If you were confused by the headline “Labor Shortage Feared” on the front page of Monday’s New York Times, you’re not alone.

Not long ago the big story was that American jobs were being outsourced overseas at such a rate that unemployment problems loomed. Now this talk about a pending labor shortage. How can this be?

The employment situation today is perplexing, but oh, so important. The proposed immigration reform bill will be debated largely on the basis of its expected impact on American workers. The bottom line: Labor unions fear that an influx of legal immigrants would keep wages low, while employers are hoping that such workers would keep wages under control. Big surprise.

So, is there a labor shortage in America? Overall, no. In April, the Bureau of Labor Statistics reported unemployment at 4.5%, on the low end for the past three decades, but not as low as the 3.9% rate at the end of 2000. There are 6.8 million Americans looking for work.

Still, there has been increasing anecdotal evidence of job tightening. Some companies report a hard time finding certain skilled workers, online ads are up, and at the same time there are numerous reports of shortages in agriculture (even at nearby gardening centers) stemming from increased restrictions on employing illegal immigrants. In other words, there seem to be spotty shortages.

There has been some dislocation related to the American shift to a service-based economy from manufacturing. Traditional assembly line workers are still being laid off, while shortages have developed in areas that are growing more quickly. And, while traditionally America has relied on immigration ebbs and flows to smooth these cycles, these days the border’s gates are rusty, opening and closing with greater difficulty.

The undeniable aging of the population has raised the specter of a broader and more persistent labor shortage in America (and in numerous developed countries). In 2011, the front edge of the baby boomer generation will hit the traditional retirement age of 65. By 2030, all boomers will be over the age of 66.

Starting with this reality, some have used statistics from the Bureau of Labor Statistics to predict wide labor shortages. Specifically, the BLS in 2004 predicted that between 2004 and 2014, the labor force will increase by 14.7 million, while jobs will expand by 18.9 million. These projections were excellent fodder for those promoting jobs outsourcing, and therefore quickly disputed by those urging protectionism.

The BLS has made clear that its various population and employment series are calculated differently and should not be used for such comparison purposes. Most likely, more and more people will work beyond traditional retirement age, both because they are expecting to live longer and because many will have to do so to maintain their lifestyle.

This much is clear: The growth in population, and in the number of people looking for work, is slowing. If the economy continues to grow at historic rates (another big dispute — growth may well slow in tandem with population), there should be a tightening of the job market.

Not all jobs will be affected. The growth will mainly be in the service sector of the economy; 18.7 million of the projected 18.9 million new jobs will be in educational and health services, professional and business services, the leisure time and hospitality industries, and so on. About 6 million of these jobs will be “professional,” with a high percentage coming from computing and technical fields. These are jobs that to a large degree will require good language and written skills.

Unhappily, many American corporations don’t view our young people as having the essential skills to fill these jobs. A report from the Conference Board released last fall cited a survey of 431 human resources officials that said 72% of high school graduates lack the basic English writing skills needed for entry-level jobs.

As a result, corporations view it as necessary to hire highly educated immigrants going forward. Unhappily, two trends stand in the way. First, an increasing number of young people from both the developing and the developed world attending college in America are returning home. While their home countries did not in the past offer good employment prospects, jobs now are plentiful in China, India, and even countries such as Ireland. Second, visas for such people have become scarcer since the attacks of September 11, 2001.

American employers also look to immigrants to fill the minimumwage jobs that are plentiful in the service industries. This is where unions are balking. Union representation has been steadily on the decline since 1983, but is strongest in some of the projected growth areas, such as education. While overall only 12% of all American workers belong to unions (down from 20% in 1983), fully 38% of those in education are members. Still, an increased supply of untrained workers is bound to put pressure on low-end wages, so the unions can be counted on to oppose easing restrictions.

Thus, as usual when the topic is large, it is indeed complex. Here’s what we can say with certainty: If the government plays a large role in determining who gets into the country, as mandated by the proposed legislation, it will be a muddy mess. Having the feds decide what skills should be awarded points toward admission is a foolish proposal and will with luck be changed. Businesses are balking at this notion, and well they should be.

The other major conclusion we can reach is that shortcomings in the American education system are no longer going to penalize only those leaving school with inadequate skills. Their loss will soon be our loss, as American industries struggle to find able workers. That, however, is a topic for another day.

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