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The Growing US Jobs Challenge - The McKinsey Quarterly - June 2011

Bullhorn Reach
Bullhorn Reach

It could take more than five years--longer than after any postwar downturn--to replace the millions of jobs lost to the 2008-09 recession. How can the US rev up its job creation engine?

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1 J U N E 2 0 11 M C K I N S E Y G L O B A L I N S T I T U T E The growing US jobs challenge It could take more than five yearslonger than after any postwar downturnto replace the millions of jobs lost to the 200809 recession. How can the US rev up its job creation engine?
2 The United States faces a daunting challenge in creating jobs: at current rates, it will take until 2016 to replace the 7 million of them lost during the 200809 recession. To million Americans expected to enter the labor force this decadethe US economy must create 21 million jobs by 2020. Only under the most optimistic of three scenarios that the McKinsey Global Institute modeled would this be likely to occur, according to a new MGI report, An economy that works: Job creation and Americas future. The study sheds new light on how companies use labor, where new jobs are likely to come from, and what conditions are needed to ensure that they can be created in a sustainable way. In addition to original research and scenario analysis, the report draws on a survey of 2,000 business leaders, as well as interviews with more than 100 business executives, public-足sector leaders, educators, and other experts on US labor markets. The United States has suffered from increasingly lengthy jobless recoveries following months after GDP rebounded for employment to recover. But after the 199091 and 2001 more than 60 months will be needed to replace the jobs lost in the 200809 recession (exhibit). this decade: health care, business services, leisure and hospitality, construction, the total number of jobs generated. Business services, for example, could create as many without high school diplomas than employers can use. that employers say they require. In our survey, 40 percent of the executives whose nuclear technicians, and nursing aides, employers say.
employment levels but also open up opportunities. Broadband communications and advanced IT systems make it possible to disaggregate jobs into tasks that can be reassigned to other workers in a given location or elsewhere. Some work now performed by physicians, for example, can be handed off to physician assistants or nurse practitioners, creating demand for those middle-足income positions. Also, this approach makes it easier to onshore service jobs to low-足cost US locations or even to workers in their own homes. Exhibit Jobless recoveries: it used to take roughly six months for US employment to recover after recessions, but in recent ones that time span has increased dramatically. Longer . . . Months elapsed between return of real GDP to prerecession peak and return of employment to prerecession peak1 1948 6 . . . and deeper 1953 7 % decline in employment from prerecession peak, in months since recession began 0 12 24 36 48 1957 6 1960 6 Previous recessions 1969 8 1973 3 2008 recession Lowest point: 6.34% 1981 6 1990 15 2001 39 2008 >60 months Projection, based on recent rates of job creation 1Returns to prerecession peaks are established by start of more than 1 quarter above prerecession levels;余 US recessions are labeled by beginning year, with the exception of the most recent. The National Bureau of Economic Research estimates that the current recession began in Dec 2007. GDP returned to its prerecession peak in Dec 2010. Source: US Bureau of Economic Analysis;余 US Bureau of Labor Statistics;余 McKinsey Global Institute
4 Related thinking The United States will not return to full employment by following a business-足as-足usual Translating innovation into meet the jobs challenge, business and government leadersand workers, toomust attack US growth: An advanced- industries perspective the obstacles to employment and have the courage to consider new approaches. Why US productivity can grow without killing jobs How US multinationals drive economic growth way to growth by making compliance with regulations less onerous. The economic cost of the Read the executive summary or download the full report on the McKinsey & Company US education gap Web site. Copyright 息 2011 McKinsey & Company. All rights reserved.

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The Growing US Jobs Challenge - The McKinsey Quarterly - June 2011

  • 1. 1 J U N E 2 0 11 M C K I N S E Y G L O B A L I N S T I T U T E The growing US jobs challenge It could take more than five yearslonger than after any postwar downturnto replace the millions of jobs lost to the 200809 recession. How can the US rev up its job creation engine?
  • 2. 2 The United States faces a daunting challenge in creating jobs: at current rates, it will take until 2016 to replace the 7 million of them lost during the 200809 recession. To million Americans expected to enter the labor force this decadethe US economy must create 21 million jobs by 2020. Only under the most optimistic of three scenarios that the McKinsey Global Institute modeled would this be likely to occur, according to a new MGI report, An economy that works: Job creation and Americas future. The study sheds new light on how companies use labor, where new jobs are likely to come from, and what conditions are needed to ensure that they can be created in a sustainable way. In addition to original research and scenario analysis, the report draws on a survey of 2,000 business leaders, as well as interviews with more than 100 business executives, public-足sector leaders, educators, and other experts on US labor markets. The United States has suffered from increasingly lengthy jobless recoveries following months after GDP rebounded for employment to recover. But after the 199091 and 2001 more than 60 months will be needed to replace the jobs lost in the 200809 recession (exhibit). this decade: health care, business services, leisure and hospitality, construction, the total number of jobs generated. Business services, for example, could create as many without high school diplomas than employers can use. that employers say they require. In our survey, 40 percent of the executives whose nuclear technicians, and nursing aides, employers say.
  • 3. employment levels but also open up opportunities. Broadband communications and advanced IT systems make it possible to disaggregate jobs into tasks that can be reassigned to other workers in a given location or elsewhere. Some work now performed by physicians, for example, can be handed off to physician assistants or nurse practitioners, creating demand for those middle-足income positions. Also, this approach makes it easier to onshore service jobs to low-足cost US locations or even to workers in their own homes. Exhibit Jobless recoveries: it used to take roughly six months for US employment to recover after recessions, but in recent ones that time span has increased dramatically. Longer . . . Months elapsed between return of real GDP to prerecession peak and return of employment to prerecession peak1 1948 6 . . . and deeper 1953 7 % decline in employment from prerecession peak, in months since recession began 0 12 24 36 48 1957 6 1960 6 Previous recessions 1969 8 1973 3 2008 recession Lowest point: 6.34% 1981 6 1990 15 2001 39 2008 >60 months Projection, based on recent rates of job creation 1Returns to prerecession peaks are established by start of more than 1 quarter above prerecession levels;余 US recessions are labeled by beginning year, with the exception of the most recent. The National Bureau of Economic Research estimates that the current recession began in Dec 2007. GDP returned to its prerecession peak in Dec 2010. Source: US Bureau of Economic Analysis;余 US Bureau of Labor Statistics;余 McKinsey Global Institute
  • 4. 4 Related thinking The United States will not return to full employment by following a business-足as-足usual Translating innovation into meet the jobs challenge, business and government leadersand workers, toomust attack US growth: An advanced- industries perspective the obstacles to employment and have the courage to consider new approaches. Why US productivity can grow without killing jobs How US multinationals drive economic growth way to growth by making compliance with regulations less onerous. The economic cost of the Read the executive summary or download the full report on the McKinsey & Company US education gap Web site. Copyright 息 2011 McKinsey & Company. All rights reserved.