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By Jeremy Glaser and Robert Johnson, CFA | 02-19-2015 11:00 AM

Johnson: Labor Shortage Coming

Demographic trends could lead to a shortage of workers in the coming years, potentially boosting the wages of some skilled positions but hurting corporate earnings, says Morningstar's Bob Johnson.

Note: Because Bob Johnson was traveling this week, we are running this recently filmed video report in place of his regular weekly column.

Jeremy Glaser: For Morningstar, I'm Jeremy Glaser. Our director of economic analysis, Bob Johnson, thinks that labor scarcity will be one of the big themes in the years to come. He is here today to walk us through some of the data underlying that idea.

Bob, thanks for joining me.

Bob Johnson: It's great to be here today.

Glaser: Let's start with why you think this labor scarcity is coming. It seems like we are still talking about recovering from the huge amount of unemployment we had during the recession. Why is it time to start talking about a shortage here?

Johnson: Well, I think the time is now, and I think that 2015 will be the first year that we really see some of the major signs of the data. We have already begun to see some early signs, which is why I'm thinking this theory is coming true. We have seen initial unemployment claims come down. And as a percentage of the population, we are actually at the lowest level in history--right here, right now. That's a very forward-looking metric.

The current unemployment level is also a decent metric to use to gauge the scarcity. The natural unemployment rate, to pick a number--and you can ask different economists--it's 5% to 5.5%. We're at around 5.8% right now. We are almost back to what people consider the natural unemployment, and that's when you are going to start to see some of these scarcity issues creep in.

Certainly, the job-openings report, as Yellen has highlighted, has become much more important economic metric. And we have seen the number of job openings--that is, they call up a business say, "How many positions do you have open?"--increased over five million openings. That's a huge number compared with the two million or three million level we had in the middle of the recession. Even going back to 2000, the first year they started collecting this data, that five million is the highest number we have ever had. So, it's really become a big indicator of, I think, the coming scarcity. Certainly, small businesses--the National Federation, there, has said that the number of companies finding it hard to fill positions has gone up every month recently. So clearly, we are seeing the data there, too.

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