Post on 17-Jun-2020
transcript
McKinsey & Company | 0
Retooling America’s economic engine: Perspectives on growth, job creation, and innovation
McKinsey Global Institute
December, 2011
CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of McKinsey & Company is strictly prohibited
McKinsey & Company | 1 1
Today’s discussion
SOURCE: McKinsey Global Institute
Challenge of US Growth & Renewal
▪ Productivity ▪ Job creation ▪ Innovation
Solutions: Rising to the Challenge
▪ High spark ▪ High skill ▪ High share ▪ High speed
McKinsey & Company | 2
Contributions to growth in real U.S. GDP, overall economy Share of compound annual growth rate, 1960-2008, %
SOURCE: U.S. Bureau of Economic Analysis; U.S. Bureau of Labor Statistics; McKinsey Global Institute analysis
1 2000-08 data used for 2000s
4665
53 47
20
Increases in value added per worker (productivity)
2000s1
2.1
80
1990s
3.3
53
1980s
3.2
47
1970s
3.1
35
1960s
4.1
54
100% =
Increases in the workforce (labor inputs)
The U.S. now must rely on productivity gains for GDP growth PRODUCTIVITY
McKinsey & Company | 3
Productivity growth rates Compound annual growth rate, %
2.2
1.1
1.5
1.8
1.6
2.1 2.3
1960s
1970s
1980s
1990s
2000s1
1 Includes 2000-08
Productivity gain required …
The productivity gains needed to sustain historic GDP growth rates are ambitious
SOURCE: U.S. Bureau of Economic Analysis; Census 2009 population estimates; McKinsey Global Institute analysis
PRODUCTIVITY
To sustain historical 2.8% GDP growth, a 44% increase from the ’00s
To sustain historical 1.7% GDP per capita growth, a 31% increase from the ’00s
McKinsey & Company | 4
-4.5
42 0 6 12
-0.5 -1.0 -1.5 -2.0 -2.5 -3.0
-6.5
-3.5
-4.0
-5.0
-5.5
36
-6.0
30 18 24
The US employment decline in this recession was more than twice as large as in previous postwar recessions
1 Total nonfarm employment, seasonally adjusted.
SOURCE: US Bureau of Labor Statistics; McKinsey Global Institute analysis
US employment decline from peak1 %
Months since employment peak
July 1974 – January 1976
March – November 1980
July 1981– October 1983
June 1990 – January 1993 February 2001–
January 2005
January 2008 – May 2011
JOB CREATION
▪ Lost 8.3 MM jobs during the recession
▪ Remains 7.2 MM jobs below pre-recession peak
▪ US must create 200k jobs a month to regain levels
McKinsey & Company | 5
1 GDP returned to its pre-recession peak in December 2010
The gap between GDP and employment recovery is growing
SOURCE: U.S. Bureau of Labor Statistics; U.S. Bureau of Economic Analysis; McKinsey Global Institute analysis
6
39
15
63
86676
2001 1981 1990 1973
?
20081 1960 1969 1957 1948 1953
Year in which the recession began
“Jobless recoveries”
Gap between GDP returning to pre-recession peak and employment returning to pre-recession peak
Months
JOB CREATION
▪ Changing competi-tive dynamics of economy (e.g., workers carrying almost the entire burden of recession)
▪ Growing mismatch between – Location – Skills – Industries
▪ Fewer new companies coming along to create jobs in the first place
McKinsey & Company | 6
02468
10121416182022
Long-run average = 18%
2009 2000 1990 1980 19701 1960 1950
US mobility has been declining since 1990 and is at a 50-year low
SOURCE: U.S. Bureau of Labor Statistics; McKinsey Global Institute analysis
1 Data from 1970–1981 are interpolated due to data constraints.
Annual domestic migration rate, 1948–2009 % of residents who have changed addresses during the past year
JOB CREATION
In the 1950s and 1960s, 1 in 5 Americans changed residences every year . . .
. . . but that figure has now dropped to 1 in 10
McKinsey & Company | 7 SOURCE: Moody’s Analytics; McKinsey Global Institute analysis
The high job-growth scenario is the only one that returns the United States to 5 percent unemployment by 2020
Employment demand scenarios Millions of net new jobs, 2010 - 2020 22.5
17.4
9.3
High Middle Low
77 145 187 Average net new jobs per month Thousands of jobs
Need 21 million new jobs to return to 5% unemployment in 2020
JOB CREATION
McKinsey & Company | 8
Compound annual growth rate, 1990-2000, %
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
6 5 4 3 2 1 0 -1 -2 -3
Wholesale
Utilities
Transport
Retail
Real estate
Professional services
Other services
Manufacturing
Management
Information
Health care
Government
Finance/ insurance
Education Construction
Arts/recreation
Agriculture and mining
Administration
Accommodation/ food services
17 16 7
Negative
Positive
1 Productivity contribution calculated using Moody’s Economy.com data 2 Valued-added growth is the contribution of each sector to total GDP growth
In the 1990s, productivity growth was driven by a virtuous cycle of increasing value added and jobs growth …
SOURCE: U.S. Bureau of Economic Analysis; Moody’s Economy.com; McKinsey Global Institute Sunrise Productivity Model
Size represents produ- ctivity contribution1
Value-added growth2
Employment growth
INNOVATION
▪ Total productivity growth 1990-2000 was 1.8 percent
▪ Productivity gains were driven by sectors that experienced positive employment growth and increasing value added growth
McKinsey & Company | 9
Compound annual growth rate, 2000-2010, %
Since 2000, the largest contributions to productivity gains were driven by declining employment
SOURCE: U.S. Bureau of Economic Analysis; Moody’s Economy.com; McKinsey Global Institute Sunrise Productivity Model
Size represents productivity contribution1
Value-added growth2
Employment growth
INNOVATION
▪ Total productivity growth 2000-2008 was 1.6 percent
▪ Large share of productivity gains came from tradable sectors with large efficiency gains and job losses
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
Other services
Manufacturing
2 1 0 -1 -2 -3
Wholesale Utilities Transport
Retail
Real estate
Professional services
17 16 7 6 5 4 3
Administration
Manage- ment
Information
Health care
Govt. Finance/insurance
Education
Construction
Computers/electronics
Arts/ recreation
Agriculture and mining
Accommodation/ food services
Positive
Negative
1 Manufacturing sector excluding Computers/electronics and Other transportation equipment sectors 2 Valued-added growth is the contribution of each sector to total GDP growth
McKinsey & Company | 10
Opportunities exist for leaders and laggards to contribute to productivity growth & innovation
1 Productivity contribution was calculated using Moody’s Economy.com data.
Top quartile 25th–50th quartile Bottom quartile
1990-20001 2000-08
Goods
Manufacturing 36.7 19.2
Construction -0.5 -11.0 Natural resources 1.6 0.2 Computer and electronic products n/a 22.5 Real estate and rental and leasing 19.8 18.4 Wholesale trade 17.5 11.2 Information 7.4 21.6
Services
Transportation and warehousing 3.8 3.9 Retail trade 9.8 1.5 Administrative and other services -4.7 5.6
Accommodation and food services -2.8 -3.2 Other services (except public admin.) -1.7 -4.8 Arts, entertainment, and recreation -0.7 -0.8 Finance and insurance 16.9 9.9 Professional, scientific, technical services 7.3 9.7 Management of companies 0.7 -0.6
Regulated and public
Government -4.1 1.0 Health care and social assistance -8.1 -1.7 Educational services -1.5 -3.1 Utilities 2.5 0.5
Contribution to productivity growth, %
SOURCE: U.S. Bureau of Economic Analysis; Moody’s Economy.com; MGI Sunrise Productivity Model
INNOVATION
Retail can continue to drive productivity growth through greater integration of online and offline channels, and innovations in responding to and engaging customers
Healthcare can increase productivity through greater use of available technology (e.g., e-mail, electronic record keeping) and broader adoption of established lean principles
Aerospace can further improve productivity by continuing to set the bar for innovation while making use of standard lean principles
McKinsey & Company | 11
US Growth and Renewal: rising to the challenge
SOURCE: McKinsey Global Institute
▪ Encourage innovation, new company creation, and the scaling up of new industries in the U.S. High spark
▪ Ensure Americans acquire the skills that match employer needs High skill
▪ Harness globalization to create more U.S. jobs High share
▪ Remove impediments to investment and job creation High speed
McKinsey & Company | 12 12 SOURCE: McKinsey Global Institute
Download these and other MGI reports at: www.mckinsey.com/mgi