The nation's future work force will be smaller and more diverse, more mobile and more vulnerable to global competition, according to a study conducted for the Labor Department (search).

Shifting demographics, advances in technology and increases in global trade are the strongest forces shaping the world of work, with big changes on the horizon for workers and employers, said the study by Rand Corp. (search), a think tank based in Santa Monica, Calif.

"These trends have important implications for vital aspects of the future workplace and work force and for the U.S. economy," said Lynn Karoly, a Rand economist who led the study.

American workers should brace for continued global outsourcing of manufacturing jobs and high-skilled, white-collar service jobs -- a touchy political issue this election year. Outsourcing refers to the loss of American jobs overseas.

The inexpensive and rapid exchanges of communication and information are breaking down trade barriers and hitting sectors of the economy that were once insulated from global competition.

Economists think globalization will continue to have "a favorable effect on income, prices, consumer choice, competition and innovation in the United States," the report said.

President Bush's top economic adviser landed in hot water last week for making that point. N. Gregory Mankiw (search) backpeddled Tuesday, saying his comments on the benefits of international trade were misinterpreted.

But the outsourcing of American jobs overseas is a growing economic reality that, according to the study, will lead to unemployment and permanent wage losses for some workers.

"The effect on the wage structure could become larger over time," the study said.

Trade also will continue to generate new jobs at home. As of 1999, about 11.6 million jobs in the United States were supported directly or indirectly by exports, representing about 9 percent of employment, the study said.

Expected job growth, however, will be concentrated in lower-paying industries such as retail, health and personal services.

"The prospects of continued or even accelerating job displacement" means policies should be examined to help workers "adjust to these shocks," the study said.

The Labor Department under the Bush administration created an office to help prepare workers for future demands. "We'll continue to focus our efforts on providing employment and training services to workers, so that we have the best prepared work force for the 21st century," said department spokesman Ed Frank.

As baby boomers retire in the coming decade, the annual growth rate of the nation's work force will slow to a near standstill despite a rise in participation from immigrants and women.

Economists are concerned because future economic growth depends on an expanding labor force or worker productivity.

Employers faced with a tight job market will be forced to adjust compensation, benefits and work schedules to attract and keep employees -- many of whom will be women and minorities, the study said. Older workers also may be enticed to work past retirement.

Technological advances will allow workers to be more mobile and to work in decentralized offices, allowing for increased telecommuting and flexible schedules.

Workers with fewer skills, however, will command much lower salaries and face competition nationally and globally.

Achievement scores of U.S. students have been only about average in comparison to other developed countries. U.S. adults rank near the middle on tests of skill measures on workplace literacy, the study said. The United States also has a wider spread in the distribution of work skills, with more very low-skilled and more high-skilled.