Morning after in America

The outlook for America looks grim, but that could quickly change

What to expect from a Biden presidency

Joe biden has been dreaming of moving into the White House since at least 1987, when he first ran for president. How those dreams must have differed from the reality this week. 

The official toll of American deaths from covid-19 has passed 400,000. 

By the end of his first 100 days it may have passed 500,000. 

Millions of Americans have lost their jobs. 

Instead of observing the triumph of democracy in eastern Europe from the Oval Office, as the victor of the election in 1988 did, Mr Biden must contend with democratic decay at home. 

It is not an auspicious start. Yet, unlikely as it sounds, in the next few months the view from 1600 Pennsylvania Avenue could improve dramatically.

Mending America starts with getting the virus under control. Vaccinating the population will be a formidable operation that will test the ability of federal, state and local bureaucracies to co-operate. A slick campaign of the type the federal government masterminded to eradicate polio would save many lives. 

Yet even an imperfect vaccination programme will make a huge difference by the time spring turns into summer. Warmer weather, and hence longer spent outdoors, will help too.

Covid-19 spreads exponentially. But once the number of people each person infects falls below one, it also dissipates exponentially.

This in turn will help America’s economic recovery. Though the labour market is about as depressed as it was when Mr Biden was sworn in as Barack Obama’s vice-president in the teeth of the financial crisis, this downturn is very different. 

Real disposable income probably rose at its fastest rate for two decades in 2020, a measure of the huge stimulus pumped into the economy by the federal government. 

The banking system looks sound. And the economic pain is not widespread, but concentrated among workers in businesses that depend on cramming lots of people into confined spaces. 

Many of them will find their services in demand again from Americans once they emerge from a year of hibernation.

Taking advantage of how the federal government can borrow at virtually no cost, Mr Biden’s team is set on another $1.9trn fiscal stimulus, bringing the total budget support since the pandemic hit to 27% of pre-crisis GDP. 

He may not be able to get that past the Senate, nor is it clear the economy needs all of it. 

But even a trimmed-down version of the Biden opening bid—more money for vaccine distribution, extending unemployment insurance and expanding child tax credits—would have big effects. The tax-credit change alone could halve child poverty.

As for the political crisis that required 25,000 troops on the street at Mr Biden’s inauguration, its causes will not soon fade. The Republican Party that became organised around a principle of loyalty to a man who has no loyalty to anything apart from himself, a dangerous coddling of racist factions and the rise of alternative facts: all were decades in the making. But the fbi is watching threats from domestic terrorism. 

The former president is just a citizen who might run for office again in 2024, assuming Congress does not bar him from doing so after his impeachment trial. And Mr Biden at his inauguration declared his clear support for the rule of law and racial equality—which at another time might have sounded like platitudes.

This will help lower the temperature of American politics, which could open other possibilities. By working with Republicans eager for Congress to get things done, Mr Biden may yet be able to pass an infrastructure bill and something on climate change, as well as his covid-19 package. 

In textbooks, democracy involves solving problems through compromise and managing conflict in elections. With a president inclined to build a coalition, a little of that spirit might return to Washington. Voters may even prefer it to 24-hour partisan warfare.

That is what needs to happen. America faces challenges that require the government to help, not just get out of the way. America has done a worse job of keeping schools open in the past year than any other rich country. Enrolments have fallen, suggesting that many children have dropped out of education. 

Higher death rates for African-Americans and Hispanics are a reminder that health is linked to skin colour. 

Four years of Donald Trump have hollowed out institutions and weakened constraints on malfeasance. His parting act was to pardon a doctor convicted of profiting from carrying out unnecessary eye treatment on hundreds of elderly patients. 

He rescinded his own executive order which would have stopped his administration’s officials working as lobbyists.

The past four years have also created a problem for America abroad. At the back of their minds, foreign leaders know that the forces which brought Mr Trump to office could return with a future president, so any agreements American diplomats make risk seeming temporary. Mr Biden’s foreign policy will also require a series of impossibly hard trade-offs. 

His team needs the co-operation of the Russian government to sign an extension of the New start treaty on nuclear weapons, which expires on February 5th. Yet that same government has just locked up Russia’s most prominent opposition politician, Alexei Navalny, after first attempting to kill him. 

They need China’s co-operation on climate change, even though China is engaged in what the outgoing administration has just labelled as “genocide” against the Uyghurs in Xinjiang.

Tricky corners in the Oval Office

A lot could go wrong. Senate Republicans may oppose everything Mr Biden suggests simply because he is a Democrat. The left of his party may turn sour on him for trying to make deals with Republicans. Politics has been simple during the Trump administration, which more often governed by inflaming partisan fights than fixing America’s problems. Engaging with reality is much harder—especially when you are buffeted by events.

To have the best chance of success, Mr Biden should stick to his folksy brand of dogged centrism which is so well suited to the moment. Western allies should be patient and not expect a miraculous overnight transformation. 

The return of restraint to the White House will be only the first step in a long journey, but it is a necessary one for America’s renewal.

Debt dangers hang over markets

With assets fully priced, investors face trouble chasing returns while trying to limit risks

John Plender

© FT montage

It is, to put it mildly, counterintuitive. In the midst of a global pandemic and one of the steepest recessions ever, mainstream investment markets are very fully valued by historic standards.

Since their bounce back from the coronavirus-induced plunge last March, they are so expensively priced that — in the judgment of veteran fund manager Howard Marks of Oaktree Capital: “The prospective returns on everything are about the lowest they’ve ever been.”

In short, investors are not being adequately compensated for risk in an uncertain world. So it is important to be clear about the nature of financial risk in the year ahead.

When market valuations are elevated there is always a potential vulnerability to negative shocks. Among the obvious triggers are possible resurgences in the coronavirus, dips in economic activity and an escalation of bankruptcies in troubled sectors such as retail, hotels, transport and property.

Moreover, the pandemic has taken hold at a time of rising geopolitical tension, with the US and China engaged in unprecedented strategic competition.

In the short term, markets will probably gyrate according to the ebb and flow of news on coronavirus and vaccines. Yet while these risks are real, investors have surely been right to look beyond the current dire economic landscape to better times, because of the timely collective policy response to support economies and the extraordinarily rapid development of vaccines.

Between early March and the end of May, the US Federal Reserve bought $2.3tn of Treasury securities and agency mortgage-backed securities, while in the UK, the Bank of England launched its largest and fastest asset purchasing programme amounting initially to £200bn of gilts and corporate bonds, equivalent to about a tenth of UK gross domestic product. Other central banks around the world followed suit, pumping liquidity into stricken markets.

The UK government addressed the collapse in demand inflicted by lockdowns with a substantial £123bn package of fiscal measures. While the size of the UK’s intervention was unprecedented, the IMF’s estimates last summer suggested the response in other G7 economies was typically even larger.

Now, recovery is under way. In its latest World Economic Outlook, the IMF’s projection for global growth in 2021 is 5.2 per cent after an estimated decline of 4.4 per cent for 2020.

Central banks act as market makers

Markets are thus being driven primarily by economic policy decisions. And in a policy-driven market, the biggest single risk is policy reversal. A recent example is the precipitate pursuit of austerity by the UK and other governments after the great financial crisis of 2007-8. 

But in a world of continuing deficient demand, excess capacity and high unemployment, an overhasty end to government support seems unlikely in 2021, except perhaps in fiscally ultra-conservative Germany and other parts of northern Europe.

Even the IMF, traditionally a dyed-in-the-wool fiscal curmudgeon, has warned against early tightening. The British Conservative government under Boris Johnson has so far shown little appetite for a return to austerity.

Meanwhile, Andy Haldane, chief economist of the Bank of England, has warned against pessimistic narratives. “Now is not the time,” he argued in a speech in September, “for the economics of Chicken Licken, the fictional fowl who, having been hit on the head by an acorn, declared the sky was falling in.”

Overall, fiscal policy in most of the developed world looks set to remain expansionary, while the central banks have demonstrated their readiness to act as market makers of last resort.

Admittedly their tool box is limited with nominal interest rates close to zero or negative. But they can still inject liquidity into markets by buying assets through so-called quantitative easing. 

Indeed, part of the reason for the rich valuations in today’s markets, according to Longview Economics, a research boutique, is that ever more newly-created money is chasing an ever-shrinking pool of investable assets as the central banks take assets on to their own balance sheets.

These purchases increasingly extend to riskier paper such as corporate bonds, in the case of the Bank of England, or equities with the Swiss National Bank and the Bank of Japan. In effect, central banks have de-risked public markets, at least in the short term, while taking more risk on to their own balance sheets.

All this suggests that there is little immediate threat of a banking crisis or of financial instability more generally, as long as we ignore the totally unexpected.

Nor is there any immediate constraint on central banks to further expand their balance sheets. Even if they make losses on these risky investments and become technically insolvent, the net present value of seignorage — the profit they make on creating money — far exceeds potential losses. The only limitation arises if their credibility erodes to the point where the public, plagued by rampant inflation, is no longer prepared to accept their IOUs.

That credibility problem tends to make central banks uncomfortable with continuing balance sheet expansion. The Fed, for example, has indicated that it would like in due course to shrink its balance sheet. 

If and when that happens, there will be a high risk of market disruption. The merest hint of balance sheet retrenchment in late 2018 and earlier in 2013 caused serious market wobbles.

Because central banks are only too aware of this danger, they seem unlikely to move before economic recovery is more firmly established. And when they do, they will exercise extreme caution.

With central banks systematically rigging markets, the resulting ultra-low interest rates pose risks to the structure of investors’ portfolios.

The reinvestment risk

The most pressing is reinvestment risk — the likelihood that investments providing a good return today cannot be replaced with equally attractive investments tomorrow, for example maturing bonds.

Eric Knight of fund manager Knight Vinke sees this as potentially the single most destructive risk now facing long-term investors. He points out that a reduction in average returns from 8 per cent per annum to 6 per cent will result in the value of a pension fund’s portfolio falling by 35 per cent in 30 years and by 50 per cent in 50 years.

Investors who seek to maintain past levels of returns have to take on more risk in pursuit of yield.

Across the capital markets this has perverted the normal relationship between risk and reward: witness the narrowed gap between yields on investment grade corporate bonds and junk bonds; likewise the recent ability of Peru, a developing economy in a region notorious for sovereign defaults, to raise 100-year money at a coupon of a mere 3.23 per cent. Note, too, the risk-hungry penchant of British and other developed world investors to inflate the bitcoin bubble.

While many people in the developed world have solid pensions that are related to final or average salaries and are backed either by the state or private pension funds, a large and growing group of people in the UK and elsewhere are members of defined contribution (or money purchase) schemes, where the level of their retirement income is affected by market fluctuations.

They are forced to accept lower returns where, in the great majority of cases, they choose to invest via a scheme’s default option. This offers a standard portfolio where the pension pot is substantially diverted into fixed-interest and index-linked government bonds as people approach retirement. Such a strategy does reduce risk in an academic sense but at today’s valuations most of these government IOUs offer guaranteed losses in real terms after inflation, and sometimes in nominal terms as well, when held to maturity.

Many scheme members, if they were aware of the consequences, might prefer a default option that entailed switching into stable, income-producing equities such as Nestlé or Unilever rather than bonds.

In addition to the mispricing of risk, investors also face the problem that central bank liquidity creation has generated high valuations across multiple asset classes and countries. With those asset classes being more closely correlated than in the past, it becomes much harder to achieve portfolio diversification.

Traditionally, fund managers have looked to fixed interest bonds to hedge against volatility in equities. 

This is now in question. 

Economists Fernando Avalos and Dora Xia of the Basel-based Bank for International Settlements, the central banks’ organisation, point out that the response of 10-year US Treasury yields to sell-offs in the US’s S&P 500 equity index has become more muted since 2018, with bond prices falling (and thus bond yields rising) when equities have fallen. As a result US Treasury bonds’ status as the safest haven in a global storm has become less secure.

Of the mainstream asset classes available to retail investors, only gold and commodities now offer genuine diversification from equities and bonds. These are, by definition, speculative assets that yield no income. 

That leaves expensive hedging via derivative instruments, or expensive absolute value collective funds where investment strategies are designed to deliver returns regardless of the direction of markets. For most retail investors the conventional well-structured, diversified portfolio is now out of reach.

How should investors position themselves against the risk of inflation? In the short run this is scarcely a concern. Since the great financial crisis, aggregate demand in the developed world has been anaemic and despite falls in unemployment to relatively low levels before the pandemic inflationary pressure was absent. 

Now, with the coronavirus, the deflationary forces in the economy have become intense. Yet there may be inflationary trouble further ahead.

In their new book, The Great Demographic Reversal, Charles Goodhart and Manoj Pradhan argue that the profound deflationary impulse of the past three decades was chiefly due to an enormous surge in the world’s labour supply resulting from favourable demographic trends and the entry of China and eastern Europe into the global trading system.

As domestic demand in advanced countries was weakening, global supply was increasing. The result was crushing downward pressure on inflation and interest rates. These trends, they say, are now about to reverse sharply thanks to the ageing of populations, while the world is in retreat from globalisation. “The future,” they add, “will be nothing like the past — and we are at a point of inflexion . . . the multi-decade trends that demography brought about are set for a dramatic reversal.”

If they are right, labour stands to be re-empowered relative to capital as workforces shrink. In a distributional struggle between workers and a growing retired population, workforces’ bargaining power will increase, with obvious inflationary consequences, while older people, who are more likely to vote than the young, will seek to fight back via the ballot box.

The pandemic may, in any case, have changed wider societal attitudes to low pay and precarious working conditions, so that the political climate will favour better pay and conditions. As the need for care workers increases, say Goodhart and Pradhan, the number of workers available for other work will decline. Against that background, the likelihood that quantitative easing would raise general price levels, rather than simply push up asset prices as has happened since 2008, looks real.

Other grounds for worrying about the risk of inflation include the extraordinary rise in global debt, which stands at levels never seen outside wartime. According to the Institute of International Finance, a trade body, global debt has surged by over $15tn since 2019, hitting a record of more than $272tn in the third quarter of 2020. It expects that figure to rise to $277tn by the end of 2020, equivalent to 365 per cent of global gross domestic product.

This accumulation of debt is a direct result of ultra-low interest rates. William White, former economic adviser and head of the economic and monetary department at the Bank for International Settlements, suggests that by keeping interest rates too low in the attempt to generate economic growth central banks have induced corporations and households to take on more debt.

This, says Mr White in an interview, creates a debt trap and rising instability. When a financial crisis strikes central banks have to save the system, but in doing so they create even more instabilities. “They keep shooting themselves in the foot,” he adds.

Will the pandemic change societal attitudes to low pay and precarious working conditions? © Neil Hall/EPA/Bloomberg

The interest rate trap

It is safe to assume that the great debt overhang is unsustainable and will never be paid off in full. After the first and second world wars, debt levels were brought down by a combination of robust economic growth, which helped raise tax revenues, and de facto defaults, either informally through inflation or formally by way of debt reconstruction.

Unless there is a much greater improvement in developed world productivity (and thus growth) than now seems plausible, inflation will again have to do much of the debt reduction. The question for investors is whether central banks can respond to rising inflationary pressure by raising rates on this huge debt pile without prompting a devastating shock to markets.

In Mr White’s judgment, central banks know they cannot leave interest rates as low as they are, because they are inducing still more bad debt and bad behaviour. But they cannot raise rates because then they would trigger the very crisis they are trying to avoid.

Monetary policy has been asymmetric. Central banks have put a floor under markets in crises, but failed to put a cap on prices in bubbles. Because interest rates have never risen as much in upturns as they have dropped in downturns the central banks’ capacity to promote economic growth has been decreasing.

There is no easy way out of this trap. So for retail investors the message is that government bonds, traditionally regarded as safe assets, are in the long run dangerous. Real assets, such as property — notably residential, warehouses and care homes — and a modicum of portfolio insurance by investment in gold, will offer greater safety in what is anyway likely to be a low-return world.

Consider, now, a final category of risk: the political and the geopolitical. Who knows what Donald Trump might yet do to upset markets in the last days of his presidency? 

How will the strategic competition between China and the US develop, including in its military dimension? 

Could tensions in the Middle East erupt into war? 

How will Brexit unfold and what consequences might there be for sterling? 

Will the forthcoming departure of German chancellor Angela Merkel, Europe’s pre-eminent political leader, be accompanied by market turbulence? 

And can industry and commerce deliver on governments’ Paris agreement targets on carbon emissions without much tougher regulation? These risks are unquantifiable.

With central banks’ asset purchasing programmes increasing wealth inequality and the coronavirus adding to social inequality, including even life expectancy, the pressure for populist policy is intense. 

Historically, populism has encouraged monetary financing of public debt, followed by a descent into inflation. This is deeply troubling.

For the moment, though, investors’ most pressing financial concern should be the reality that the world economy is hostage to debt and wayward monetary policy. There will, in the end, be a reckoning. 

But the timing of any market crunch is inherently unpredictable — nor how it hits any particular country such as the UK. The American economist Herb Stein famously remarked that if something can’t go on forever, then it will stop. 

Less well known is the rejoinder by fellow economist Rudi Dornbusch who said: Yes, but it will go on a lot longer than you anticipate.

American politics

Trump’s legacy—the shame and the opportunity

The invasion of the Capitol and the Democrats’ victory in Georgia will change the course of the Biden presidency

Four years ago Donald Trump stood in front of the Capitol building to be sworn into office and promised to end “American carnage”. 

His term is concluding with a sitting president urging a mob to march on Congress—and then praising it after it had resorted to violence. 

Be in no doubt that Mr Trump is the author of this lethal attack on the heart of American democracy. His lies fed the grievance, his disregard for the constitution focused it on Congress and his demagoguery lit the fuse. 

Pictures of the mob storming the Capitol, gleefully broadcast in Moscow and Beijing just as they were lamented in Berlin and Paris, are the defining images of Mr Trump’s unAmerican presidency.

The Capitol violence pretended to be a show of power. In fact it masked two defeats. While Mr Trump’s supporters were breaking and entering, Congress was certifying the results of the president’s incontrovertible loss in November. 

While the mob was smashing windows, Democrats were celebrating a pair of unlikely victories in Georgia that will give them control of the Senate. The mob’s grievances will reverberate through the Republican Party as it finds itself in opposition. And that will have consequences for the presidency of Joe Biden, which begins on January 20th.

Stand back from the nonsense about stolen elections, and the scale of Republicans’ failure under Mr Trump becomes clear. Having won the White House and retained majorities in Congress in 2016, defeat in Georgia means that the party has lost it all just four years later. The last time that happened to Republicans was in 1892, when news of Benjamin Harrison’s humiliation travelled by telegraph.

Normally, when a political party suffers a reverse on such a scale it learns some lessons and comes back stronger. That is what the Republicans did after Barry Goldwater’s defeat in 1964, and the Democrats after Walter Mondale lost in 1984.

Reinvention will be harder this time. Even in defeat, Mr Trump’s approval rating among Republicans has hovered around 90%—far better than George W. Bush’s 65% in the last month of his presidency. Mr Trump has exploited this popularity to create the myth that he won the presidential election. YouGov’s polling for The Economist finds that 64% of Republican voters think Mr Biden’s victory should be blocked by Congress.

Perhaps 70% of Republicans in the House and a quarter in the Senate connived in his conspiracy by vowing to attempt just that—to their shame, many of them persisted even after the storming of Congress. As an anti-democratic stunt, it had no precedent in the modern era (nor any chance of success). 

And yet it is also a sign of Mr Trump’s malign grip. After seeing how he ended the careers of loyalists like Jeff Sessions and almost single-handedly elected others, like Florida’s governor, Ron DeSantis, those facing primaries remain terrified of provoking him.

The election myth that Mr Trump has spun may thus have broken the feedback loop needed for the party to change. Ditching a failed leader and broken strategy is one thing. 

Abandoning someone whom you and most of your friends think is the rightful president, and whose power was taken away in a gigantic fraud by your political enemies, is something else entirely.

If something good is to come from this week’s insurrection, it will be that this way of thinking loses some of its purchase. The sight of a Trump supporter lounging in the Speaker’s chair should horrify Republican voters who like to think theirs is the party of order and of the constitution. 

To hear Mr Trump inciting riots on Capitol Hill may persuade parts of middle America to turn their back on him for good.

For Mr Biden, much depends on whether Trump-sceptic Republicans in the Senate share those conclusions. That is because the victories for Jon Ossoff and Raphael Warnock, the first African-American to be elected as a Democrat to the Senate from the South, have suddenly opened up the possibility that government in Washington, dc, will be less plagued by Republican obstruction and Trumpian stunts.

A week ago, when the conventional view was that the Senate would remain in Republican control, it looked as if the ambitions of Mr Biden’s administration would be limited to what he could accomplish through executive orders and appointments to regulatory agencies. 

A 50-50 split in the Senate, with the vice-president, Kamala Harris, casting the tiebreaking vote, is as narrow a majority as it is possible to get. It will not miraculously let Mr Biden bring about the sweeping reforms many Democrats would like, but it will make a difference.

For example, Mr Biden will be able to get confirmation of his choices for the judiciary and for his cabinet. Control of the legislative agenda in the Senate will pass from the Republicans to the Democrats. 

Mitch McConnell, the outgoing Senate majority leader who spoke powerfully this week against Mr Trump’s institutional vandalism, was a master of blocking votes that might divide his caucus. That created the gridlock in Washington that voters usually blame on the president’s party.

Democrats may also be able to get some measures through the Senate via reconciliation, a procedural quirk that allows budget bills to pass with a majority of one or more, rather than the 60 votes needed to avoid a filibuster, which will remain, however much the leftist wing of the party would like to drop it.

Where Republicans come in is in the scope for cross-party votes. The more they feel that Middle America was horrified by the riot, the more likely that some of them will reject the nihilism of blocking everything for the sake of it. 

The more their caucus is at war with itself, the freer they will be to do their part to restore faith in the republic by accomplishing something.

For Republicans, the cost of the cursed deal their party did with Mr Trump has never been clearer. The results in November provided signs that a reformed party could win national elections again. 

American voters remain wary of big government and have not handed one party more than two consecutive terms in the White House since 1992. 

But to become successful and, more important, to strengthen America’s democracy once more rather than pose a threat to it, they need to cast off Mr Trump. 

For, in addition to being a loser of historic proportions, he has proved himself willing to incite carnage in the Capitol. 


Millions of new jobs will emerge in health care and tech as society ages and digital transformation changes the nature of work



Taking care of an aging population—and their pets—and working on the nation’s digital transformation are likely to offer the most well-paying job opportunities in the next decade.

Those filling jobs will increasingly be older adults, and the health-care and high-tech fields are among those poised for the most growth, according to the Labor Department’s projections for employment in 2029. 

The agency’s economists review scholarly articles, expert interviews, historical data and other sources to estimate demand for specific occupations, combined with macroeconomic modeling to anticipate changes in the economy’s structure.

For workers to thrive over the coming decade they can expect to need more education and be willing to refresh their skills.

Meanwhile, home aide and restaurant jobs are expected to grow by the millions, but that work tends to pay among the lowest wages. Individuals looking for work in office support and manufacturing fields will find fewer positions.

Health-Care Jobs Lead Growth

Employment in health-care occupations is expected to grow 15% in the next decade, well ahead of 3.7% overall growth, according to the Labor Department’s study, which compares expected growth to 2019 levels and doesn’t attempt to account for the pandemic and related economic downturn.

Part of that growth—driven by baby-boomer aging—will occur in better paying jobs, such as nurse practitioners. 

Their numbers will rise by more than 50%, an increase of 111,000. Nurse practitioners, who usually require a master’s degree, were paid a median annual salary of $109,820 in 2019. 

Physician-assistant jobs, also requiring a master’s degree and paying about $112,000, are expected to grow 31.3%. Registered nurses, a job that usually requires a bachelor’s degree and paid about $73,000 in 2019, will see their ranks swell by 220,000, an increase of 7%.

Over the next decade, home-health aide jobs will grow the most out of nearly 800 job titles, with an expected addition of 1.16 million positions, the Labor Department says. The job requires a high school diploma. 

But while the hiring pace should be strong, wages may not be. The median annual pay for the job in 2019 was $25,280, less than half the median wage for all occupations.

Other jobs in the medical field will increase as well:

• Medical and health services managers—an occupation with a median annual wage of about $101,000 in 2019 and which requires a bachelor’s degree—will rise by nearly 32%.

• Not all of the trends driving the health-care boom are tied to aging. The Labor Department projects the number of psychiatrists to rise 12% by 2029. Community and social services jobs will increase by 13%, adding 350,000 jobs.

• Gains will be slower in other medical fields. Physicians and surgeons, among the best paying jobs, will only grow at about the same rate as the overall economy. And don’t expect a baby boom. Obstetricians and pediatricians will shrink in number as the population ages.

High Tech, Energy Jobs Boom

The shift to a digital economy will drive demand for high-tech workers. Computer and math occupations will grow 12.1% in the next decade—three times faster than the overall workforce.

Software developers, a role that paid a median wage of $107,500 in 2019, will be among four occupations adding the most jobs in the next decade, growing by 316,000. There will also be a heightened need to protect data, driving a 30% boost in the number of information security analysts, a job that paid about $100,000 in 2019.

Energy jobs are also among the fastest-growing occupations. Wind turbine technicians and solar photovoltaic installers will see their numbers rise by more than 50% from 2019 levels, though that is from a base of a few thousand. Meanwhile, jobs in oil and natural gas—for example, derrick operators, roustabouts, and rotary drill operators—will rise nearly as much, as the U.S. shale boom continues.

The outlook is mixed in other occupations:

• As demand for companionship increases, so too will the need to care for pets. The number of veterinarians and vet assistants will rise 16% from 2019 levels. Jobs in animal-care work—groomers, dog-sitters and the like—will see their numbers grow 23%, while animal-trainer employment will increase 13%.

• Other occupations are expected to lose jobs over the next decade. The office and administrative support sector, which includes secretaries, administrative assistants, bookkeepers, and customer service representatives, is projected to lose nearly 1 million jobs, as machine learning and other forms of automation supplant clerical workers. The shift toward remote work caused by the pandemic could accelerate that change.

• As robotics technology improves, the Labor Department projects the economy to shed 420,000 production jobs. The e-commerce boom, which increased during the pandemic, will also shrink sales jobs. Cashiers will see their numbers fall by 270,000.

U.S. Workforce Ages

By 2029, more than a quarter of the U.S. workforce will be 55 or older, up from 12% in 1999 and 23.4% last year. 

This is driven in part by the size of the baby boom generation and people living and working longer, says William F. Ziebell, chief executive of the benefits and human resources consulting division at Gallagher, a global insurance brokerage, risk management and consulting services firm.

The growing share of older workers will increase demand for workplace flexibility, something the coronavirus pandemic has helped accelerate. “Retiring on time doesn’t necessarily mean going off to Arizona or Florida—it could mean moving into more of a part-time role,” says Mr. Ziebell.

Greater generational diversity could strain traditional organizational structures, says Karin Kimbrough, chief economist at professional networking site LinkedIn.

Employers may have to adapt—a 35-year-old could be running a team of people with 60-year-olds on it. Employees, in turn, will see their career paths take a different shape. 

“People might find their careers aren’t quite so linear,” says Ms. Kimbrough. “You could pick up a career later in life and be very comfortable not being that high up. But these workers will still be engaged, which is better for the economy and society.”

The recruiting process will likely span broader geographies and criteria as a result, requiring workers to have to compete more by demonstrating their skills, with educational pedigree and experience becoming less important than they are today.

Preparing for the Job Market of 2030

Even with the focus on skills, the faster-growing occupations will still require more education.

Occupations that require a master’s degree will grow the quickest over the next decade, projected to rise 15%. 

That compares with around 6% growth among jobs requiring all other degree types. 

Jobs that demand a bachelor’s degree for entry-level positions will increase the most in absolute terms, by 2.4 million jobs, compared with an additional 400,000 jobs that require a master’s degree.

However, employers are increasingly looking for workers who take initiative in updating their skills through, for example, online certification programs.

A decade ago, employers were skeptical of such programs, says Brian Kropp, chief of human resources research at consulting firm Gartner. 

“Now that perspective is very different,” he says. 

The programs show people have in-demand skill sets and that they value improving themselves through continuous learning.

The half-life of skills is quickening in pace, Mr. Kropp says. 

The number of skills employers are looking for has surged, with companies listing about 33% more skills on job ads in 2020 than they did in 2017, according to a Gartner analysis. 

Only about half of the skills demanded in 2017 ads still feature in current job ads. Top technology companies, for example, increasingly seek experience with “mobile operating systems” and DataDog, a cloud-based applications platform. 

Demand for skills involving “user interface,” meanwhile, is on the wane. 

US cash mountain: the agony of choice

Companies face big dilemma of what to do with all their money

Sujeet Indap

Slack co-founder Stewart Butterfield insisted on raising far more VC than his software company required in the mid-2010s © Bloomberg

In the mid-2010s, Stewart Butterfield, the co-founder of Slack Technologies, insisted on raising far more venture capital than his young software company needed. 

His theory was that, since VC cash was bountiful at advantageous terms, it would be irresponsible not to take it. 

That dynamic seemed to play out in 2020 in the public company capital markets too. 

Rock-bottom interest rates sent high-grade companies scurrying into debt markets to raise cash that was superfluous.

The 30 biggest investment-grade offerings last year in the US raised $289bn. 

Those cash machines Apple and Google together borrowed $18bn. 

But with the money now in the bank — something like an extra $1.5tn across the S&P 500 — companies face a far harder task: deciding what to do with it all.

According to the “pecking order” theory in corporate finance, companies should prefer their own profits for financing their operations. 

Another school of thought contends that companies can lower their overall cost of capital and increase their value by issuing debt.

Yields for investment-grade companies typically fell below 2 per cent in 2020. 

Accessing bond markets allowed companies to refinance existing debt not only at lower interest rates but at maturities pushed out several years.

The temptation of cheap cash is to spend it riskily. 

Using the money for dividends or buybacks increases net leverage. 

But, predictably, some private equity investors are transacting so-called dividend recaps, where debt funds big paydays.

Companies can use new and old cash balances to deleverage their balance sheets, too. 

Bank of America analysts recently highlighted drugstore chain CVS. 

The company raised billions in early 2020 as a safeguard. 

As conditions eased later in the year, CVS offered to buy $6bn in outstanding debt, with $4bn of that coming from new borrowings and the rest reducing the cash balance.

Acquisitions are another way to reduce cash. 

In September, Salesforce, a tech company thriving in the work-from-home world, announced an expensive $28bn agreed offer for a cutting-edge disrupter. 

Appositely, the target was none other than Mr Butterfield’s Slack Technologies.