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^ ^ e i in er ester FORECASTS FOR MANAGEMENT DECISIONMAKING 1729 H St. NW, Washington, DC 20006-3938 • KiplingerForecasts.com • Vol. 83, No. 13 Dear Client: Adding fuel to the immigration fire... The worker shortage is growing, and it defies any other short-term solution. Going vacant...jobs for the skilled: IT techs, engineers, machinists, accountants. And ones that too few Americans want: Roofers, busboys, janitors and landscapers. ~: Employers are being forced to pay more '~ ~ to find and keep reliable employees. That may compel some firms to raise prices, which will stir up inflationary pressures. But even higher wages won't be enough to alleviate the chronic skills deficiency. The labor force will keep ti~htenin~ as more baby boomers head for the exit door, with too few younger workers to replace them. Workforce growth will slow dramatically... from 1.1% now to an estimated 0.4% after 2010. Washington, March 31, 2006 Finding foreign workers is harder, too, as more overseas competitors join the fight for skilled em to ees More for d jGDP Growth slipping to 3.3% this year Ilnterest rates Prime rate reaching 8% __. i _ ................._.........._...........- _ Inflation Moderating to 2.8% Employment (2 million more jobs j Trade deficit '* ~ Rising to $730 billion, 5.6% of GDP Crude oil t Over $70 a barrel by June I"IOUSInQ sales NEW FORECAST Easing 6% to 7.85 million w ........................... _.............. -............ . i i Retail sales growth `! I Decelerating to 4% Complete economic outlook at Kip lingerForecasts.com/outlooks p y eign gra uates who used to stay and live in the U.S. will be lured away by companies in their home nations or elsewhere that now offer good jobs and high pay. U.S. offshore operations are already seeing hiring problems, as a once plentiful labor force finds it has many more job options. Competing for workers will require more creativity from firms. Start with keeping current staffers on board. Replacement costs add up quickly, so retention is easily the most cost-effective measure. Flexible policies are key to persuading some would-be retirees not to leave as well as to luring stay-at-home moms, at least part time. Job sharing, telecommuting and flextime work well for many employers. Some retail chains are now letting older employees in northern states take similar jobs in their southern stores during the winter months. Be willing to try new approaches. A dearth of bricklayers, for example, has architects designing with materials other than brick. Community colleges can be good partners in training workers, a huge headache for most employers that won't go away anytime soon. Many schools work closely with employers to provide customized programs. AARP and the U.S. Chamber of Commerce are helpful liaisons between employers and older job seekers. Trucking firms, for example, are among 20 industries working with the two to find employees over S0. To get details about the job help program, go to www.aarp.org/alliance. The Kiplinger Letter (ISSN 1528-7130) is published weekly for $117/one year, $199/Mro years, $263tthree years SubSCripti0n inquiries: 800-544-0155 orsubservices~akiplinger.com by The Kiplinger Washington Editors, 1729 H St., NW, Washington, DC 20006-3938. Periodicals postage paitl at Washington, DC. EdifOrial in/O/R18h0I1: Tel., 202-8876462; Fax, 202-778-8976; POSTMASTERS Send atldress changes to The Kiplinger Letter, P0. Bax 3295, Harlan, IA 51593. Email, letters@kiplinger.com; or Web site, KiplingerForecasts.crom