The Conference Board recently published a report predicting there will be an acute labor shortage — you heard that right — in several dozen occupations by 2022. In theory, that means the economic malaise of the past seven years will vanish as the unemployment rate plummets and wages soar, even in oversubscribed occupations that lose workers because they move to other sectors where pay and opportunity are better. It's possible we've seen the start of that this year, with the economy creating more than 200,000 new jobs per month, on average--although the latest jobs report showed a disappointing 142,000 new jobs in August, far below expectations.
Or, robots might replace podiatrists, ship captains, data security analysts and all the other badly needed workers, and solve that whole labor-shortage problem in a jiffy. That, at least, is the contention of some leading technologists who believe digital technology has only begun to disrupt the way we live and work. They point out that robots can already perform surgery, fly planes and manage an investment portfolio, while arguing the only thing preventing a complete droid takeover is human discomfort with machines more competent than they are.
The ultimate outcome will probably rest between those two extremes, yet a lot is at stake as millions of American workers — like, everybody under 50 — try to forge careers that will protect them from a rapidly changing and often ruthless economy. One thing forecasters often fail to factor in is the way people and institutions will react to change. In other words, it might be easy to predict one thing that will happen, but a lot harder to figure out what will happen next as everybody reacts and adjusts. In that regard, here are three things businesses are likely to do if a labor shortage does indeed develop and wages rise significantly:
Look harder for technology that can replace people. Workers lose out to machines when the machine costs less — and costs includes factors such as productivity, lost labor due to vacations and sick days, and of course the added expense of providing health insurance and other benefits. We’re used to the idea of robots manning factory floors and defusing bombs. But there are many more jobs robots could do if employers had a strong incentive to hire — er, sorry, buy — them. Consider, for instance, these 10 professions for which the Conference Board says labor shortages will be most acute by 2022:
Occupational therapy assistant
Nurse practitioner and midwife
Information security analyst
Crane and tower operator
Machines may not be able to do all those jobs, completely, within the next decade or two. But they could probably do part of the job in some cases, and much of it in a few. Technologists, for example, foresee robots being able helpers in physical therapy and more routine aspects of medicine such as elder care. Software can navigate ships, railroads, hauling trucks and other types of craft more accurately and safely than humans in many cases. As artificial intelligence gets more sophisticated, computers could easily become adept security analysts. That doesn’t mean all these fields are doomed. It means if companies have trouble finding workers, technology may materialize to fill the gap.
Find other ways to improve performance without hiring. U.S. companies excelled at this in the aftermath of the 2007-09 recession, when corporate profits soared but hiring barely budged. Part of that involved efficient new technology, but many companies simply cut payroll to the bone and lumped more work onto those who remained. If labor shortages do actually develop, employees who feel overworked or mistreated ought to have more leverage to demand better pay or work conditions. And they might get it. But better rewards for existing employees might come with more work and responsibility, reducing the need to hire new workers. And there remain hordes of lesser-skilled Americans able to fill the ranks on a part-time or temporary basis.
Go [back] overseas. There’s a bit of a “reshoring” phenomenon happening these days, as big multinationals that moved jobs overseas in the past bring positions back to America. That allows them to take advantage of cheap, plentiful U.S. energy and domestic labor costs that are rising much more slowly than in some other countries. But if workers become scarce and labor costs go up, reshoring could reverse. And an abundance of developing countries would love to host U.S. businesses, and could offer several incentives — such as super-low tax rates — to nab them.
As with many other things in the economy, lesser-skilled and undereducated workers will be most vulnerable, and may never benefit from a labor shortage. On the other hand, these trends could be good for some workers, especially those able to adapt quickly by developing the latest skills or going where demand for workers is strongest. Meanwhile, there’s one other thing forecasters may not have anticipated: the need for workers to design, build and maintain legions of robots. Maybe we’ll have labor shortages and a technology revolution both.
Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.