In the United States, the manufacturing sector is critical to the economy once again. But les bons temps may not roll for long.
New research from McKinsey partner Brooke Weddle and coauthors finds that the market for skilled laborers in the United States is about to get squeezed: by 2032, there will be roughly 22 times more new hires in critical skilled-trades roles than there are new jobs in those categories (such as carpenters, construction laborers, and electricians). Translation: turnover in these jobs will be high and could cost US companies more than $5.3 billion every year in talent acquisition and training costs alone.
What does this have to do with Gen Z? The combination of the aging US population and too few young people entering the trades means the manufacturing and skilled-labor pool is shrinking—fast. (BTW, it’s not just the US manufacturing sector that’s confronting labor market and productivity challenges: a key part of Africa’s growth lies in ensuring millions of young people can step into manufacturing jobs, while India could become a manufacturing powerhouse if it can also improve worker productivity.)
Let’s first examine why Gen Z may not be interested in skilled labor roles, which can offer great job security, benefits, and high pay without shelling out for a four-year college degree.
Despite recent headlines that call Gen Z the “toolbelt generation,” for some, there’s still a stigma associated with pursuing a trades job. One survey Weddle’s team cited found that among 1,000 US-based 18-to-20-year-olds, 74 percent perceive a stigma associated with choosing vocational school over a traditional four-year university. Meanwhile, 79 percent of respondents said their parents wanted them to pursue a college education after high school; only 5 percent said the same about vocational school.
That stigma has resulted in a decline in the share of Gen Zers in the manufacturing workforce, according to McKinsey senior partner Fernando Perez and coauthors, even though more than 20 million Gen Zers have reached adulthood since 2019. (Conversely, older workers’ share of that same workforce has risen by about three percentage points, to 26.5 from 23.6 percent.) For those Gen Zers who are open to jobs in the trades, engagement is low, and they’re more likely to leave than older workers.
Manufacturers, like other businesses, can’t buy their way out of this hole. Traditionally, manufacturing companies offered dissatisfied workers more money to keep them around. But even if that option were affordable, it wouldn’t do much to keep Gen Z employees over the long term.
In a McKinsey survey of Gen Z workers in manufacturing, Perez and coauthors found this instead:
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