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The truth about the coming labor shortage; confusing predictions and data are clouding the real picture of tomorrow's labor supply.

Article Excerpt
It's a well-accepted fact that the population growth rate for the United States is slowing down. Between now and 2010, the U.S. population is projected to grow 1.1 percent annually, identical to the rate a decade earlier. After that, it will dip, eventually reaching 0.3 percent by 2030, even less by 2050.

While these numbers are widely known and accepted, what's far less certain is what they will mean for employers hoping to avoid an ultra-competitive labor market in the short term.

Doomsayers rely on such demographic data, as well as employment projections from the U.S. Bureau of Labor Statistics (BLS), to determine that as early as 2010 there won't be enough workers available to staff the nation's jobs. But such predictions often are flawed or fail to take into account a full view of the facts.

Balance out the competing views and data, and a different, sometimes less gloomy, view of the future emerges--at least for some employers. Will you be one of the lucky ones to dodge the bullet? Or will you face a near-term shortage of talent? And, if so, what can you do about it?

The time to address this issue is now. Many employers will be negatively affected by the future labor market but to varying degrees. Those who will face the tightest competition for labor can take steps now to help create a brighter future.

Projections Miss the Mark

Predictions that the total labor supply won't keep up with the total demand are off base, according to sources at BLS. Such predictions generally are based on subtracting estimates of the total number of future workers from the total number of expected jobs. The resulting calculation shows that by 2012, there will be 3.3 million fewer workers than jobs.

But there are numerous flaws with that math. Most significantly, the two data sets involved, both of which are supplied by BLS, are derived from different sources and cannot be compared accurately. To subtract one from the other is to make an apples-and-oranges comparison that is invalid and misleading.

Michael Pilot, BLS's division chief for occupational outlook, says anyone who subtracts one data set from the other and finds a gap is "totally misrepresenting" the data. He says BLS has "tried to correct the misconceptions with press releases and in an article in the Monthly Labor Review" in February 2004. (For a link to that publication, see the online version of this article at www.shrm.org/hrmagazine/05March.)

But, to date, the agency's efforts have been to no avail. "Our data are in the public domain; people use it and misuse it," says Pilot.

What's more, the BLS data have limitations that often are not taken into account. For example, the data representing the total number of jobs rely on surveys in which employers project their job needs years into the future. But such estimates are far from perfect.

"Don't bet on employers' accuracy in predicting future needs," says Peter Cappelli, director of the Center for Human Resources at the Wharton School in Philadelphia. "Most employers have business strategies that go out only a year or two, so how can they predict [far into the future]?"

Further, the BLS numbers don't take into account the fact that some individuals hold more than one job, so they effectively overestimate the number of workers needed to staff the nation's jobs.

Finally, there is a large pool of labor that employers have, to this point, been reticent to tap--and that doesn't show up in BLS labor force projections. Those who have become so discouraged that they have stopped looking for work, for example, aren't reflected in BLS labor projections. Neither are skilled individuals with disabilities or those, such as parents or older...