The United States labor force could face an aphotic future of lower pay, less benefits and fewer full-time employment positions, says a new Harvard Business School alum study of U.S. companies released Monday. Study authors purport that this is a growing example of the widening gap between the rich, middle class and poor.
Entitled “An Economy Doing Half its Job,” the study found that American companies, especially major corporations, are attaining their financial strength back and competing on the international stage. However, it’s the workers that are not regaining this monetary strength as a growing number of workers will struggle in receiving higher pay and lucrative benefits in the future.
Here’s a snapshot of the data: 40 percent of the company respondents reported projecting lower pay and less perks; nearly half favor outsourcing than hiring staffers; close to half would rather invest in technology than new hires; and more companies want to hire part-time workers than full-time employees.
One of the reasons why businesses have become disinterested in the workforce is because of the paucity of skilled workers. Regardless, Jan Rivkin, a Harvard business professor and a lead co-author of the survey, argued that companies not willing to advance and develop their workforce could lead to hurting those very same companies as well as diminish the strength of the U.S. economy.
“The bleak picture facing middle and working class Americans are the canary in our coal mine,” Rivkin told the Associated Press. “Eventually, that will come back to haunt business.”
Overall, the study reported that 47 percent of respondents believe U.S. companies will be less competitive within the next three years.
What’s the solution? Survey authors are urging America’s biggest corporations to do more by investing in advanced skills-training programs, transportation infrastructure and elementary and secondary education.
“Shortsighted executives may be satisfied with an American economy whose firms win in global markets without lifting US living standards. But any leader with a long view understands that business has a profound stake in the prosperity of the average American,” the report stated. “Thriving citizens become more productive employees, more willing consumers, and stronger supporters of pro-business policies. Struggling citizens are disgruntled at work, frugal at the cash register, and anti-business at the ballot box.”
Financial analysts aver that Harvard’s study is just another example of how the U.S. economy’s recovery from the recession that ended a few years ago remains to be a quandary. Although employment gains have been made and wealth has rapidly increased, the economy has experienced the same benefits.
For instance, after the U.S. Department of Commerce released August’s job numbers, Bloomberg News concluded that there are still 3.9 million prime-age jobs missing in the economy. Meanwhile, the labor force participation rate has declined to 62.8 percent, a 36-year low.
The Heritage Foundation explains the problem:
“Understanding why labor force participation has fallen is critically important to assessing the state of the economy. When millions of people would like to be employed, but have given up on finding work, the official unemployment rate understates the weakness of the labor market. It omits millions of potential workers who have become so discouraged that they have stopped job searching.”
According to Harvard, this current trend is “unsustainable.”
