Workforce Development:
An Overview for CGIA-SAWDC
by
Semoon Chang
Semoonchang.com
December 10, 2015
 Posted on semoonchang.com
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pictures are not mine (proprietary!)
Impact of Economy on
Workforce Development
 Recession: Keep employees
and inventories to minimum
 Growing economy
 Increase in hiring
 Increase in turnovers
 What if future is uncertain?
Growth Rate of Real GDP (%)
Annual
Growth Rate of Real GDP (%)
Quarterly
5
4.6
3
2.7 2.9
0
2.1
1.9
2
1
3.9
3.8
4
3
4.3
1.5
1.1
0.5
0.6
0.1
12-1 12-2 12-3 12-4 13-1 13-2 13-3 13-4 14-1 14-2 14-3 14-4 15-1 15-2 15-3
-1
-2
-0.9
Projectionof U.S. Economy by FRB
6.00
Real GDP
Unemp Rate
5.00
5.00
4.80
Inflation
4.80
4.80
4.00
3.00
2.00
1.00
2.30
2.10
2.20
1.70
1.90
2.00
2.00
0.40
0.00
2015
2016
2017
2018+
Projections by CBO
Growth of Real GDP
Percent
6
Actual
Projected
4
CBO expects output to grow more
rapidly in 2016 and 2017 than in
2015 and at a more moderate pace
in subsequent years.
2
0
-2
-4
2000
2005
2010
2015
2020
Sources: Congressional Budget Office; Bureau of Economic Analysis.
2025
Inflation
Inflation
Percentage Change in Prices
5
Actual
Project
ed
4
Overall
CBO anticipates that core prices will
rise modestly, reflecting the
remaining slack in the economy and
widely held expectations for low and
stable inflation.
3
2
1
0
2000
Core
2005
2010
2015
2020
2025
Labor Market
The Labor Force, Employment, and Unemployment
The percentage of the population that is employed is projected to fall over the next 10 years because of declining
participation in the labor force, mainly by baby boomers as they age and move into retirement.
Percentage of the Population
70
Actual
Projected
65
Unemployed
63
61
60
Employe
d
59
58
55
Labor Force
Participation
Rate
50
0
1955
1965
1975
1985
1995
Sources: Congressional Budget Office; Bureau of Labor Statistics.
2005
2015
2025
Hourly Compensation
percentage change
Hourly Labor Compensation
Percentage Change
5
Actual
Projected
4
Although hourly labor compensation
has grown slowly in recent years,
CBO projects that growth over the
next several years will be stronger
3
than in 2014, as the demand for
workers continues to rise and slack
in the labor market diminishes.
2
1
0
2000
2005
2010
2015
Sources: Congressional Budget Office; Bureau of Labor Statistics
2020
2025
Interest Rate Projections
5
10-Year
Treasury
Notes
4
CBO projects that interest
rates on Treasury securities
will rise
with the anticipated increase in
the federal funds rate and with
expectations of continued
improvement in
economic conditions.
3
3-Month
Treasury
Bills
2
1
0
2015
2016
2017
Sources: Congressional Budget Office; Federal Reserve; Bloomberg
Longer Term
Fed Chair Yellen’s speech at Economic
Club of Washington DC: Dec. 2, 2015
 “economic and financial information
received since Oct meeting has been
consistent with our expectations of
continued improvement in the labor
market,” and inflation moving “back
to 2 percent objective.” However:
 “economic conditions may warrant
keeping the target federal funds rate
below” 3.5% long run natural rate.”
Why Slow Growth?
 Too many
regulations
 Needs to be
flexible
 Too many
depending on
gov’t
 Too much
debt>>>
Annual Budget Deficit
Total Deficits or Surpluses
Because outlays are projected to grow faster than revenues after 2018, projected deficits increase to almost 4
percent of gross domestic product from 2022 through 2025.
Percentage of Gross Domestic Product
4
4
Actual
Surpluses
Project
2
2
ed
0
0
-2
-2
-4
-6
-4
Average Deficit,
1965 to 2014
(-2.7%)
Deficits
-6
-8
-8
-10
-10
1965
1970
2025
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
Public Debt
 How much?
 $18,774,000,000,000 total ($60,000/person)
 $450,000,000,000 annual interest
 $1,500/per person per year
 Long-term impact?
 What if no one is willing to lend
 Higher interest rates (Why Not now?)
 Slowing economy & loss of jobs
 Limit what gov’t can do during
emergency (big recession or war)
Stock Market, Anyone?
 Old Times
 Low price earnings ratio
 Expected capital gains
 Today
 Rising income
 Rising demand unrelated to P/E
 Wider/wilder fluctuations
 Index funds with low expense ratios
What If Attacks Continue?
Metro Areas
for CGIA-SAWDC Members
 Alabama
 Mobile (MOB)
 Daphne-Fairhope-Foley (DAP)
 No metro: Monroe, Washington, Clark,
Escambia
 Florida
 Crestview-Ft. Walton Beach-Destin (WAL)
 Panama City (PAN)
 Pensacola-Ferry Pass-Brent (PEN)
 Mississippi
 Gulfport-Biloxi-Pascagoula (BIL)
Metro Comparison
MOB
DAP
WAL
PAN
PEN
BIL
UNR 8-14 UNR 8-15 GDP($M) 2014 Rank
8.1
7.6
18,284 124
6.1
5.6
6,488 254
5.3
4.5
12,007 174
6.4
5.2
7,674 225
6.3
5.2
15,916 140
7.4
5.6
15,841 143
AL Ind Energy Cons
Importance of the
Manufacturing Industry
23
Why Is Manufacturing
Important?
 Long-term commitment
 Once lost, hard to bring it back
 Higher wages in general
 Significant multiplier effect
 Major source of exports; and
 Major source of productivity
growth
24
100 New Manufacturing Jobs
 Create additional 66 to 356
jobs, depending on products
 Based on latest RIMS II
multipliers for Alabama.
25
Manufacturing Industry…
 Requires globally competitive
energy supply.
 Locates plants where it allows them
to be competitive.
 Responds to high energy prices.
 Key driver of the AL/MS (FL?)
economy through jobs and wage
benefits.
26
2015: Year of Retail Boom
 Retail
 McGowin Park (Dock’s Sporting Goods)
 Westwood Plaza (Gander Sporting Goods)
 Pinebrook Shopping Center (Whole Food)
 Non-Retail
 Airbus
 Return of Carnival
 Austal expansion
 Impact on Tax Revenues?
Sales Tax Revenue by Month:
Mobile Co: Jan 2005 to Sept. 2015
Mobile Co. Sales Tax Revenue by
Month (Jan. 2012 – Sept. 2015)
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
2012
2013
2014
2015
1,000,000
0
1
2
3
4
5
6
7
8
9
10
11
12
Sales Tax in Alabama:
What are the problems?
Problems
Many different rates
Too many exemptions
Tax rates too high
Non-compliance
Impact of Retail Boom in
Mobile?
 Sales tax revenues will increase
above the trend in recent years..
 The rising trend in sales tax will
make leaders to proclaim that “we
are doing a good job!” and
 Hide all the problems of current
sales taxation with no attempt
to solve them!!!
Words
vs.
Action
CGIA & SAWDC
 Central Gulf Industrial Alliance
 “best practices in the areas of
workforce development”
 SW AL Workforce Develop Council
 “comprehensive, integrated
workforce development system”
Two Approaches
Sector-based (demand
side of workplace)
Place-based (supply side
of workplace)
Sector-based approach
 Focus on industries which most likely
hire new employees
 higher entrance requirements than
place-based strategies
 typically created through networks
and partnerships (part of incentives)
 Need employers to participate in
curriculum development and trainee
evaluation
Potential barriers
 Regions experiencing skills gap
between trainees and employer needs
 Low literacy or educational levels of
trainees
 Quick turnover in technology making
training program obsolete
 Need to be ready for changing
technologies
Place-based approach
 Help participants gain initial access to
the labor market
 ideal framework for state and local
government to address the issue of
unemployment and poverty problems
 requires analysis of the community's
current and anticipated needs
 Programs must be flexible enough to
adapt to changing workplace needs.
Generation
 Baby Boomers: born 1946 to 1964;
 X: born 1965 and 1977; perceived
to be disaffected and directionless;
 Y: People born in 1978 or later;
known as Gen Y because they
came after Gen X; also called Baby
Boom Echo
Millennials
 % of workforce
 6% in 2000
 35% in 2015
 Top 3 most valued work benefits




Training & development
Flexible working hours
Cash bonus
(next: free health insurance, etc)
Millennials
 Tech Savvy
 Prefer to collaborate online
 Use personal smartphones at work
 Use downloads for work purposes
 Work values
 Not a team player
 Narcissistic
 Excessive or erotic interest in oneself
 Inflated idea of own importance
Negative Impact of Automation
on Jobs: Old Concerns
 1961 TIME magazine titled “The
Automation Jobless” Feb 24, 1961.
 1964 President Lyndon B Johnson
empaneled a blue-ribbon national
commission to tackle “the problem
that productivity was rising so
fast it might outstrip demand
for labor.”
Negative Impact of Automation
on Jobs: Continuing Concerns
 2014 Erik Brynjolfsson and Andrew
McAfee (MIT), “The Second Machine
Age: Work” 2014 Norton & Co:
 Best time to be a worker with special
skills, but worst time to be a worker
with ‘ordinary’ skills
 because computers, robots, and other
digital technologies are “acquiring
these skills” at an extraordinary rate.
David H. Autor (MIT), “Why Are There Still So
Many Jobs? The History and Future of Workplace
Automation,” J of Economic Perspectives (Sum 15)
 Automation does substitute for
labor
 Automation also complements
labor, leading to higher demand for
labor
 Changes in technology do alter the
types of jobs, however.
Autor cites computer
technologies as an example.
 computers follow procedures laid out by
programmers
 Cost of computations “fallen by at least 1.7
trillion-fold since the manual computing era”
 Firms have strong incentives to substitute
computers for labor
 computers can substitute routine tasks,
but not non-routine tasks such as
 problem-solving capabilities, intuition,
creativity, persuasion, visual and language
recognition, and in-person interactions.
Professor Autor concludes
 Education and job training system
should focus on producing workers who
can combine routine and nonroutine capabilities
 “human capital investment must be
at the heart of any long-term strategy
for producing skills that are
complemented by, rather than
substituted for, technological
change,,” especially…….
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