Increase Employment: Structural Problems in USA Labor Force High Healthcare Costs + Skills Mismatch + Labor Immobility e Healthcare costs may be a barrier to hiring for employers — Healthcare benefits = 8% of average total employee compensation; grew at 6.9% CAGR from 1998 to 2008 compared with 4.5% CAGR in salaries. — Healthcare benefits are fixed costs as they are paid on an annual per-worker basis and do not vary with hours worked. — As employers try to lower fixed costs to right-size to reduced revenue levels, layoffs are the only way to reduce fixed healthcare costs. e Skills mismatch may be a barrier to hiring for employers — Alarge portion of the long-term unemployed may lack requisite skills. — 14% of firms reported difficulty filling positions due to the lack of suitable talent, per 5/10 Manpower Research survey. e Labor immobility resulting from the housing bust may be a barrier to hiring — One in four homeowners are “trapped” because they owe more than their houses are worth, so they cannot move to take new jobs — until they sell or walk away. KP Source: Richard Berner, “Why is US Employment So Weak’ (7/23/10), Morgan Stanley Research. i USA Inc. | What Might a Turnaround Expert Consider? 387 Increase Employment: Immigration Does Not Take Away Jobs in USA; It Improves Productivity + Boosts Income per Worker e Immigration = Positive Impact on USA Productivity & Income per Worker e Immigration = Neutral Impact on Employment for U.S.-Born Workers % Change in USA Productivity / Income per Worker / Employment for U.S.-Based Workers In Response to an Inflow of Immigrants Equal to 1% of Employment oe £ 53 Sf AD) es cw cece ar me ee emer ce aac ian ce PD redluCtivity a9 eo fe BB O.Bi wae a ms me wee eee en ag Pe are mes ee 2 aa cs om £ © iy ——Income per ” 8 a Worker £2 2 04 ----+--------g Ps ms — cs sens em 8 i = a: , ie —— Employment for 2 = 0.0 A \ U.S.-Born Workers £2 N77 & OA 1 2 4 7 10 Years After Immigration Source: Giovanni Peri, “The Effect of Immigrants