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New Labour Report Highlights Structural Shift in the Workforce

Stockhouse Editorial
1 Comment| February 11, 2022

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An investment firm released a macro report this week that highlights how current job market trends are rewriting the narrative on inflation and creating a new regime for capital allocators.

In the report, titled Labor in Transition by the CIO of KKR & Co. Inc. (NYSE: KKR, Forum), Henry McVey, the structural changes in today’s job market are contributing to a higher resting rate for inflation, a backdrop they believe is creating a new regime for capital allocation.

He said that even before the pandemic, his team’s macro forecasts had been signaling that a structural shift in the US employment market was taking place.

“Indeed, despite significant progress in key areas such as automation and digitalization in recent years, the United States still remains short of qualified workers to satisfy its growth demands. Now, under the cloud of COVID, a perfect storm has been brewing.”

The report also found that the US job market is the tightest it has been in 50 years. Long-term demographic trends and pandemic-related disruptions, including a wave of early retirements, a pause on immigration flows, new challenges around family care and difficulties reintegrating discouraged workers into the workforce have all come together to create a significant and persistent worker shortfall.

The KKR team estimates that 2.1 million of the total 3.9 million erosion in the work force since 2019 may be more structural and permanent in nature. They also disagree with projections from the US Federal Reserve that the workforce participation rate will increase. Over the last three months it has averaged 62%, versus 63.4% pre-pandemic.



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