Highlights of a GAO Forum:

Workforce Challenges and Opportunities For 21st Century: Changing Labor Force Dynamics and the Role of Government Polices

GAO-04-845SP: Published: Jun 1, 2004. Publicly Released: Jun 1, 2004.

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The U.S. workforce of the 21st century is expected to face a very different set of opportunities and challenges than previous generations. Demographic and economic trends indicate that the size and composition of the labor force, as well as the characteristics of many jobs, are changing in the 21st century. To discuss these changing labor force dynamics and the role of government policies, GAO hosted the "Workforce Challenges and Opportunities for the 21st Century Forum" on April 22, 2004. The participants were a select group of national leaders and experts on the dynamics of theU.S. workforce. This group included government officials, business and union representatives, and other national experts on workforce issues. As agreed with forum participants, the purpose of the discussion was not to reach consensus but rather to engage in an open, nonattribution-based dialogue.

GAO began the 21st Century Workforce Forum by presenting some of the key demographic, economic, and fiscal trends. In the past 50 years, the size of the U.S. labor force has more than doubled. However, over the next 50 years, the labor force as a whole is projected to grow much more slowly--at about one-third the previous rate. The labor force is also projected to become much more racially and ethnically diverse in the future. In addition to these demographic trends, a number of broad economic trends--global interdependence, technological change, and the growth of the knowledge-based economy--are changing U.S. labor markets; these changes include the kind of skills and knowledge needed within the workforce for the United States to compete effectively while maintaining a high standard of living. As the U.S. labor force changes, the role of the federal government must be examined. While the federal government sets immigration, tax, and labor policies and provides information on labor force dynamics, it also funds a variety of employment and training programs that increase the skills of workers and help match job seekers with employers. However, the federal government faces large and growing deficits that might constrain future spending on these programs and affect a wide range of workforce issues. Participants generally agreed that the United States will soon face tight labor markets, in part because of changes in demographic trends and demands for higher skills. Some participants noted that the approaching retirement of the baby boom generation will contribute to tight labor markets and affect some industries more than others. They also discussed low labor force participation rates among certain groups, such as high school dropouts, low-income individuals, and some minority groups. Some participants explained that immigrants--both legal and undocumented--help the United States meet its labor demands. In addition to these demographic trends, participants agreed that the gap between the skills needed by employers and the skill level of U.S. workers poses a challenge for the U.S. labor market. Participants explained that several factors contribute to this skills gap, including the growth of the knowledge-based economy, decreased support for training programs, and insufficient emphasis on career education in schools. While considering both the needs of the U.S. labor force and the realities of a tight fiscal environment, participants discussed several ways to address the possible tight labor market in the coming years. Some participants questioned the effectiveness of current public training programs. Many agreed that employers together with unions should take an active role in determining training needs. To increase the number of skilled workers, most participants agreed that youth and young adults, especially those who do not plan on attending college, need alternative education and training opportunities. In addition, some agreed that keeping older workers in the labor force longer by offering more flexible retirement options, such as phased retirement approaches, could lessen future labor shortages and help pay for costly benefits, such as health care. Participants also debated the need to change immigration policies and visa priorities to better meet future workforce needs.

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