Our nation is now experienc­ing a huge mismatch between workers and jobs. And this could threaten U.S. economic growth well into the 1990s. This human capital deficit is growing as our need for highly skilled workers bump into the reality of a shrinking labor pool. Jobs are plentiful, but qualified applicants are scarce. The New York Telephone Company recently had to test 60,000 prospects to hire 3,000 people. This growing scarcity of skilled workers is destined to stimulate a growing national debate in the three following areas:(1) Massive Retraining. The economic future of the U.S. hinges on our ability to develop a better-educated workforce. As many as 50 million workers will have to be trained or retrained by the year 2000. Today, Japan's functional literacy rate is over 95%. In the U.S. it's around80%. America's competitiveness in a global economy is dependent on the productivity of the currently unskilled and illiterate 20%. (2) The Skills Gap.TheHudsonInstitute now projects that three-quarters of the nation's future entry-level workers will be deficient in basic science, math,reading and writing skills.

THE DRIVER RETENTION IMPERATIVE: With companies even re­sorting to highway billboards to lure drivers, it's plain that the driver shortage has the industry worried. What does it really take to retain reliable drivers? According to an ATA panel of experts meeting recently, a new attitude is needed toward drivers' needs and concerns. Better pay and a full work schedule are important, but a good working environment also helps. Drivers want trucks with power steering. air conditioning. pleasant interiors, and tape decks, one expert noted. They also want a company commitment to schedule work that will get them home at night more often. Other findings noted by the panel included: (1)Turnover may be less among student drivers hired from driving schools.(2)Better relations with dispatchers are needed to help retain drivers.(3)Drivers leave companies when they feel supervisors have lied to them or let them down.(4) Turnover is highest among dock workers. One idea emerging from the conference was to obtain part-time LTL drivers and other help from colleges, placement centers, and police departments. Companies might recruit local drivers from workforces of plants being closed. It's also important to begin rating managers on their success in reducing driver turnover. Driver retention is also improved by helping drivers achieve a higher level of skill and letting them know they're important.

THE STEEL INDUSTRY'S NEXT HURDLE: Today, U.S. steel makers can produce a ton of steel for$435. Now here's the surprise. This is $37 per ton lower than current Japanese production costs. This amazing turnaround is the result of:(1) reduction in U.S. capacity by 27%, (2) a drop in U.S. steel employment of 50%,(3)plant modernization expenditures of over $11 billion,(4)the devalued dollar, and(5)critical import restrictions that limit steel imports to 20.5% of our steel market. Here's the bottom line.U.S. steel makers are expected to realize over$2 billion in profits this year.That's double the level of last year's earnings. Meanwhile, our steel exports are projected to reach 1.6 million tons this year,a 45% increase over last year. Prior to the 1984 import quota system,the U.S.steel industry was losing $5.6 billion and foreign steel imports had captured a 26% share of the market. However, the 1984 quota system negotiated with 29 other nations is set to expire on October 1, 1989. Given recent steel price increases, the next President may receive a mixed message on renewing these restrictions. For the last two years steel prices have risen 11% each year. If steel profits continue, steel restrictions may not!

IS THE EXPANSION ABOUT TO EXPIRE? Most economists don't think so-at least not yet. The worst we can expect over the next year is probably a slowdown in growth rates. How about the threat of inflation? Forecasters point out that productivity is the perfect inflationary cure. And it's something we've got plenty of these days. Over the past two years, annual manufacturing productivity growth has hummed along at about 3%. To many analysts, this looks like a healthy-and sustainable-rate. Unfortunately, service industries may face a tougher time ahead. Most economists expect domestic demand for services to slow in the coming year. Nothing critical, mind you, but nothing very promising, either Some weary economy-watchers are worried about a factory capacity crunch. Not likely, say the experts. Industrial utilization rates will probably climb a bit more through 1989--especially in the durable goods sector,where more trucks, machinery, and computers will be churned out for export. But most manufacturers can easily handle the anticipated extra load.... How about the U.S.dollar? Is it headed for another nose-dive? Actually, the dollar is relatively stable these days. so it probably won't soar-or crash anytime soon. If it were to rise slightly, we could benefit from the results: There would be less pressure on interest rates and, hence, less threat of inflation.