Aging population and low workforce participation and productivity driving a 9 percent decline
ARLINGTON, Va.; July 30, 2014 – According to Accenture (NYSE:ACN), the U.S. standard of living is in danger of declining by 9 percent by 20301 – back to the level it was in 2000 – due to three major economic threats: an aging population, lower workforce participation and a flat or declining labor productivity growth rate.
The Accenture analysis is outlined in a new report, U.S. States: For Richer, For Poorer? Winning the battle for talent and securing our standard of living, which advocates that state governments develop and execute strategies to ensure a sufficient supply of talent to meet the country’s workforce demands. According to the U.S. Bureau of Labor Statistics, current workforce participation rates are at their lowest since 1977. 2
“For the first time in our nation’s history, the next generation may not be better off than their parents,” said Peter Hutchinson, who leads Accenture’s public service strategy for North America state, provincial and local business. “For decades people have come to expect our economy and way of life to continue to improve, not decline. Our standard of living hinges on harnessing a skilled workforce to power our economies.”
Accenture identified three factors threatening the U.S. standard of living:
Population: As Baby Boomers retire, the working age population (15- to 64-years-old) is shrinking as a share of the total population. By 2030, the working age population could shrink by 9 percent, declining to a 1970 level.
Participation: There are not enough people of working-age actually working today, driven in part by youth unemployment (16- to 24-years-old).
Productivity: States are facing an unreliable growth rate in workforce productivity, which has fallen below 1 percent for five of the past 10 years and is now at one of its lowest points since 1960.3
Accenture’s analysis, as well as survey findings, point to several factors affecting participation and productivity growth rates: Employers are not finding the skills they need for open positions, the long-term increase in high school and college graduation rates is forecast to end and more than half of recent college graduates consider themselves either under-employed or working in positions that do not require their college degrees.
Key Survey Findings
Accenture surveyed citizens, employers, jobseekers and state employment officials across the country with additional interviews in 12 states: California, Florida, Illinois, Indiana, Massachusetts, Michigan, Minnesota, New York, North Carolina, Ohio, Texas and Washington. The surveys found growing dissatisfaction with government:
- The majority of citizens surveyed,72 percent, said they have little or no trust in the ability of government to act quickly enough to address employment and skills issues.
- Only 18 percent of employers surveyed said they had sufficient access to the skills they require, and only 12 percent of job seekers say it is easy to find the right job.
- Among the job seekers, 58 percent cited a lack of access to job information as a major barrier to finding employment.
- Both job seekers (48 percent) and employers (56 percent) say they would value better matching of skills needed by employers against available jobs.
- A majority of employers (62 percent) do not think government is anticipating future skills demands.
Recommendations for Action
The report recommends a number of strategies and tools to increase workforce participation and accelerate productivity growth, including:
- Real-time information on the demand and supply of skills and competencies. Today’s jobs and skill needs are different from those in the past, making historical data an unreliable predictor of future talent demand or supply. Accenture recommends that states provide real-time, skill- based information about jobs that are in high demand and promote the workforce qualifications needed to fill those jobs; this will result in better directing employers to the right pools of talent, helping job seekers match their skills with employer needs, and engaging educators to focus on developing the employment skills needed for today’s economy.
- Talent supply pipelines. States should create talent supply pipelines that can provide employers, including government, with reliable access to the skills and competencies they need.
- Roadmaps showing pathways to jobs. States should offer every job seeker a personalized road map that shows him or her how to put unique talents to work to gain the skills and competencies needed for the desired job.
- United talent agenda focused on increasing standard of living. States should create a unified, statewide talent agenda that pulls together all related agencies, programs and budgets that focuses on increasing the standard of living.
Accenture analyzed trends related to demographics, workforce participation rates and productivity in 162 countries. Together, these factors can have a major impact on the U.S. standard of living, defined as real GDP per capita. Given that most countries’ long-term productivity growth rate is trending toward zero percent, the base scenario assumes that productivity and participation growth rate is maintained at zero. Accenture estimates that in the sample of countries studied, standard of livingis set to fall between 4 percent and 12 percent by 2030. Accenture also conducted surveys with citizens, employers, jobseekers and public employment officials in 11 countries (Australia, Brazil, Canada, France, Germany, India, Italy, Japan, Singapore, the United Kingdom and the United States), with additional interviews in 12 U.S. states (California, Florida, Illinois, Indiana, Massachusetts, Michigan, Minnesota, New York, North Carolina, Ohio, Texas and Washington) and the Canadian province of Ontario. These surveys provide a comprehensive view on the jobs and skills environment. Ipsos Mori and MGuire Research Services executed the surveys between September and November 2013.
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Accenture is a global management consulting, technology services and outsourcing company, with approximately 293,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture
collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$28.6 billion for the fiscal year ended Aug. 31, 2013. Its home page is www.accenture.com.