OPINION | America’s disappearing workers

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DEMOCRATS and many Republicans complain that U.S. corporations are raking in huge profits as blue-collar jobs disappear. The reality is the opposite, a new Conference Board business survey reports. Corporate profits have been declining as employers increase wages to hire scarce blue-collar workers, but hold the champagne.

Eighty-five percent of blue-collar businesses report recruiting difficulties versus 64% of white-collar employers. One reason is the working-age population without a college degree is shrinking as baby boomers retire and more young people enroll in college. Labor participation among 16- to 24-year-olds has fallen 10 percentage points in two decades.

Many working-age men who dropped out of the workforce during the recession and early years of the recovery are relying on parents and government. Nearly 12% of 25- to 64-year-olds in Kentucky are not in the workforce because they claim a disability. Almost a quarter of 25- to 34-year-old men without a four-year degree live with their parents — twice as many as those with a bachelor’s.

The good news is that a tight labor market is accelerating wage growth most for lower-skilled and young workers. Wages for 20- to 24-year-olds are increasing twice as fast as for other workers. Many companies are also recruiting more women and minorities and sweetening benefits. Overall job satisfaction in 2018 was the highest since 1995, according to the Conference Board survey.

Nonetheless, 90% of blue-collar businesses report operating with unfilled positions, and 29% say this has made them reduce output or turn down business. Rising wages together with sluggish productivity growth are crimping corporate profits. Between the fourth quarter of 2014 and the second quarter of 2019, profits for nonfinancial corporations declined 17% and 46% for manufacturers.

On current trend, corporate profits could soon drop to historic lows, which could reduce business investment and GDP growth. “The U.S. will not be able to maintain its current standard of living unless the U.S. government acts to significantly increase immigration, improve labor force participation, and, together with employers, raise labor productivity growth,” the Conference Board warns.

Maybe the only short-term fix is to increase legal immigration — unless Americans want to see their living standards decline and more jobs exported.

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