Average hourly wages are growing at a slightly slower pace over the past 12 months compared with the prior year, according to the Labor Department. Median weekly earnings are growing at a better rate, but gains have been subdued since the recession ended more than eight years ago.
Typically modest wage growth would point to remaining slack in the labor market. But that’s not the case, according to updated research from the Federal Reserve Bank of San Francisco.
“While higher-wage baby boomers have been retiring, lower-wage workers sidelined during the recession have been taking new full-time jobs,” paper authors Mary C. Daly, Bart Hobijn, and Benjamin Pyle wrote. “Together these two changes have held down measures of wage growth.”
The youth deficit also seems to be spreading to the post-millennial generation. Due, in part, to a dearth of new families, California’s new generation is actually shrinking the potential workforce. Between 2013 and 2025, the number of high school graduates in California is expected to fall by 5 percent, while Texas, Florida and North Carolina experience gains of near 10 percent or more. With a shrinking birthrate, as well as diminished immigration, the L.A. region could experience a continual decline in its workforce.
These trends should alarm employers and businesses who depend on growth in workers and consumers. A rapidly aging population, by its very nature, adds less to economic growth and innovation, while spending less on housing and consumer goods. Southern California politicians, seemingly more obsessed with sporting events and climate change than economic reality, need to address the fundamental housing and employment issues undermining our demographic future.
The pace of motherhood in California is slowing and its members are aging, a shift demographers expect to continue and contribute to far-reaching and uncertain changes in the decades to come.
Last year, the state reached a historic milestone: the lowest birth rate on record — 12.4 births per thousand people. That rate was 12.3 for Los Angeles, Orange, Riverside and San Bernardino counties and a Southern California News Group analysis of state projections shows the region’s rate could fall another 24 percent by 2040.
The unemployment rate for Hispanic or Latino workers fell to 4.8% last month, the lowest level on records back to the 1970s. The rate for black Americans was 7.1%, the second-lowest monthly rate, bested only by April 2000’s 7% reading, according to the Labor Department. The decline in unemployment for blacks and Hispanics comes with a significant caveat: Both June lows are higher than the 3.8% rate for whites, and the 4.4% overall rate.
These changes will define, and perhaps undermine, our economy by creating a dearth of new workers. Between 2013 and 2025, the number of high school graduates in our state is expected to drop by 5 percent, compared to a 19 percent increase in Texas, 10 percent growth in Florida and a 9 percent rise in North Carolina. Some, of course, may hail these trends. Environmental activists and their allies in the density lobby generally prefer a childless population, both to cut greenhouse gas emissions and to expand their influence. Some tech-oriented futurists may even suggest that robots will replace all but the most skilled of workers, making additional children more a burden than a blessing. Yet, for California employers — at least until the technological nirvana — a labor shortage, particularly in skilled trades, could prove troubling in the near-term, and even medium-term, future. Historically, California could count on migration from both the rest of the nation and abroad. But this seems to have changed dramatically. The state has lost more domestic migrants than it has gained since at least 2000. Net immigration, the other lodestone of our labor force growth, has also slowed.