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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. (@ 4 www.kpcb.com 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 —— Productivity —— Income per Worker —— Employment for U.S.-Born Workers Immigration's Impact as % of Employment / Income / Productivity Increase Years After Immigration Source: Giovanni Peri, “The Effect of Immigrants on U.S. Employment and Productivity,” 8/30/2010 Federal Reserve Board of San Francisco (FRBSF) Economic Letter 2010-26. (@ EB) www.kpcb.com USA Inc. | What Might a Turnaround Expert Consider? 388 HOUSE_OVERSIGHT_021035