A crystal-ball look at US business
Cambridge, Mass. — A tricky Chinese proverb warns: Prediction is very difficult -- especially with regard to the future. Robert C. Holland, president of the Committee for Economic Development, is aware of the hazards of forecasting. Nonetheless, as head of a nonprofit research and educational organization of business and academic leaders devoted to the study of public-policy problems, Mr. Holland has regarded it as necessary to gaze into the future. How else could his group of prominent executives and academics decide what to study?
To polish up the crystal ball, some trustees and staff members of the committee spent 18 months talking with business leaders and academic experts on key economic issues that will significantly affect the future of business and society in America.
They found, Mr. Holland noted over breakfast here, some fundamental forces that will need to be taken into account:
* Changes in the structure of the population and labor force.
In the 1980s, the labor force is likely to be more stable and potentially more productive than the labor force of the 1970s.
This is primarily because a much larger percentage of the population and the work force than in the 1970s will be in the 25-to-44 age category. The trend reflects the age of the postwar "baby boom" generation. At that age, individuals usually have a more regular attachment to the labor market than younger or even older people.
Moreover, the work force of the 1980s will be substantially better educated than in the past, despite failings in the educational system.
Women are also expected to continue the trend of the 1970s of going to work in offices and factories. Some forecasters predict that by 1990, the female participation in the labor force will rise to something like 60 percent, from the 51 percent rate recorded in early 1979.
Such changes in labor force composition may make it easier to achieve somewhat lower overall unemployment rates, given a specific level of business activity and growth.
However, with relatively fewer youths entering the labor force, there could be shortages in the supply of workers for skilled entry-level positions.
* The ratio of those working to those not working could decline in this decade.
In other words, those employed will be supporting, per capita, fewer children , students, and retired people. But as the baby boom generation retires after the turn of the century, this "dependency ratio" will rise sharply. So there must be adequate planning in this decade in such areas as social security and pension design.
* The character of work will change.
The United States will become more and more dependent on professional, technical, and clerical skills rather than on muscle power. Over 60 percent of employment is now attributable to service industries. Some 51 percent of the work force was classified as white collar in 1979, only 33 percent as manual or blue collar. A quarter consisted of professionals and service-type people.
The character of office work could well be drastically changed by the application of computers to this activity.
Managers will respond to the growing desire of employers to have their jobs "humanized" -- redesigned to improve the quality of work life. There could be more flexible arrangements in work hours or even in the pace of work. More people may share jobs and work only part time.
* The public will increasingly question the fairness and reasonableness of economic decisions.
This trend will likely affect both business and government policymakers. Objections, demonstrations, litigation, or new legislation would increasingly restrain management in such areas as hiring, firing, job assignments, plant location, plant closings, product design, and the introduction or termination of a service or product line.
* International interdependence will grow.
Such integration of national economies will give borrowers in individual countries access to a much wider range of financing sources. But it will also sharply reduce the scope for independent actions in monetary policy by nations.
Inflation and recession will continue to spready easily across national borders. So will "supply shocks," arising from such problems as oil shortages or poor harvests.
* The less-developed countries will become more important.
A continued increase in the relative political and economic power of these nations will arise in part from the increased influence of the oil-producing nations and the surplus funds at their disposal. It also will reflect the growing industrial might of such nations as Brazil, Mexico, South Korea, and Taiwan.
The growing significance of these lands in the markets for manufactured products of the industrial nations will be enhanced by a similar growing influence in the international political arena and in international organizations and lending institutions.
Mr. Holland's collection of predictions is relatively conservative. They could even come true.