workforce development : an overview for cgia-sawdc by semoon chang semoonchang.com december 10, 2015
TRANSCRIPT
Workforce Development: An Overview for CGIA-SAWDC
by Semoon Chang
Semoonchang.comDecember 10, 2015
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Impact of Economy on Workforce Development
Recession: Keep employees and inventories to minimum
Growing economy Increase in hiring Increase in turnovers
What if future is uncertain?
Growth Rate of Real GDP (%)Annual
Growth Rate of Real GDP (%)Quarterly
12-1 12-2 12-3 12-4 13-1 13-2 13-3 13-4 14-1 14-2 14-3 14-4 15-1 15-2 15-3
-2
-1
0
1
2
3
4
5
2.7 2.9
0.50.1
1.9
1.1
3
3.8
-0.9
4.64.3
2.1
0.6
3.9
1.5
Projectionof U.S. Economy by FRB
2015 2016 2017 2018+0.00
1.00
2.00
3.00
4.00
5.00
6.00
2.10 2.30 2.20 2.00
5.00 4.80 4.80 4.80
0.40
1.70 1.90 2.00
Real GDP Unemp Rate Inflation
Projections by CBO
Actual Projected
Growth of Real GDP
Percent
6
4
CBO expects output to grow more 2 rapidly in 2016 and 2017 than in
2015 and at a more moderate pace
0 in subsequent years.
-2
-4 2000 2005 2010 2015 2020 2025
Sources: Congressional Budget Office; Bureau of Economic Analysis.
Inflation
Actual Projected
O verall
C ore
Inflation
Percentage Change in Prices
5
4
3 CBO anticipates that core prices will rise modestly, reflecting the
remaining slack in the economy and 2 widely held expectations for low and
stable inflation.
1
0 2000 2005 2010 2015 2020 2025
Labor MarketThe Labor Force, Employment, and Unemployment
The percentage of the population that is employed is projected to fall over the next 10 years because of declining participation in the labor force, mainly by baby boomers as they age and move into retirement.
Percentage of the Population
70
65
60
55 Labor Force Participation Rate
50
0 1955 1965 1975 1985 1995 2005 2015 2 02 5
Sources: Congressional Budget Office; Bureau of Labor Statistics.
Actual Projected
Unemployed 63
61 Employed
59
58
Hourly Compensationpercentage change
Actual Projected
Hourly Labor Compensation
Percentage Change
5
4 Although hourly labor compensation
has grown slowly in recent years, 3 CBO projects that growth over the
next several years will be stronger
2 than in 2014, as the demand for workers continues to rise and slack
in the labor market diminishes. 1
0 2000 2005 2010 2015 2020 2025
Sources: Congressional Budget Office; Bureau of Labor Statistics
Interest Rate Projections
10-Year Treasury
Notes
3-Month Treasury
Bills
5
4 CBO projects that interest
rates on Treasury securities will rise
3 with the anticipated increase in the federal funds rate and with
2 expectations of continued improvement in
economic conditions. 1
0 2015 2016 2017 Longer Term
Sources: Congressional Budget Office; Federal Reserve; Bloomberg
Fed Chair Yellen’s speech at Economic Club of Washington DC: Dec. 2, 2015
“economic and financial information received since Oct meeting has been consistent with our expectations of continued improvement in the labor market,” and inflation moving “back to 2 percent objective.” However:
“economic conditions may warrant keeping the target federal funds rate below” 3.5% long run natural rate.”
Why Slow Growth? Too many
regulations Needs to be
flexible Too many
depending on gov’t
Too much debt>>>
Annual Budget Deficit
Surpluses Actual P rojected
Average D eficit, 1965 to 2014
(-2.7% ) Deficits
Total Deficits or Surpluses
Because outlays are projected to grow faster than revenues after 2018, projected deficits increase to almost 4 percent of gross domestic product from 2022 through 2025.
Percentage of Gross Domestic Product
4 4
2 2
0 0
-2 -2
-4 -4
-6 -6
-8 -8
-10 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
-10
Public Debt How much?
$18,774,000,000,000 total ($60,000/person) $450,000,000,000 annual interest $1,500/per person per year
Long-term impact? What if no one is willing to lend Higher interest rates (Why Not now?) Slowing economy & loss of jobs Limit what gov’t can do during
emergency (big recession or war)
Stock Market, Anyone?
Old Times Low price earnings ratio Expected capital gains
Today Rising income Rising demand unrelated to P/E
Wider/wilder fluctuations Index funds with low expense ratios
What If Attacks Continue?
Metro Areas for CGIA-SAWDC Members Alabama
Mobile (MOB) Daphne-Fairhope-Foley (DAP) No metro: Monroe, Washington, Clark,
Escambia Florida
Crestview-Ft. Walton Beach-Destin (WAL) Panama City (PAN) Pensacola-Ferry Pass-Brent (PEN)
Mississippi Gulfport-Biloxi-Pascagoula (BIL)
Metro Comparison
UNR 8-14 UNR 8-15 GDP($M) 2014 RankMOB 8.1 7.6 18,284 124DAP 6.1 5.6 6,488 254WAL 5.3 4.5 12,007 174PAN 6.4 5.2 7,674 225PEN 6.3 5.2 15,916 140BIL 7.4 5.6 15,841 143
Importance of the Manufacturing Industry
AL Ind Energy Cons
23
Why Is Manufacturing Important?Long-term commitmentOnce lost, hard to bring it backHigher wages in generalSignificant multiplier effectMajor source of exports; andMajor source of productivity
growth
24
100 New Manufacturing Jobs
25
Create additional 66 to 356 jobs, depending on products
Based on latest RIMS II multipliers for Alabama.
Manufacturing Industry…
26
Requires globally competitive energy supply.
Locates plants where it allows them to be competitive.
Responds to high energy prices. Key driver of the AL/MS (FL?)
economy through jobs and wage benefits.
2015: Year of Retail Boom Retail
McGowin Park (Dock’s Sporting Goods) Westwood Plaza (Gander Sporting Goods) Pinebrook Shopping Center (Whole Food)
Non-Retail Airbus Return of Carnival Austal expansion
Impact on Tax Revenues?
Sales Tax Revenue by Month: Mobile Co: Jan 2005 to Sept. 2015
Mobile Co. Sales Tax Revenue by Month (Jan. 2012 – Sept. 2015)
1 2 3 4 5 6 7 8 9 10 11 120
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
2012 2013 2014 2015
Sales Tax in Alabama:What are the problems?
ProblemsMany different ratesToo many exemptionsTax rates too highNon-compliance
Impact of Retail Boom in Mobile?
Sales tax revenues will increase above the trend in recent years..
The rising trend in sales tax will make leaders to proclaim that “we are doing a good job!” and
Hide all the problems of current sales taxation with no attempt to solve them!!!
Words vs. Action
CGIA & SAWDC
Central Gulf Industrial Alliance “best practices in the areas of
workforce development”SW AL Workforce Develop Council
“comprehensive, integrated workforce development system”
Two ApproachesSector-based (demand
side of workplace)Place-based (supply side
of workplace)
Sector-based approach
Focus on industries which most likely hire new employees
higher entrance requirements than place-based strategies
typically created through networks and partnerships (part of incentives)
Need employers to participate in curriculum development and trainee evaluation
Potential barriers
Regions experiencing skills gap between trainees and employer needs
Low literacy or educational levels of trainees
Quick turnover in technology making training program obsolete
Need to be ready for changing technologies
Place-based approach
Help participants gain initial access to the labor market
ideal framework for state and local government to address the issue of unemployment and poverty problems
requires analysis of the community's current and anticipated needs
Programs must be flexible enough to adapt to changing workplace needs.
Generation
Baby Boomers: born 1946 to 1964; X: born 1965 and 1977; perceived
to be disaffected and directionless; Y: People born in 1978 or later;
known as Gen Y because they came after Gen X; also called Baby Boom Echo
Millennials
% of workforce 6% in 2000 35% in 2015
Top 3 most valued work benefits Training & development Flexible working hours Cash bonus (next: free health insurance, etc)
Millennials Tech Savvy
Prefer to collaborate online Use personal smartphones at work Use downloads for work purposes
Work values Not a team player Narcissistic
Excessive or erotic interest in oneself Inflated idea of own importance
Negative Impact of Automation on Jobs: Old Concerns
1961 TIME magazine titled “The Automation Jobless” Feb 24, 1961.
1964 President Lyndon B Johnson empaneled a blue-ribbon national commission to tackle “the problem that productivity was rising so fast it might outstrip demand for labor.”
Negative Impact of Automation on Jobs: Continuing Concerns
2014 Erik Brynjolfsson and Andrew McAfee (MIT), “The Second Machine Age: Work” 2014 Norton & Co:
Best time to be a worker with special skills, but worst time to be a worker with ‘ordinary’ skills
because computers, robots, and other digital technologies are “acquiring these skills” at an extraordinary rate.
David H. Autor (MIT), “Why Are There Still So Many Jobs? The History and Future of Workplace Automation,” J of Economic Perspectives (Sum 15)
Automation does substitute for labor
Automation also complements labor, leading to higher demand for labor
Changes in technology do alter the types of jobs, however.
Autor cites computer technologies as an example.
computers follow procedures laid out by programmers
Cost of computations “fallen by at least 1.7 trillion-fold since the manual computing era”
Firms have strong incentives to substitute computers for labor
computers can substitute routine tasks, but not non-routine tasks such as
problem-solving capabilities, intuition, creativity, persuasion, visual and language recognition, and in-person interactions.
Professor Autor concludes Education and job training system
should focus on producing workers who can combine routine and non-routine capabilities
“human capital investment must be at the heart of any long-term strategy for producing skills that are complemented by, rather than substituted for, technological change,,” especially…….
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