Wage Stagnation and Structural Unemployment

Friday, November 25, 2011

Wage Stagnation, a.k.a. “median wage stagnation”, can be defined as the lack of long-term real wage growth and can be best illustrated by U.S. worker wages from the 1970’s until present. Structural Unemployment occurs when there is a mismatch between the skills employers require and the skills of prospective workers. 

The current period of elevated employment is indicative of structural unemployment with thousands of job openings going unfilled, while many of U.S. workers lack the skills to fill them.  How are wage stagnation and structural unemployment interrelated with organizational productivity?  Many workers acquire their initial job skills during early formative years in secondary, trade or  higher education. Others may develop skills as the part of some informal or formal on-the-job training program through employers or trade unions.

Prior to World War II, skills developed early in life were generally suitable for the entire life time of many workers. However, as the post war world developed into the technology and information age, workers often are required to be re-trained or acquire new skills. Today, workers often change jobs and careers and reinvent themselves as whole industries undergo radical change and once solid jobs disappear.

The prime objective of a publicly or privately-held organization is to return economic value to its stakeholders, whether those are individuals, partners or shareholders in a common corporation. To do so, the organization must produce those goods or services demanded by its consumers, at both a price and quality that consumers require. To meet this objective, the organization must acquire, motivate, and retain individuals with the characteristics and skills to produce those goods and services.

Jobs that once could be had with a basic high school education, now often require additional technical training in numerical controlled machining tools, robotics, intermediate math, problem solving, and logical thinking processes.  While traditional four-year degrees in higher education have been the gateway for many workers to advance, numerous industries still continue to offer well paying jobs with two-year degrees and through trade and apprenticeship programs throughout the nation.

Organizations continue to find that in-house sposonered training is required to better engage new employees while building long-term relationships and developing future team leaders.  In order to become and remain productive and competitive, many organizations have resorted to partnership with local educational institutions to provide job related trade and skills training for current and future employees. Regard less of how it occurs, businesses with specific skill requirements have found that they must take action to ensure a significant inflow or skilled workers.

While issues with Wage Stagnation and Structural Unemployment cannot be addressed by any one organization, without real wage growth and a means to effectively deliver skilled workers to a business sector when needed, enterprises will continue with competiveness.