Jobs! Jobs! Everywhere a Job!

By William Reinsch

January 4, 2018

This Friday will feature the regular monthly unemployment report, and it will probably continue to show a figure of around 4 percent, the lowest in years and certainly a welcome sign in any economy. There are two big reasons for this. First, the economy is undeniably growing—more than 3 percent in the third quarter with a similar figure expected in the fourth quarter. (I'll avoid the debate over who should get the credit for this, although there is no question of who will take credit for it, except to note the parallel to 1992-93. Then Clinton won the election based on a weak economy, even though it had already started to get better, and then took credit for what would almost certainly have happened anyway.)

Second, my generation, the baby boomers, is, if not dying off, then certainly retiring—at the rate of 10,000 per day according to the Pew Research Center. The result is a record average of six million job openings for the past five months. While many of the openings require skills that the unemployed do not have—I've written about the skills-jobs mismatch in the past—a lot of them do not. Jobs in construction, even service jobs in fast foods, are going begging. The American Trucking Association says it will need nearly a million new drivers over the next six years, autonomous vehicles notwithstanding. Those require a driver’s license and a well-padded posterior, but not a college degree.

Yet, in the face of this unmet demand, labor force participation continues to decline. It's now at 62.7 percent compared to 66 percent ten years ago. So, it appears we have lots of jobs, and the president is clearly focused on creating even more of them, but we can't fill them. That suggests the president may be fighting the last war rather than the next one, something that Americans have always been good at. Instead of worrying about job creation, we need to worry about job right-sizing—helping people find the job that is right for them, helping them acquire the skills they need, and helping them surmount the personal and logistical challenges that keep them out of the labor market. The most obvious example of the latter is the growing opioid crisis that is devastating families and communities in all parts of our country.

These are not entirely new problems, and programs have been developed over the years to address them, but they are always underfunded and often get caught up in the never-ending debate over what is the responsibility of the federal government versus the local government versus the individual. In recent years the pendulum has been swinging away from government. It remains to be seen whether it will start to swing back as these problems get worse.

Meanwhile, as Congress fiddles while communities burn, we still have six million jobs to fill at a time when many areas are approaching full employment. Conveniently, we have a partial answer staring us in the face: immigration. We've been fighting over it almost since our nation began, and the history of our policy has been two steps forward, one step back, or, during some decades, the opposite. When we have decided to allow immigration to grow, the winning argument has generally been the simplest: we need more workers if we want to keep on growing. Our birth rate currently is slightly below the replacement rate, and demography contains its own set of iron laws. Chief among them is that the domestic labor force in 2035 has already been born. We can't miraculously create a new crop of millennials when we need them, but we can import them. And remember, we don't do it for them; we do it for us. If the argument needs a clincher, look at the economic track record of countries like Japan or a number of European countries whose native population is declining and that have resisted immigration. We face the same future if we do not allow our population to grow.

There are, of course, a thousand associated questions of who, how, and when, plus what to do about those already here illegally. The political process has to answer those, but it is apparent that it has lost momentum, and we need to jumpstart it, which means moving beyond the myopic view of immigrants as threats rather than opportunities. If we can come to understand their importance to our future growth, then perhaps we can make better decisions about their future and finally stop fighting a very old war.

Personal note: this marks my first column as the Scholl Chair at the Center for Strategic and International Studies (CSIS). I am grateful to the Stimson Center for its support the past 18 months and look forward to my new role at CSIS. I also remain a senior advisor at Kelley Drye & Warren, and you can reach me there as usual at wreinsch@kelleydrye.com or at my new address at CSIS: wreinsch@csis.org.

William Reinsch is the Scholl Chair in International Business at the Center for Strategic and International Studies (CSIS) in Washington, D.C.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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