By just about any measure, President Trump will inherit a strong economy on Inauguration Day, 2017. Unemployment is at its lowest level since the summer of 2007. Wage growth is increasing for the first time since 2009, accompanied by productivity that has risen to a two-year high of 3.1 percent. The overall economy grew 3.5 percent in the third quarter, bolstered by exports and consumer spending.
Even the beleaguered manufacturing industry is seeing job openings returning to pre-recession levels, and factory activity is trending upwards to its highest levels in 18 months. Amid the solidly expanding economy and tightening labor market, the Federal Reserve raised its benchmark interest rate, only the second rate hike since December 2008.
What a difference a year makes, even in a good year
Around this time last year there was still some residual sting left over from the Great Recession. Many jobseekers were spooked by predictions of a near-term recession, amid indications of labor market weaknesses and decreased overall spending. But as 2017 begins, those and other risks have faded, reducing the probability of recession to 16.5 percent, as business earnings and investment continue to trend up.
Jobseekers can approach the job search in 2017 with real confidence, as there is more than enough momentum for the favorable economic conditions to continue through the first year of the Trump presidency.
Overall economic growth for 2017 is expected to hold steady at 2.4 percent, while unemployment is likely to decrease slightly to 4.4 – 4.5 percent. Wage growth will likely continue to rise as the labor market remains tight. Hiring and job creation should follow 2016 levels, as the economy approaches what many believe to be full employment.
What if the economy threw a party and no workers showed up?
As just mentioned, most economists agree that the labor market is approaching full employment, meaning that the supply of workers is running out, and employers are going to have to become a lot more resourceful when it comes to tapping new job pools.
One source of additional workers is the long-term unemployed. At present there are approximately 2.2 million persons desiring work but that have given up the job search, and thereby remain barely attached to the workforce or have exited it altogether.
However, many worry these workers are not hire-ready, particularly regarding work skills and workplace demeanor, both of which are constantly being reinvented by technology and demographics. Yet even if most prime-age discouraged and marginally attached workers were to return to the workforce, the effect on the overall economy would likely be only a 0.15 percent annual productivity increase, barely enough to move the needle.
In short, it is doubtful there is enough additional prime-age workforce capacity to grow the economy significantly. Labor shortages are especially acute in industries where Trump seems to favor investment and jobs creation, particularly in medium- to high-skilled roles.
Luring the long-term unemployed back into the workforce may not do much for economic growth unless it also includes more workers thanks to increased immigration, a solution towards which Trump has hitherto exhibited much intransigence.
With labor markets thus likely to tighten even more in 2017, hiring managers, recruiters, and HR leaders may need to truly think critically about how they access, source, and keep workers who belong to hitherto neglected categories of talent.
The soul of a new machine…is you
The other lever of economic growth is increasing the amount of output per worker, which typically involves technology, and in turn drives significant disruption. Workforce automation will likely be top headline news throughout 2017, as drones and self-driving vehicles become widely field tested, and productive property becomes redefined as smart devices linked by software platforms. How Trump’s hand will move this lever is also uncertain, as many workers at risk of losing their jobs to automation are also those whose jobs Trump pledged to save during his campaign.
As 2017 begins, jobseekers should be fully aware that for the foreseeable future, businesses are more inclined to invest in automation than human labor. Consequently, the onus is squarely on workers vulnerable to displacement to adapt, upskill, or reskill. Learning to become the manager of the machine is always a good career strategy, and one that puts 2017 jobseekers in a better position to take home more of the value they help create through increased productivity.
Yet perhaps the best strategy for 2017 is mastering skills in areas still out of reach by automation technology, especially people management, soft skills, caregiving, sales, creativity, and applying domain expertise.