5. Disparity in income growth. Trends in job creation are contributing to growing income polarization across advanced economies. Households at the bottom of the distribution have seen little or no income growth in many countries over the last decade, raising questions about aggregate demand, living standards, and social stability. As we have seen, globalization and technology have greatly increased demand for highly skilled workers, pushing up wages for these people and reducing demand for the less-skilled. Other factors are driving growing income disparity as well. One is shifting patterns in family formation: across the OECD, the proportion of single-headed households (single adults with and without children) has risen by 25 percent since the 1980s, limiting the growth of household income. At the same time, marriage rates rise along with educational attainment -- and with high earners more frequently marrying one another, it further widens the income gap. As a result, most advanced economies have seen incomes grow faster for the highest earners than for the lowest.
As a result of these trends, advanced economies face a long-term jobs problem that they will not be able to address adequately with standard solutions. Both policy makers and business leaders will need to find new approaches. Of course, governments will need to continue to encourage overall economic growth -- using fiscal and monetary policy, and removing barriers to business expansion. But restoring aggregate demand alone may not be enough to put all of today's unemployed back to work.
To do so, governments will need to adopt policies and strategies aimed directly at preparing the workforce -- making sure there are bodies and skills ready for the jobs of tomorrow. It's of fundamental importance for national competitiveness. Continuing to improve primary and secondary education and overhauling post-secondary and vocational education for young people who are not headed to college and for mid-career workers who need retraining must be a priority. Relatively simple steps like creating a national jobs database -- to enable students and workers to see what jobs are in demand and what credentials are needed -- would help. In addition, policy makers can unlock growth and job creation by promoting entrepreneurship and innovation, catalyzing investment in infrastructure, and streamlining regulatory approval processes.
Business also has a critical interest in finding solutions to the jobs challenge. In a global economy, companies will continue to seek talent wherever they can find it and at the most attractive cost. But this formula is becoming more complex and simply finding the best-priced labor is no longer always the optimum solution. Companies have rising concerns about supply chain risk -- from natural disasters and other causes -- and are seeing wages rise in coastal China and in India's offshoring capitals.
One strategy is for companies to make talent development a competitive advantage; when the critical resource is talent, companies that can find a steady supply of highly qualified workers and teach them distinctive skills should outperform rivals who can't. This will require stepping up investments in workforce training to levels we have not seen previously. Infosys, the Indian IT services giant, has become one of the top training institutions in the world, capable of putting 14,000 new employees at a time through its 23-week program. This capability has given Infosys a competitive advantage and has helped enable its rapid growth. Companies can also tap into new pools of skilled talent by using technology to bridge the geographic divide -- offering flexible, remote work arrangements to workers they could not hire otherwise. In the coming years, companies that can build up their own supplies of the best trained and motivated workers will win -- and so will the economies in which they operate.