In my last post, “Can U.S. Economic Growth Be Speeded Up?” I pointed out that:
- GDP growth has averaged just 2% since the end of the Great Recession in May 2009.
- The Federal Reserve has taken unprecedented steps to keep interest rates low in the meantime but these efforts aren’t boosting GDP and, in addition, have quite harmful side effects.
- Wages are growing and consumers are spending money but business investment is shrinking and productivity growth is slowing.
- This means that the problem is supply side rather than demand side, contrary to what many economists are saying.
- America is now home to a vast army of jobless men, seven million of them age 25 to 54, who are no longer even looking for work. This is 15.6% of the traditional prime of working life.
- Openings for manufacturing jobs this year have averaged 353,000 per month up from 311,000 per month in 2015 and 121,000 per month in 2009.
- According to the Manufacturing Institute, 8 in 10 manufacturing executives say that the growing skills gap will affect their ability to keep up with customer demand.
- As shown in the above chart, at the present time there are only an average of two unemployed manufacturing workers for each job opening, way down from the level in 2010.
Conclusion. Speeding up economic growth requires new business investment in order to increase worker productivity. But a lack of skilled and trained workers will greatly hamper this effort. The solution here is better vocational and career training in high schools and at community colleges.