AN OVERVIEW OF ECONOMIC, SOCIAL, AND DEMOGRAPHIC TRENDS AFFECTING THE US LABOR MARKET

This paper offers an assessment of broad social, economic, and demographic trends affecting the US labor force now—in this time of strong economic growth—and in the future. The focus is on demographic trends, work and family issues, health and pension patterns, technical change, adjustment to low unemployment, globalization, and the plight of low-skilled workers. The paper identifies several important trends and patterns, including: 1) the largest demographic shift relevant to the job market is the impending decline in the share of prime-age workers; 2) over 60 percent of workers do not have their own children in their home, but an increasing share of workers care for elderly relatives; 3) the impact of the substantial shift from defined-benefit (DB) to defined-contribution (DC) pension plans on workers is unclear, but some estimates suggest that the typical worker will gain financially; 4) while investment in computers is spurring technical change, the impacts on productivity in firms vary a great deal because of the varying organizational responses to technology; 5) the labor market has adjusted surprisingly well to low unemployment, partly because college-educated workers have accounted for over 90 percent of the net growth in employed adult workers during the 1992-99 expansion; 6) globalization of production is unlikely to have weakened the position of US workers because overall foreign investment in the US has exceeded US investment abroad and foreign direct investment has been nearly as high as US direct investment; 7) while the economic expansion greatly reduced unemployment and expanded job opportunities for low-skill workers, many less-educated men who left the labor force in earlier years have not reentered the job market.