How Global Economic Trends Are Driving Relocation
As the global economy shifts at an unprecedented pace, the role of global mobility managers is becoming increasingly complex and vital. Understanding the intricate web of free trade, technological advancements, and evolving workforce trends is crucial, given their profound impact on the nature and structure of today's work environment. This article explores the interplay between these variables and provides insights into their collective impact on job distribution and talent management.
Global Trade Dynamics and the Movement of Jobs
The last decade has witnessed significant shifts in global trade dynamics. While free trade fosters growth in total income at the country level, it also influences the distribution of jobs within and between nations.
A notable example is the United States, where manufacturing accounts for roughly 11 percent of total output and employs 8.4 percent of the workforce.1 Over the course of 40 years, the U.S. has seen a major migration of manufacturing jobs to countries with lower manufacturing wages. Manufacturing jobs have declined from 19.6 million in 1979 to nearly 13 million by November 2022, representing a 56 percent+ decrease when adjusted for population growth.2
As the manufacturing sector in the United States shrinks, this not only affects those directly employed in manufacturing but also results in a ripple effect, causing a substantial loss of jobs in secondary and tertiary industries. One study calculated that for every 100 jobs lost in durable manufacturing, 744.1 indirect jobs were lost through connections to sectors that provided materials for manufacturing and where manufacturing workers spent their income.3
Debate continues over the potential to restore these manufacturing jobs through policy changes, but the rising influence of technology and automation could irreversibly reshape the employment landscape in manufacturing.
Technology's Role in the Changing Workforce
Automation in industries, especially noticeable in sectors like automobile manufacturing, have drastically reduced the need for human labor. A modern automobile factory now operates with significantly fewer employees than it did four decades ago. Additionally, as exemplified by a shift towards battery electric vehicles (BEVs) with simpler, less part-intensive plans, broader technological advancements in product designs have the potential to further impact manufacturing jobs overall.4
This shift, while diminishing the number of manufacturing jobs, has increased the demand for higher-skilled labor. Consequently, the compensation per job in the manufacturing sector has risen, reflecting the need for more specialized skills. A 2021 Deloitte study reports the U.S. is expected to have 2.1 million unfilled manufacturing jobs by 2030, citing that, with technological advancements driving efficiency and productivity, “companies are willing to pay top dollar for skilled workers who can help them stay competitive in the global market.”5
With organizations facing increased challenges incentivizing both existing employees and new skilled workers to accept roles that involve relocation, offering competitive and cost-effective relocation benefits can prove to be a useful tool.
Economic Trends and Predictions
The current state of the global economy presents a mixed picture. While some regions experience modest growth, there's an overarching trend of slowing economic activity. This slowdown is partly attributed to significant increases in interest rates, the Federal Reserve’s response to a burst of inflation not seen in decades. The tightening of financial conditions by central banks aims to temper this inflation but comes at the cost of slowing down economic growth.
Predictions for the near future include the possibility of mild recessions in some areas. In a recent interview with NEI Global Relocation, Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae, stated,
“In the first half of next year, still it's close to a toss-up, but we still think there's likely to be a mild recession starting sometime in the first half of next year… Right now, growth is pretty good, but we think it's likely to slow into next year.”
The reasons range from rising costs of goods and services due to increased credit costs to dampened employment and income growth. “Even though the rate of inflation is falling, it's still positive and prices have not come back down to where they were,” Duncan continued. “Of course, the Fed is concerned about the pace at which wages rise, which can be a contributor to inflation. So, there's going to be this period of frustration as time needs to pass with inflation at or below 2% and real incomes rising faster than that for households to catch up.”
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Such economic concerns have profound implications for global mobility, affecting everything from talent acquisition strategies to compensation norms.
In the face of economic uncertainties, companies are sharpening their focus on roles crucial for enhancing operational efficiencies, such as HR business partners, process improvement specialists, and supply chain strategists. By focusing on strategic planning and efficient process management, these professionals help businesses navigate complex challenges, ensuring smarter and more effective use of resources. Simultaneously, with inflation impacting living costs, companies may reassess their compensation strategies. This could involve not only offering competitive salaries to attract key professionals, but also tailoring benefit packages to address the specific concerns of a workforce grappling with economic instability, such as increased healthcare coverage or flexible work arrangements.
As businesses recalibrate their talent acquisition strategies in response to economic challenges, understanding demographic shifts is the next essential consideration, given their significant impact on labor market dynamics and workforce availability.
Demographics and Labor Force Implications
Shifting demographic trends, particularly in developed countries like the U.S., are significantly impacting the labor force and emphasizing the need for immigration and corporate relocation strategies. Between 2009 and 2021, the U.S. saw a significant decrease in fertility rates, dropping by nearly 15 percent from 66.2 to 56.3 births per 1,000 women aged 15-44, as reported by the Center for Disease Control.6 With the birth rate now below the replacement level, this trend points to a potential future decrease in the domestic workforce.
“The discussion of immigration is a flash point, but at some point there's going to have to be a realistic assessment of what it is that we would like to achieve,” conveyed Duncan. “We will not replicate our workforce absent immigration.”
That flash point may have been reached. Though Congress has traditionally capped the limits on annual H-1B visa numbers at 65,000, the program could significantly change in October 2024. The Department of Homeland Security U.S. Citizenship and Immigration Services (USCIS) published a 94-page Proposed Rule in October to modernize the H-1B program requirements beginning in October 2024.7
Talent acquisition professionals and relocation managers will have to balance workforce needs with shifting immigration policies, ensuring that their staffing and relocation strategies align with the evolving demographic environment and labor market demands.
Adapting Talent Strategies in a Rapidly Evolving Global Economy
The interrelation between free trade, technology, demographics, and economic health creates a complex backdrop for Global Mobility and Talent Management leaders.
In the manufacturing industry alone, jobs are likely to change significantly in the next five to ten years due to rapid technological advances, and the skills companies seek in their future workforce may evolve. Global Mobility and Talent Management teams, both in manufacturing and across all industries, will need to continually adapt, balancing the costs of relocation benefits with their effectiveness in recruiting and retaining employees who are requested to move.
Staying abreast of trends is essential for developing effective strategies for global talent mobility, workforce planning, and corporate relocation. In an era marked by rapid changes and uncertainties, global mobility and talent managers will remain critical to guiding organizations through future economic landscapes.
Sources:
- Maquiladoras, Mexico’s engine of trade, driven to navigate evolving demand, by Jesus Cañas
- Forty years of falling manufacturing employment, by Katelynn Harris
- Updated employment multipliers for the U.S. economy, by Josh Bivens
- The stakes for workers in how policymakers manage the coming shift to all-electric vehicles, by Jim Barrett and Josh Bivens
- 2.1 Million Manufacturing Jobs Could Go Unfilled by 2030, NAM News Room
- Crude birth rates, fertility rates, and birth rates, by age, race, and Hispanic origin of mother: United States, selected years 1950–2019 and National Vital Statistics Reports, January 31, 2023
- Modernizing H-1B Requirements, Providing Flexibility in the F-1 Program, and Program Improvements Affecting Other Nonimmigrant Workers
How Global Economic Trends Are Driving Relocation
As the global economy shifts at an unprecedented pace, the role of global mobility managers is becoming increasingly complex and vital. Understanding the intricate web of free trade, technological advancements, and evolving workforce trends is crucial, given their profound impact on the nature and structure of today's work environment. This article explores the interplay between these variables and provides insights into their collective impact on job distribution and talent management.
Global Trade Dynamics and the Movement of Jobs
The last decade has witnessed significant shifts in global trade dynamics. While free trade fosters growth in total income at the country level, it also influences the distribution of jobs within and between nations.
A notable example is the United States, where manufacturing accounts for roughly 11 percent of total output and employs 8.4 percent of the workforce.1 Over the course of 40 years, the U.S. has seen a major migration of manufacturing jobs to countries with lower manufacturing wages. Manufacturing jobs have declined from 19.6 million in 1979 to nearly 13 million by November 2022, representing a 56 percent+ decrease when adjusted for population growth.2
As the manufacturing sector in the United States shrinks, this not only affects those directly employed in manufacturing but also results in a ripple effect, causing a substantial loss of jobs in secondary and tertiary industries. One study calculated that for every 100 jobs lost in durable manufacturing, 744.1 indirect jobs were lost through connections to sectors that provided materials for manufacturing and where manufacturing workers spent their income.3
Debate continues over the potential to restore these manufacturing jobs through policy changes, but the rising influence of technology and automation could irreversibly reshape the employment landscape in manufacturing.
Technology's Role in the Changing Workforce
Automation in industries, especially noticeable in sectors like automobile manufacturing, have drastically reduced the need for human labor. A modern automobile factory now operates with significantly fewer employees than it did four decades ago. Additionally, as exemplified by a shift towards battery electric vehicles (BEVs) with simpler, less part-intensive plans, broader technological advancements in product designs have the potential to further impact manufacturing jobs overall.4
This shift, while diminishing the number of manufacturing jobs, has increased the demand for higher-skilled labor. Consequently, the compensation per job in the manufacturing sector has risen, reflecting the need for more specialized skills. A 2021 Deloitte study reports the U.S. is expected to have 2.1 million unfilled manufacturing jobs by 2030, citing that, with technological advancements driving efficiency and productivity, “companies are willing to pay top dollar for skilled workers who can help them stay competitive in the global market.”5
With organizations facing increased challenges incentivizing both existing employees and new skilled workers to accept roles that involve relocation, offering competitive and cost-effective relocation benefits can prove to be a useful tool.
Economic Trends and Predictions
The current state of the global economy presents a mixed picture. While some regions experience modest growth, there's an overarching trend of slowing economic activity. This slowdown is partly attributed to significant increases in interest rates, the Federal Reserve’s response to a burst of inflation not seen in decades. The tightening of financial conditions by central banks aims to temper this inflation but comes at the cost of slowing down economic growth.
Predictions for the near future include the possibility of mild recessions in some areas. In a recent interview with NEI Global Relocation, Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae, stated,
“In the first half of next year, still it's close to a toss-up, but we still think there's likely to be a mild recession starting sometime in the first half of next year… Right now, growth is pretty good, but we think it's likely to slow into next year.”
The reasons range from rising costs of goods and services due to increased credit costs to dampened employment and income growth. “Even though the rate of inflation is falling, it's still positive and prices have not come back down to where they were,” Duncan continued. “Of course, the Fed is concerned about the pace at which wages rise, which can be a contributor to inflation. So, there's going to be this period of frustration as time needs to pass with inflation at or below 2% and real incomes rising faster than that for households to catch up.”
Such economic concerns have profound implications for global mobility, affecting everything from talent acquisition strategies to compensation norms.
In the face of economic uncertainties, companies are sharpening their focus on roles crucial for enhancing operational efficiencies, such as HR business partners, process improvement specialists, and supply chain strategists. By focusing on strategic planning and efficient process management, these professionals help businesses navigate complex challenges, ensuring smarter and more effective use of resources. Simultaneously, with inflation impacting living costs, companies may reassess their compensation strategies. This could involve not only offering competitive salaries to attract key professionals, but also tailoring benefit packages to address the specific concerns of a workforce grappling with economic instability, such as increased healthcare coverage or flexible work arrangements.
As businesses recalibrate their talent acquisition strategies in response to economic challenges, understanding demographic shifts is the next essential consideration, given their significant impact on labor market dynamics and workforce availability.
Demographics and Labor Force Implications
Shifting demographic trends, particularly in developed countries like the U.S., are significantly impacting the labor force and emphasizing the need for immigration and corporate relocation strategies. Between 2009 and 2021, the U.S. saw a significant decrease in fertility rates, dropping by nearly 15 percent from 66.2 to 56.3 births per 1,000 women aged 15-44, as reported by the Center for Disease Control.6 With the birth rate now below the replacement level, this trend points to a potential future decrease in the domestic workforce.
“The discussion of immigration is a flash point, but at some point there's going to have to be a realistic assessment of what it is that we would like to achieve,” conveyed Duncan. “We will not replicate our workforce absent immigration.”
That flash point may have been reached. Though Congress has traditionally capped the limits on annual H-1B visa numbers at 65,000, the program could significantly change in October 2024. The Department of Homeland Security U.S. Citizenship and Immigration Services (USCIS) published a 94-page Proposed Rule in October to modernize the H-1B program requirements beginning in October 2024.7
Talent acquisition professionals and relocation managers will have to balance workforce needs with shifting immigration policies, ensuring that their staffing and relocation strategies align with the evolving demographic environment and labor market demands.
Adapting Talent Strategies in a Rapidly Evolving Global Economy
The interrelation between free trade, technology, demographics, and economic health creates a complex backdrop for Global Mobility and Talent Management leaders.
In the manufacturing industry alone, jobs are likely to change significantly in the next five to ten years due to rapid technological advances, and the skills companies seek in their future workforce may evolve. Global Mobility and Talent Management teams, both in manufacturing and across all industries, will need to continually adapt, balancing the costs of relocation benefits with their effectiveness in recruiting and retaining employees who are requested to move.
Staying abreast of trends is essential for developing effective strategies for global talent mobility, workforce planning, and corporate relocation. In an era marked by rapid changes and uncertainties, global mobility and talent managers will remain critical to guiding organizations through future economic landscapes.
Sources:
- Maquiladoras, Mexico’s engine of trade, driven to navigate evolving demand, by Jesus Cañas
- Forty years of falling manufacturing employment, by Katelynn Harris
- Updated employment multipliers for the U.S. economy, by Josh Bivens
- The stakes for workers in how policymakers manage the coming shift to all-electric vehicles, by Jim Barrett and Josh Bivens
- 2.1 Million Manufacturing Jobs Could Go Unfilled by 2030, NAM News Room
- Crude birth rates, fertility rates, and birth rates, by age, race, and Hispanic origin of mother: United States, selected years 1950–2019 and National Vital Statistics Reports, January 31, 2023
- Modernizing H-1B Requirements, Providing Flexibility in the F-1 Program, and Program Improvements Affecting Other Nonimmigrant Workers
