Fewer Skills Equals Less Growth: How A Less-Skilled Workforce Is Slowing U.S. Productivity

February 29, 2016

Much has been written about how, even as other aspects of the economy continue to recover or have already passed their pre-recession levels, the amount of U.S. apprenticeships continues to lag behind.

Why is this an issue? Fewer apprenticeships and training programs mean workers are not going to be as skilled as they once were. And, as The Wall Street Journal reports, J.P. Morgan Chase thinks this less-skilled American workforce is a contributing factor as to why U.S. productivity growth has stalled.

Over the last few years, the growth in “labor quality,” a measure of the skill set to the average worker, has declined. Last year saw the smallest contribution of labor quality to GDP growth since 1979, as overall workforce skills contributed less than 0.1 percentage points to that growth.

Comparatively, between 1980 and 2005, the growth in labor quality contributed about a third of a percentage point to GDP growth each year.

The solution to this problem is simple; increase workers’ skill levels with more education. However, while the solution may be simple, the execution will be a little trickier to pull off in the most effective way possible.

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