BLS DAILY REPORT, THURSDAY, APRIL 17, 1997 The U.S. labor market in the 21st century will face a growing scarcity of highly skilled workers and a dearth of younger workers to replace the baby boomers who hope to retire before the year 2020, the Hudson Institute predicts in a report released today. The U.S. workforce of the next century will be divided between the highly-skilled who can compete in the global, high-tech economy and those who lack the education who will be left in low-paying jobs, the institute says in "Workforce 2020: Work and Workers in the 21st Century." The key to upward mobility will be education, according to the report that updates a major project the institute did in 1987 for the Labor Department ....Some of the Hudson Institute's predictions of the workforce in 2020 project that: Automation will continue to displace low-skilled workers in U.S. manufacturing and offices; the development, marketing, and servicing of advanced technology will create more jobs than they destroy; jobs in low-skilled manufacturing will disappear or be available only at depressed wages, but millions of high-productivity manufacturing jobs will remain, offering higher wages than at any time in U.S. history; employment growth will remain concentrated in services, particularly in those sectors servicing baby boomers, such as travel, specialized health care, home repair, and professional services; and the jobs created by the demands of the baby boomers may replace many of the low-skilled manufacturing jobs the United States will likely lose, although not always at comparable wages .... (Daily Labor Report, page A-6). Construction of new homes and apartments dropped 6.4 percent in March after a 10.7 percent surge in activity the previous month, the Commerce Department reported. Analysts said the new report confirms the view that February's unusually mild weather boosted housing construction ....(Daily Labor Report, page D-1; New York Times, page D7: Wall Street Journal, page A2). __Industrial production soared an unexpectedly sharp 0.9 percent in March, buoyed by strong gains in the output of durable goods, the Federal Reserve reported ....Capacity utilization also jumped in March, climbing to 84.1 percent. The last time the operating rate of U.S. factories, mines, and utilities was higher was March 1995. But bottleneck pressures should not prove to be a concern going forward, because capacity growth remains strong at 4 percent ....(Daily Labor Report, page D-5: Washington Post, page E2; New York Times, page D7: Wall Street Journal, page A2). __Another time-tested detector of looming inflationary pressures may be ready for the statistical scrap heap. For year, economists have looked to the factory capacity utilization rate as an early warning sign of inflation ....The logic: A high and rising utilization rate indicates bottlenecks are building in the economy, creating shortages that can push up prices. A reading over 84 percent is widely viewed as an inflationary red alert ....A growing number of economists, including some inside the Fed itself, have their own doubts about the old logic. Like the unemployment rate, which once was thought to signal inflation whenever it fell below 6 percent or so, the capacity utilization rate now may be sending a false alarm. In fact, a recent study by the Dallas Federal Reserve found that the old relationship between inflation and capacity utilization broke down completely in the early 1980s, perhaps as a result of growing global trade and competition ....(USA Today, page 4B). DUE OUT TOMORROW: Usual Weekly Earnings of Wage and Salary Workers: First Quarter 1997