What's Driving the Pending Labor Shortage?

We all know that retiring Baby Boomers are going to have an effect on the labor market in the coming years. But according to the Herman Group, an HR think tank, Boomer retirement isn't behind the labor shortage that's already upon us and will keep growing for at least the next decade. In fact, many Boomers will remain in the workforce well after reaching traditional retirement age.

Instead, factors in the tightening labor market include:

• The decline of the annual US birthrate increase to 1.1% during the 1990s (versus 2.6% during the "baby bust" of the 1970s)... meaning fewer new entrants into the workforce in 2010 and beyond.
• The increasing tendency of women to leave the workforce permanently to stay home and raise their children.
• College graduates who prefer to start their own businesses rather than apply for open positions at existing enterprises.
• The overall strong economy, which keeps the pool of available labor low and offsets any relief from immigrant labor and outsourcing.

Citing a RAND Corporation study, Herman believes that "[t]he annual growth rate of the nation's workforce is expected to slow to a nearly static 0.4 percent by 2010."” Good news for job seekers, of course. But a challenge for an economy that looks to keep growing.