Judging by the headlines, there is nothing to be happy about. We are in the midst of a seemingly endless pandemic, mental health is deteriorating, political polarization is historically high, the planet is heating up, and soaring inflation dominates economic news.
But take a step back and the picture becomes less gloomy. In many ways, life in the United States is improving. This is in part because the growth of the economy and stock prices in the United States, driven by the technology sector, is and will continue to be much stronger than in most other advanced economies. The pie gets bigger.
In addition, a tight labor market and faster wage growth benefit workers, especially in manual and in-person service jobs. The pie is more evenly distributed. And the shift to remote work is allowing millions of Americans to spend less time traveling and living in bigger, better homes.
These trends are expected to continue for years to come. Here are 12 reasons why life in the United States is improving:
The United States is growing faster than most other advanced economies thanks to its technology sector
1. The technological engine. Since 2017, the US economy has grown significantly faster than most other advanced economies, especially those in Europe. Higher labor productivity and rapid growth of the technology sector have boosted this. One of the main comparative advantages of the United States is in technology, which happens to be one of the fastest growing sectors in the world economy.
2. Gains in technology company stocks and stock prices. Owners, shareholders, and workers of tech companies disproportionately benefit from these gains. Over the past five years, the financial assets of U.S. households have grown by more than 50%, largely due to the growth of technology companies. US stock indices have risen much faster in recent years than those of most other countries. Some of the gains will extend beyond the owners of the shares. Tech workers and businesses spend a large portion of their income on goods and services in the communities in which they live and operate, which will generate jobs and income for all workers.
3. Technological growth will not stop. The pandemic has dramatically accelerated the shift to online activity and the digital transformation of businesses and consumers, which would otherwise have taken years. This leads to faster growth in global technology demand. This helps the United States to dominate specific technology industries that have experienced rapid growth in recent years, such as online shopping and payments, cloud services, cybersecurity, commercial software, social media, online advertising and on-demand entertainment content. . There is no sign it will slow down anytime soon.
Workers get a bigger slice of the pie, especially lower paid workers
4. Tight labor market drives wage growth. The share of workers’ compensation in GDP has increased in recent years, driven by the tightening labor market in the United States and faster wage growth. Basically, the baby boomers were retiring and the associated stagnation in the number of working-age people. That number itself declined in 2020 and 2021 – for the first time in U.S. history – and with more baby boomers reaching retirement age, it is unlikely to change over the course of time. of the next decade.
5. Rapid wage growth will continue. Labor shortages in the United States in the second half of 2021 were the most severe in decades. The reduction in labor supply due to the pandemic has been behind much of the squeeze. Most of the impact of the pandemic will likely be gone in a year or two, but labor shortages will persist for the rest of the decade. Job growth, especially in in-person service industries, is likely to be strong in 2022. By 2023, the unemployment rate is likely to reach 3%, the lowest in about 70 years. History shows that once unemployment begins to fall, it will continue to do so until a few months before the next recession. Therefore, the unemployment rate is expected to remain historically low over the next 5-10 years and a tight labor market will push wages up.
6. It is a labor market. Higher wages aren’t the only way tight labor markets are helping workers. First, the risk of being made redundant is lower. Second, workers are more likely to move on to better jobs. Third, social benefits, other non-monetary job characteristics, and overall job satisfaction tend to improve in tight labor markets.
Wage inequalities and poverty are declining
seven. Non-university salaries are growing faster. Workers without a university degree have experienced tighter labor markets than those who have since 2016. The discourse on slowing the growth of the working-age population masks two opposing educational trends: the number of working-age people bachelor’s degree holders increase by around 2% per year. while the number of unlicensed people willing to take on manual jobs is declining. This is likely to support the labor shortage and rapid wage growth among manual workers over the next decade. Strong wage growth for manual workers has led to declining wage inequalities and poverty rates over the past seven years – and will likely continue to do so for the rest of the decade.
8. Manual workers can’t work remotely – and will be better paid. Because blue collar jobs cannot be distant, they will become relatively less attractive. This means that the number of workers entering these occupations is likely to decline and may cause employers to offer higher wages to fill the positions.
9. Focus more on equity. American businesses are more focused on equal opportunity, with business leaders indicating a desire to diversify further. Indeed, US CEOs told the Conference Board in late 2020 that recruiting a more diverse workforce and creating a more inclusive culture would be among the top human capital management issues of 2021. This focus can reduce racial wage gaps. The difference between what white and black workers earn started out big and only increased in the 2010s, despite efforts to reduce it. But that trend reversed between 2019 and 2021. Conference Board research shows that more black workers are finding well-paying jobs, a possible result of social protests and the growing commitment of American companies to racial equity. .
Teleworking improves quality of life
ten. Less trips and bigger houses. At some point in their lives, many workers have had to decide whether to live in smaller houses close to their work in city centers, in part to reduce commuting time, or to live in larger houses. larger more distant. Now they can do both.
11. Well-paid jobs more geographically distributed. In the decade or two before the pandemic, growth in the highest paying jobs occurred in a handful of coastal cities. As remote working expands, companies are expanding their businesses and hiring well-paying employees elsewhere. This will lead to a more even geographic distribution of income and wealth in the United States.
Jobs are improving
12. The number of good jobs is increasing. New entrants to the workforce tend to be more educated than their predecessors and are likely to have more rewarding careers. Between 2000 and 2021, the share of executives and executives in total employment rose from 34 to 43%. The long-term shift from manual services and routine clerical jobs to more satisfying professional jobs is expected to continue, further increasing overall job satisfaction.
COVID-19 spreading faster than ever, it’s hard to see half the glass full. But history can judge the 2015-2030 period as one of a significant improvement in the quality of life for most Americans, especially compared to other advanced economies. Maybe there is something to be happy about after all.