‘Disappointing’ jobs report will soon look good: Moody’s-commentary

Businesses number one problem is thus quickly becoming the lack of qualified workers. There are already a record 6 million open job positions, and not just in computer programming but across nearly every industry and occupation. Retention is also a mounting issue for businesses. The percentage of the workforce that quit their jobs last month fell back a bit, but it remains very high, and close to record highs after adjusting for the fact that the workforce is growing older and less mobile.

The Trump administration’s immigration policies will only add to these problems. Immigrants currently account for most of the growth in the nation’s labor force, as the large baby boom generation is retiring en masse. More millennials are starting to work, but they are being more than offset by the retiring boomers.

Even if immigrants continued to come into the country to work at the same rate as they did during the Bush and Obama administrations, the labor force would soon come to a virtual standstill. With the pullback in immigration now underway by the Trump administration, that seems likely to happen. The agriculture, construction, leisure and hospitality, retail and transportation industries will have an especially tough time finding workers.

Hopes that lots of prime-aged workers sidelined since the Great Recession will re-enter the workforce to take these open job positions, will likely be frustrated. Some are coming back, but certainly not in the numbers necessary to forestall further declines in unemployment and the looming specter of significant labor shortages. The problems many of these workers face in getting back to work are very difficult to overcome, including opioids, incarceration and disability.

This brings us back to the December jobs report. While the disappointing job gain during the month is likely a statistical fluke and will eventually be revised higher, it does highlight an important point. Namely that after the temporary boost from the deficit-financed tax cuts fade later this year, job growth is destined to slow sharply.

With no more unemployed or underemployed to hire, fewer immigrants coming into the country to work, and the boomers retiring, job growth will significantly throttle back. By early in the next decade, months in which job growth comes anywhere near December’s 148,000 gain will be the fluke.

Commentary by Mark M. Zandi, chief economist at Moody Analytics, a subsidiary of Moody’s Corp., and a leading provider of economic research, data and analytical tools. Zandi is also a co-founder of Economy.com, which Moody’s purchased in 2005. Follow him on Twitter @economics_MA.

Follow CNBC’s Opinion section on Twitter @CNBCopinion.

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