Will the U.S. Labor Economy Avoid Brain Death?

GORDON REPORT, August 2024
By Edward E. Gordon, Imperial Consulting Corporation

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The Gordon Reports are based on over 30 years of research on the causes, effects, and solutions for continuing world-wide, skills-jobs disconnects. For your convenience here are the major publications that have reported on a burgeoning talent-deficit question:

• Closing the Literacy Gap in American Business, 1991 (adult reading)
• FutureWork, 1994, and Enhancing Learning in Training and Adult Education, 1998
  (higher performing employer training and development programs)
• Skill Wars: Winning the Battle for Productivity and Profit, 2000 (training return-on-
  investment)
• The 2010 Meltdown: Solving the Impending Jobs Crisis, 2005 (impact of baby-boomer
  retirements on workforce skill levels 2010-2030)
• Winning the Global Talent Showdown, 2009 (skilled worker challenges in 25 nations and
  their solutions)
• The Talent Hunters, 2012, (China, India, and United States vie to attract skilled workers)
• Future Jobs: Solving the Employment and Skills Crisis, 2013,2018 (preparing solutions
  for skilled talent deficits)
• Job Shock, 2022 (Building a new skilled workforce in the wake of COVID-19)

These publications feature case studies of businesses and communities that are rising to the challenge of fixing skill deficits. Many have established Regional Talent Innovation Networks (RETAINs) that are not one-off partnerships, but collaborative hubs that focus on systemic change. Coast to coast under local brand names, RETAINs connect schools and businesses to educate and train students and incumbent workers for today’s jobs and careers.

The Fourth Industrial Revolution continues to raise the education and skills required to develop and use advanced technologies with AI now the focus of attention. Yet the skill levels of too many Americans stalled out during the last decades of the 20th century. High levels of vacant jobs persist across all business sectors. As businesses seek to mine the inadequate supply of knowledge workers, wages continue to rise. We are nearing a state of collapse in the current and future availability of such people. The critical mass of educated Americans is inadequate to support and grow the U.S. economy. Why has this happened?

IT BEGINS WITH EDUCATION
National Assessment of Educational Progress (NAEP) test scores show a steep post-COVID decline in the reading and mathematics performance of American elementary school students. In 2022, only about one-third of 4th- and 8th-grade public and private school students scored at grade level or above in reading. In mathematics 37 percent of 4th-graders scored at grade level or above, but only 27 percent of 8th-grade students did. All the testing results showed a significant growth in students scoring well below their grade level in both mathematics and reading.

International testing also showed sharp drops in reading and mathematics results. The 2022 PISA exam of 15-year-old students in 81 OECD member countries, saw mean performance fall 10 points in reading and 15 points in mathematics compared to 2018 results.

Another confirmation of educational declines can be found in the results of the 2024 ACT exams. This achievement test is taken by American high-school seniors to assess readiness for college-level studies. The 2024 average ACT score was the lowest in thirty years.

This year the Georgetown University Center on Education and the Workforce issued a report on post-secondary jobs requirements. It indicates that 75 percent of all jobs by 2031 will require some form of post-secondary education: either 2- or 4-year degrees, technical certificates, or apprenticeships.

These post-secondary options will need students to have achieved 12th-grade reading comprehension. In 2024 only 33 to 37 percent of public and private high school graduates are reading at this comprehension level. This is a major factor behind the sad statistic that only half of students who start a post-secondary degree complete it.

LOOKING TO THE FUTURE
Demand for more advanced IT skills will continue to grow across the job market. Higher cognitive skills, critical thinking and creativity are more essential skills for innovation. They all are based on achieving higher reading comprehension.

Business executives report skill shortages and expect them to continue. A 2024 Experis survey of IT employers in over 40 countries found that 76 percent reported difficulty finding the skilled talent they need. The World Economic Forum predicts that there will be up to 90 million skilled job vacancies worldwide by 2030 with up to 30 million in the United States. U.S. high schools are now graduating a significant number of functionally illiterate young adults. The 21st-century reality is that the world has moved into a new era of occupational transitions and employment
qualifications. What actions need to be taken to stave off the brain death of the U.S. labor force?

A 2024 McKinsey Global Institute Report, “A New Future of Work,” found that the executives they surveyed expect a greater increase in skill demands by 2030. To fill these growing skills deficits, they are looking at retraining their current workers, hiring, and using contractors.

Success with these strategies basically depends on widening talent pools. Due to inadequate elementary and high-school preparation, too many young Americans do not have the educational foundation needed to succeed in today’s high-tech jobs and careers. Reform needs to begin at these early educational levels. Businesses need to develop career information programs beginning in elementary schools that highlight the new jobs created by the Fourth Industrial Revolution and how to prepare for them. They also need to expand different types of partnership programs with secondary and post-secondary educational institutions. Career academy high schools can give local businesses the opportunity to help students explore how well their interests and skills fit actual employment opportunities. Apprenticeship, internship, and work- study programs need to be implemented in more industry sectors.

Business leaders need to deploy these and other strategies that prioritize human capital development. To make this succeed, Regional Talent Innovation Networks can help business leaders collaborate with other community sectors to reinvent local and regional education-to- employment systems. RETAINs provide the framework for long-term systemic transformation that sustains talent growth that benefits individuals, businesses, and U.S. economic competitiveness.