Docstoc

Exhibits MGI Africa

Document Sample
Exhibits MGI Africa Powered By Docstoc
					                                          Preparing a Workforce
                                          for the Next Arizona
                                          Economy


                                          McKinsey & Company

                                          November 17, 2011




CONFIDENTIAL AND PROPRIETARY
Any use of this material without specific permission of McKinsey & Company is strictly prohibited
The US has lost 3 to 5 times as many jobs as those lost in
any other post-war recession
Millions of jobs lost from peak prior to recession

                                           1990-91                  1981-82                2001-2010




                                               1.8

                                                                        2.8



                                                            5X
                                                                                     3X




                                                                                                 8.8



SOURCE: U.S. Bureau of Economic Analysis; U.S. Bureau of Labor Statistics; McKinsey Global Institute analysis   McKinsey & Company   | 1
The US is a long way from recovering the lost jobs
Millions of jobs


                                          2007-2010                 2010-2011                Net jobs lost




                                                                                                 -6.7
                                                                        2.1

                                              -8.8



SOURCE: U.S. Bureau of Economic Analysis; U.S. Bureau of Labor Statistics; McKinsey Global Institute analysis   McKinsey & Company   | 2
Unemployment rates vary by degree level
Percent




    College graduates                                                              4.2



    Young college graduates                                                                           14.5



    Young high school graduates                                                                                          24.5



    Young people without a high school diploma                                                                                          34.6




1 Total employment equals the number all employed workers in the economy, including full-time, part-time, and self-employed
2 Net employment change as a share of total employment in the base year (e.g., 1990 for 1990s)

SOURCE: U.S. Bureau of Economic Analysis; U.S. Bureau of Labor Statistics; McKinsey Global Institute analysis           McKinsey & Company   | 3
In the long term, the cost of unemployment is in the
trillions of dollars
USD billions                                                         4,500
                                                        Lost lifetime income for
                                                         today’s unemployed


                                                                  2,500
                                                            Lost output due to
                                                             unemployment

                                                                     400
                                                                    UI pay-
                                                                     outs




SOURCE: U.S. Bureau of Economic Analysis; U.S. Bureau of Labor Statistics; McKinsey Global Institute analysis   McKinsey & Company   | 4
A quarter of Americans surveyed “feel the American dream
is not really alive today”
Percent of surveyed
                                     27




                              15

                       11




                      1986   2003   2011



                                             McKinsey & Company   | 5
A new job market?




                    McKinsey & Company   | 6
The period between GDP recovery and employment
recovery has been increasing
                                Gap between GDP returning to pre-recession peak and
                                employment returning to pre-recession peak
                                Months
                                                                            “Jobless recoveries”
                                                                                                                                          ?


                                                                                                                               39




                                                                                                                     15

                                   6           7          6           6           8                       6
                                                                                              3                                           8

Year in which the              1948        1953        1957        1960        1969        1973        1981         1990      2001 20081
recession began
1 GDP returned to its pre-recession peak in December 2010

SOURCE:     U.S. Bureau of Labor Statistics; U.S. Bureau of Economic Analysis; McKinsey Global Institute analysis         McKinsey & Company   | 7
In contrast to the past, firms today are more likely to lay off
workers during a recession than suffer declines in
productivity
Contribution to change in real GDP during recessions
Compounded quarterly growth rate,1 peak to trough (%)
             100% = -0.65          -0.53        -0.45                                               -0.27                -0.70


    Employment loss                    32
                                                            51

                                                                                 75
                                                                                                      98                   98

    Productivity loss                  68
                                                            49

                                                                                 25
                                                                                                       2                    2
                                  1973–75              1981–82              1990–91                 2001              2007–09
1 Calculated from the onset of recession to trough of GDP. Calculations use real GDP estimate (2005 chained dollars) and total employment (full time
  and part time) for workers ages 16 and over.

SOURCE: US Bureau of Labor Statistics; US Bureau of Economic Analysis; McKinsey Global Institute analysis                 McKinsey & Company     | 8
The number of new businesses has declined dramatically
in this recession
Change in number of private-sector establishments launched every year
March 1993 to March 20101, thousands

                                                                 667          656                         -23%
   634        631                                     633                           627
                        612       609       603
                                                                                             548
                                                                                                       505


                                                                                                               The US would
                                                                                                               have 1.8 million
                                                                                                               more jobs had
                                                                                                               the 2007 rate
                                                                                                               of start-ups
                                                                                                               continued



  2000        01         02        03        04        05         06          07    08        09      2010
1 Calculated using U.S. Bureau of Labor Statistics Business Employment Dynamics data set. The annual number indicates the number of businesses
  less than 1 year old that were in existence in March of that year.

SOURCE: U.S. Bureau of Labor Statistics; McKinsey Global Institute analysis                                          McKinsey & Company     | 9
Low-skill occupations had the                                                             >500,000 job loss                  <1,000 job change
                                                                                          >100,000 job loss                  1,000-10,000 job gain
highest job losses in all sectors                                                         10,000-100,000 job loss            >10,000 job gain
Annual net employment change from 2007–20091                                              1,000-10,000 job loss
Thousands of jobs
                                                                        Most significant source of occupational training
                                                                                                                   Bachelor’s
                                                         On-the-job   Work     Vocational     Associate Bachelor’s plus work Graduate
                                                          training  experience   award         degree    degree experience    degree
           Manufacturing
           Administrative & support services
           Retail
           Construction
           Finance and insurance
Industry




           Transportation and warehousing
           Business services
           Wholesale
           Real estate
           Accommodation & food services
           Educational services
           Government
           Health care

1 Calculated using U.S. Bureau of Labor Statistics Occupational Employment statistics data, which do not include farm, self-employed, or new entrants
  to the labor market

SOURCE:             U.S. Bureau of Labor Statistics; McKinsey Global Institute analysis                                   McKinsey & Company     | 10
The unemployment rate varies widely across the                                                >10%
                                                                                              9–10%
country                                                                                       8–9%
Unemployment rate, December 2010
% unemployed                                                                                  7–8%
                                                                                              6–7%
                                                                                              5–6%
                                                                                              <5%




SOURCE: U.S. Bureau of Labor Statistics; McKinsey Global Institute analysis   McKinsey & Company   | 11
Mobility in the United States has been declining since 1990
and is at a 50-year low
Annual domestic migration rate, 1948–2009
% of residents who have changed addresses during the past year

22
20                                                                                                               Long-run
18                                                                                                               average =
16                                                                                                               18%
14             In the 1950s and 1960s,
               1 in 5 Americans changed
12             residences every year . . .                                    . . . but that figure
10                                                                            has now dropped
  8                                                                           to 1 in 10
  6
  4
  2
  0
      1950                1960               19701                1980          1990            2000      2009

1 Data from 1970–1981 are interpolated due to data constraints.

SOURCE: U.S. Bureau of Labor Statistics; McKinsey Global Institute analysis                            McKinsey & Company   | 12
Are we asking the
right question?




Cyclical | Structural |   Institutional


                                 McKinsey & Company   | 13
                                                                                                                        MCKINSEY CONFIDENTIAL AND PROPRIETARY


How many jobs does the US economy need to
produce?
  Employment needed to achieve 5% unemployment rate by 2020
  Millions


  Employment
                                                                            139.1
  In 20101



  Replace lost jobs                                                            7.1

                                                                                                                                      21 million
  Net new entrants
                                                                                                    14.3
  to workforce2


  Full employment
                                                                                                                         160.4
  in 20201


1 Total employment, including self-employed and part-time workers
2 New entrants include student inflows, net immigration inflows, return of discouraged workers, and exits of retirees

SOURCE: Bureau of Labor Statistics’ Current Population Survey; McKinsey Global Institute analysis                               McKinsey & Company   | 14
Is it possible to produce 21 million jobs?

                                                                                                                              Real GDP
               Net employment change                                                                                          compound
                                                                                                Increase in total             annual
               Total employment1                                                                employment2                   growth rate
               Millions                                                                         Percent                       Percent
1950s                                6.9                                                           12                             3.5
1960s                                                   12.9                                       20                             4.2

1970s                                                                           20.6               26                             3.2

1980s                                                                        19.5                  20                             3.2

1990s                                                                    18.1                      15                             3.4

2000-07                                      9.2                                                    7                             2.4

2000-10                2.2                                                                          2                             1.7


1 Total employment equals the number all employed workers in the economy, including full-time, part-time, and self-employed
2 Net employment change as a share of total employment in the base year (e.g., 1990 for 1990s)

SOURCE: U.S. Bureau of Economic Analysis; U.S. Bureau of Labor Statistics; McKinsey Global Institute analysis           McKinsey & Company   | 15
▪ Has automation and information technology
 permanently reduced the need for workers?

Has globalization permanently priced US
 workers out of the global labor market?

Does growth in non-traded sectors come at
 the expense of traded sectors?

                                 McKinsey & Company   | 16
How must
institutions
change?




               McKinsey & Company   | 17
▪ How must schools, colleges and universities
 change what and how they teach?

How must businesses change the way they
 recruit and train?

How should government change its
 priorities and the way it operates?

                                  McKinsey & Company   | 18
Skill   Share



Spark   Speed


        McKinsey & Company   | 19
Ensure more Americans acquire the skills that match
employers needs
      Demand vs. supply – 2020 projections                                                 Difference
      Millions
                                                                              168.9
                                  163.3
      No high school diploma       13.6                                        19.5           +5.9


      High school graduate                               43.3                  44.1           +0.8


      Some college, no degree                            30.7                  29.1           -1.6

      Associate degree                                   17.7                  19.6            1.9


      Bachelor’s degree
                                                         58.0                  56.5           -1.5
      or higher


                                                     Demand1                  Supply

1 Labor demand from MGI high job-growth scenario

SOURCE: U.S. Bureau of Labor Statistics; McKinsey Global Institute analysis            McKinsey & Company   | 20
Help US workers to win market share
                                                               Potential visitors lost
                                                               Actual overseas visitors
        Number of overseas visitors in the US
        Millions

                                                               36
                                                          34                34
                                                     31
                                                29             11
         26                             27                10                11
          0        24   24                      7    9
                                23       7
                    2    5       5


         26                                               24   25
                   22                           22   22                     24
                        19      18      20




        2000       01   02      03      04      05   06   07   08           09


SOURCE: WTTC                                                   McKinsey & Company   | 21
Restore the new business growth engine
                                                                                               Entire economy without startups
                                                                                               Entire economy
    Net job creation in US establishments
    Thousands of employees
      5,000
      4,000
      3,000
      2,000
      1,000
          0
     -1,000
     -2,000
     -3,000
     -4,000
     -5,000
     -6,000
     -7,000
                77       79      81       83      85      87          91   93   95   97   99   01    03    05     07    09

1 Startups refer to new businesses, i.e. firms less than 1 year old

SOURCE: BDS, Kauffman                                                                                  McKinsey & Company   | 22
Speed up processes

 US has a lengthy and complicated set of regulatory/                                This lack of speed can act as a major
 permitting requirements                                                            competitive disadvantage


                                                                 EPA
                                                                                       “It is much easier to site and
                                                                                       build a factory in China than it
 A power plant built in Wisconsin                                US Army Corp          is in the US. For a
 required 46 environment approvals                               of Engineers          manufacturer, two year
                                                                                       advantage in building a plant
                                                                                       may be everything”
                                                                 FAA


                                         46 environ-
                                                                 FERC
                                        mental reviews


                                                                 Six state
                                                                 agencies              “The real threat to our industry
                                                                                       is the slow, cumbersome, and
                                                                 State historical      out-of-date system that we use
                                                                 society               to manage our”

                                                                 City, country,
                                                                                            - Executive of Corporation
                                                         Other
                                                                 and others



SOURCE: RFF “Reforming Permitting”; expert interviews                                                 McKinsey & Company   | 23
Skill   Share



Spark   Speed


        McKinsey & Company   | 24
Why can't students, workers, and
employers have as useful
information as marketers and
investors?                McKinsey & Company   | 25
Why shouldn't what you learn on
the job be worth as much as what
you learn in school?       McKinsey & Company   | 26
How can we turn the unemployment
system into a re-employment
system?                  McKinsey & Company   | 27
▪ Incentives and support to innovate

▪ Make it easier to invest in the US

Prioritize a high skill, high share, high
 spark, and high speed economy


Joint commitment to solving these issues

                                     McKinsey & Company   | 28
Thank you




            McKinsey & Company   | 29
McKinsey & Company   | 30

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:9
posted:2/18/2012
language:English
pages:31