Worker Shortage Could Dampen Economy

Dec 8, 2017
Originally published on December 8, 2017 6:57 pm
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MARY LOUISE KELLY, HOST:

The White House is celebrating what it calls a great month for American workers. U.S. employers added 228,000 jobs last month. Manufacturing jobs in particular are bouncing back. Employers and President Trump now have a new challenge if they want to keep the economy growing, and that is finding enough workers. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: The monthly job number from the Labor Department was somewhat better than forecasters had been expecting. But it was no surprise to Tom Maher. He runs the Manpower temporary firm in Dayton, Ohio, where factories have been buzzing.

TOM MAHER: Virtually every manufacturer in the area has a help wanted sign outside their window.

HORSLEY: Nationwide, factories have added 189,000 jobs in the last 12 months. But even though the national unemployment rate is a low 4.1 percent, Maher says workers' paychecks are barely outpacing inflation.

MAHER: Wages are rising, but they're not rising as fast as I believe they really should in order to attract the workers that they need.

HORSLEY: White House economist Kevin Hassett suspects that's partly because many of the new hires have been entry-level workers. They don't make as much as more experienced colleagues. But those entry-level openings do spell opportunity for people who haven't worked in a long time or ever.

KEVIN HASSETT: We're at that point in the cycle where the market is tight enough that it's really rewarding everybody.

HORSLEY: Hassett notes the jobless rate among people without a high school diploma fell by half a percentage point last month and unemployment among Hispanics fell to its lowest level ever.

HASSETT: If we could sustain growth at this level for another couple of years, then the amount of progress we would make on income inequality and wage growth for middle America would be maybe even unprecedented.

HORSLEY: But sustaining that level of growth or even accelerating it as the president has promised could be difficult without a larger workforce. Chief economist Constance Hunter of the KPMG accounting firm warns within the next year or two, a lack of workers could become a drag on growth.

CONSTANCE HUNTER: What I expect is that we will start seeing increasing labor shortages. And at some point those labor shortages are going to really limit the ability we have to continue expanding.

HORSLEY: In the past, the U.S. has relied on immigration to help fill labor shortages, but the Trump administration wants to sharply restrict that. The president believes the U.S. can lure additional homegrown workers into the job market. His plan includes both carrots in the form of tax cuts to make work more attractive and sticks.

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PRESIDENT DONALD TRUMP: Welfare reform. Does anybody want welfare reform?

HORSLEY: In Missouri last week, Trump hinted that limiting welfare programs will be one of his next priorities.

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TRUMP: I know people, they work three jobs and they live next to somebody who doesn't work at all. And the person who's not working at all and has no intention of working at all is making more money and doing better than the person that's working his and her ass off. And it's not going to happen. Not going to happen.

(CHEERING)

HORSLEY: Just this week, the Agriculture Department launched a push to limit the food stamp program that serves more than 41 million Americans. Secretary Sonny Perdue says he wants to promote self-sufficiency and help recipients transition from government programs back to work. White House budget director Mick Mulvaney telegraphed that initiative last spring when he called for cutting the food stamp budget by $191 billion over the next decade.

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MICK MULVANEY: We need folks to work. We do. There's a dignity to work, and there's a necessity to work to help the country succeed. And we need everybody to pull in the same direction.

HORSLEY: The government already requires most able-bodied adults on food stamps to work at least 20 hours a week. The administration is encouraging states to attach additional work requirements to this and other programs, including Medicaid, so employers in the growing economy can find the workers they need. Scott Horsley, NPR News, Washington.

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