Exhibits: MGI Africa

Report
The future for
educated workers in
the United States
Economy
McKinsey & Company
July 12, 2012
CONFIDENTIAL AND PROPRIETARY
Any use of this material without specific permission of McKinsey & Company is strictly prohibited
The jobs challenge
is bigger than people think
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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
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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
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Unemployment rates vary by degree level
Percent
College graduates
Young college graduates
4.2
14.5
Young high school graduates
24.5
34.6
Young people without a high school diploma
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
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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 payouts
SOURCE: U.S. Bureau of Economic Analysis; U.S. Bureau of Labor Statistics; McKinsey Global Institute analysis
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A quarter of Americans surveyed “feel the American dream
is not really alive today”
Percent of surveyed
27
15
11
1986
2003
2011
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A new job market?
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The US is entering the third and likely longest “jobless
recovery” of the last 20 years
Gap between GDP returning to pre-recession peak and
employment returning to pre-recession peak
Months
“Jobless recoveries”
?
39
15
6
Year in which the
recession began
1948
7
1953
6
1957
6
1960
8
3
1969
1973
6
15
1981
1990
2001 20081
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
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1 In recent recessions, employment has suffered
disproportionately compared to productivity
How GDP decline is reflected in employment and productivity
Employment loss
32
51
75
Productivity loss
98
98
2
2
2001
2007–09
68
49
25
1973–75
1981–82
1990–91
SOURCE: U.S. Bureau of Labor Statistics; U.S. Bureau of Economic Analysis; McKinsey Global Institute analysis
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2 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 2010,1 thousand
-23%
667 656
634 631
633
627
612 609 603
548
505
The US would
have 2.4 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 US 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:US Bureau of Labor Statistics; McKinsey Global Institute analysis
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3 Mismatch: Workers don’t have the skills to
transition from lost jobs to new jobs in
growing sectors
Change in number of jobs by field
Millions of jobs (2007 – 2011)
Change in number of jobs by education level
Millions of jobs (2007 – 2011)
1.4
1.6
-2.2
-2.2
Construction
Healthcare
-3.1
High school
dropouts
SOURCE: U.S. Bureau of Labor Statistics
High school
graduates
College
graduates
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3 Mismatch: The unemployment rate today
>10%
9–10%
varies widely across the United States…
Unemployment rate
% unemployed
8–9%
7–8%
North Dakota
3.5%
Michigan
11.2%
6–7%
5–6%
<5%
Nevada
13.4%
Virginia
6.3%
California
12.1%
South Carolina
11.1%
Texas
8.5%
SOURCE: U.S. Bureau of Labor Statistics; McKinsey Global Institute analysis
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3
… but 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
average =
18%
18
16
In the 1950s and 1960s,
1 in 5 Americans changed
residences every year . . .
14
12
. . . but that figure
has now dropped
to 1 in 10
10
8
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
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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
In 20101
Replace lost jobs
139.1
7.1
21 million
Net new entrants
to workforce2
14.3
Full employment
in 20201
160.4
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
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Is it possible to produce 21 million jobs?
Net employment change
Increase in total
employment2
Percent
Total employment1
Millions
1950s
6.9
1960s
12.9
1970s
20.6
1980s
19.5
1990s
18.1
2000-07
2000-10
9.2
2.2
Real GDP
compound
annual
growth rate
Percent
12
3.5
20
4.2
26
3.2
20
3.2
15
3.4
7
2.4
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
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Skill
Share
Spark
Speed
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Ensure more Americans acquire the skills that match
employers needs
Demand vs. supply – 2020 projections
Millions
163.3
No high school diploma
13.6
168.9
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
or higher
58.0
56.5
-1.5
Demand1
Supply
Difference
1 Labor demand from MGI high job-growth scenario
SOURCE: U.S. Bureau of Labor Statistics; McKinsey Global Institute analysis
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Help US workers to win market share
Number of overseas visitor arrivals in the
United States, 2000-2009
Potential visitors lost
Million
Actual overseas visitors
36
34
34
27
26
0 24 24
23 7
2 5
5
26
29
7
31
10
11
11
9
24 25 24
22
22
22
19 18 20
Estimated U.S. jobs lost due to shrinking
market share in international travel
Thousand
Hospitality services
55
Retail trade
Transportation
33
Other services
31
Arts and recreation
26
Financial services
24
Health care
21
Administrative support
20
Professional services
18
Manufacturing
200001 02 03 04 05 06 07 08 09
171
Other1
SOURCE: U.S. Travel Association; Oxford Economics; McKinsey Global Institute analysis
14
28
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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
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Speed up processes
US has a lengthy and complicated set of regulatory/
permitting requirements
This lack of speed can act as a major
competitive disadvantage
EPA
US Army Corp
of Engineers
A power plant built in Wisconsin
required 46 environment approvals
FAA
46 environmental reviews
FERC
Six state
agencies
State historical
society
Other
SOURCE: RFF “Reforming Permitting”; expert interviews
“It is much easier to site and
build a factory in China than it
is in the US. For a
manufacturer, two year
advantage in building a plant
may be everything”
City, country,
and others
“The real threat to our industry
is the slow, cumbersome, and
out-of-date system that we use
to manage our”
- Executive of Corporation
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Thank you
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