O’Hare modernization in Chicago, office-building projects in New York, condo and rental-housing projects in Boston, Miami and Los Angeles.
Elsewhere, shortages of auto mechanics due to increasing complexity of cars are driving up labor rates to where a certified master mechanic can command $100,000 pay check. Fiat Chrysler Corp. said its dealers – forget about your local auto mechanic — will need 25,000 new mechanics in the next five years.
With the US unemployment rate now at 4.4 percent – lowest since the recession began, according to the April jobs report – and with 700,000 workers having moved in the past year to fulltime status from part-time status, the market grows tighter.
It seems unlikely the Trump administration will encourage immigration to mitigate the shortage.
Exasperated employers are raising wage rates, but there are fewer workers on the sidelines to lure into jobs. That’s a stiff headwind for any economy, even one growing at the dismal 0.7 percent annual rate for the first quarter.
What Policies Could Help?
(1) US business needs a skills-certification program for key jobs – an education and certification program that’s national in scope so certified workers can move easily and quickly into jobs in many states without having to jump through local-union apprenticeship hoops.
(2) Long term, the US education system has to confront its depressing record of failing to educate students for 21st Century jobs in the trades.
Indeed, social and education policies discourage students from investing in a trade-school education.
Dan Miller is one of Chicago’s most respected and experienced economic journalists.
He served as Chairman of the Illinois Commerce Commission in the 1990s, then business editor of the Chicago Sun-Times, and, in recent years, as policy adviser to the Heartland Institute, a libertarian think tank. He also co-founded the Chicago Innovation Awards, which as recognized best-practices in products and services for over 15 years.