Bob Marshall’s January 2015 BLS Analysis for Recruiters; 2/6/15
January BLS Preface
Bob Marshall – Training/Coaching Updates:
Agent HR Recruiting Group, ACES (Agent Continuing Education Series) Event, Virtual Presentation, Thursday, February 19, 2015, 1pm (eastern)
I have confirmed that I will conduct a one-hour virtual presentation plus Q&A on Thursday, February 19, 2015. Contact Robert Brennan, President, at 727-350-1994 x102, or email at email@example.com, for connection details.
The Newport Group (TNG), Encinitas, CA, March 4-5, 2015
Right now we are in discussions to continue the four visits in twelve months program. If this comes to fruition, my second training visit to The Newport Group (TNG) in Encinitas, CA, will be on Wednesday and Thursday, March 4-5, 2015. This visit will consist of formal presentations and desk-level coaching. More details to follow.
If you are serious about increasing your billings, give my prized ‘$1,000,000 billing in one year’ coaching client, David Thaler (502-531-9890), a call. He will let you know what I did for him and what I can do for you to help you reach your maximum potential. If you are ready to invest in yourself and to receive the info you need, to bill at high levels, I can give you that information. Then it will be up to you to execute. The ball is in your court.
You can also read the descriptions of my other coaching plans, and all of my products, on my website @ www.themarshallplan.org or you can reach me directly at 770-898-5550 or email me @ firstname.lastname@example.org.
Many of you continue to correspond with me about these monthly BLS analyses and have asked if it is OK to use them in your presentations. The answer is, of course, yes! That is why I spend the time to assemble this information. I would encourage any of you who have that desire to weave any of the information I have printed below into your presentations. I write these analyses for the benefit of our recruitment industry in general and for the members of my distribution list in particular. So use this info as you deem appropriate.
I also write these monthly BLS analyses to not only counterbalance the negative/incorrect press reporting of our general economic state but, more than that, to remind all of my recruitment readers that, at the level we work, there is no unemployment and so we must recruit to find the candidates our client companies so desperately need!
So, to my recruiter colleagues, get out there and do what your name implies…RECRUIT! When your client companies have unique and difficult positions to fill, they need you. When they are being picky, they need you. When they are longing for more production from fewer employees, they need you. Go fill those needs. These should be the halcyon days in the recruitment arena!
Finally, always remember that we are not in an HR business, but in a ‘circumventing the time factor in the hiring sequence’ business—and adding value to our client companies.
The Big Lie: 5.6% Unemployment
Jim Clifton, Chairman and CEO, Gallup
Here’s something that many Americans — including some of the smartest and most educated among us — don’t know: The official unemployment rate, as reported by the U.S. Department of Labor, is extremely misleading.
Right now, we’re hearing much celebrating from the media, the White House and Wall Street about how unemployment is “down” to 5.6%. The cheerleading for this number is deafening. The media loves a comeback story, the White House wants to score political points and Wall Street would like you to stay in the market.
None of them will tell you this: If you, a family member or anyone is unemployed and has subsequently given up on finding a job — if you are so hopelessly out of work that you’ve stopped looking over the past four weeks — the Department of Labor doesn’t count you as unemployed. That’s right. While you are as unemployed as one can possibly be, and tragically may never find work again, you are not counted in the figure we see relentlessly in the news — currently 5.6%. Right now, as many as 30,000,000 Americans are either out of work or severely underemployed. Trust me; the vast majority of them aren’t throwing parties to toast “falling” unemployment.
There’s another reason why the official rate is misleading. Say you’re an out-of-work engineer or healthcare worker or construction worker or retail manager: If you perform a minimum of 1 hour of work in a week and are paid at least $20 — maybe someone pays you to mow their lawn — you’re not officially counted as unemployed in the much-reported 5.6%. Few Americans know this.
Yet another figure of importance that doesn’t get much press: those working part time but wanting full-time work. If you have a degree in chemistry or math and are working 10 hours part time because it is all you can find — in other words, you are severely underemployed — the government doesn’t count you in the 5.6%. Few Americans know this.
There’s no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.
And it’s a lie that has consequences, because the great American dream is to have a good job, and in recent years, America has failed to deliver that dream more than it has at any time in recent memory. A good job is an individual’s primary identity, their very self-worth, their dignity — it establishes the relationship they have with their friends, community and country. When we fail to deliver a good job that fits a citizen’s talents, training and experience, we are failing the great American dream.
Gallup defines a good job as 30+ hours per week for an organization that provides a regular paycheck. Right now, the U.S. is delivering at a staggeringly low rate of 44%, which is the number of full-time jobs as a percent of the adult population, 18 years and older. We need that to be 50% and a bare minimum of 10,000,000 new, good jobs to replenish America’s middle class.
I hear all the time that “unemployment is greatly reduced, but the people aren’t feeling it.” When the media, talking heads, the White House and Wall Street start reporting the truth — the percent of Americans in good jobs—jobs that are full time and real—then we will quit wondering why Americans aren’t “feeling” something that doesn’t remotely reflect the reality in their lives. And we will also quit wondering what hollowed out the middle class.
Mid Tuesday is best for cold calls, study finds
Daily News, January 28, 2015
Tuesdays between 10 a.m. and 4 p.m. is the optimal time for cold calling, giving recruiters a 30% higher chance of connecting with prospects than other common calling windows, according to a research from InsightSquared that studied more than 10,000 calls.
The best time window for weekday cold calls is between 10 a.m. and 4 p.m. After beginning the work day at about 5%, the connect rate surged to 8% around 10 a.m. and hovered there until 4 p.m., when it declined sharply for the rest of the evening.
Day of the week has almost as much impact on ‘connect’ rate as time of day, according to the report. Tuesday was the best day for reps to make calls, with a 10% connect rate. The connect rate fell each subsequent day before reaching a low point of 8.7% on Friday.
by Tara Sinclair, January 22, 2015
Right now, there are three generations in the U.S. workforce: millennials, generation Xers, and baby boomers. Each of these age cohorts makes up about one third of the workforce, but by 2020, as baby boomers retire, millennials are projected to make up nearly half of the working-age population.
At the Indeed Hiring Lab, we took a look at how each of these generations is searching for jobs today to get a better idea of the coming talent opportunities and challenges. In addition to examining the aggregate search data on what millennials, Gen Xers, and baby boomers are looking for, we also talked with employers to learn how they perceive candidates from different generations.
Overall, we found that job seeker preferences don’t differ that much from generation to generation. The differences are more subtle than the current conversation around millennials in the workforce would suggest, and employers are aware of that hyperbole. According to Aaron Kraljev, vice president of employer marketing at Wells Fargo, “While we’ve found that younger segments are more adept at technological advances in the application process, we also know that for most of our workforce, people are basically on the same page in how they approach their job search. It’s part of how anyone looks for a job now.”
In fact, our data show that one consistent commonality between job seekers of all ages is mobile — they all rely on their devices in a job search, even Baby Boomers, although slightly less than the younger generations. 73.4% of millennials search on mobile, and 71.3% of Gen Xers, and 48.4% of baby boomers use mobile too.
We also saw a preference for flexible work across generations. Search terms associated with flexible work are consistently among the top terms used by job seekers of any age. This will become increasingly important for employers as the labor market tightens and they compete for talent. In conversation with Jocelyn Lincoln, vice president of Americas recruiting at Kelly Services, she commented that, “the biggest discussions we’re having are around flexible and remote work, and this is a change that affects all generations. This has a lot to do with the portability of much of today’s work.” Attracting the candidates of tomorrow will mean redefining when and where a lot of work takes place.
In addition to those similarities, we found some differences that hew more closely to generational stereotypes. Millennials are more likely to use their mobile devices. And they’re less familiar with the labor market compared to older job seekers — Baby Boomers search most often in occupations where the most jobs are available, followed by Gen Xers and then millennials. This suggest that as people age into their careers they get a better sense of what’s available and make decisions accordingly.
Gen Xers are often neglected in the discussion about today’s generations, but in some ways, they may emerge as the ideal candidates for many hard-to-fill roles. They’re nearly as mobile as millennials, show more interest in computer and mathematical occupations than the younger set, and will have the experience to fill management occupations as baby boomers retire.
Baby boomers are more interested in blue-collar jobs than younger job seekers, meaning we may see shortages in occupations like construction and extraction and transportation and material moving as boomers leave the workforce. Healthcare practitioners and technical occupations are one area where there is low interest from all generations, but particularly from younger generations. Employers in this space will need to develop creative strategies for working around looming shortages, attracting people into these professions, and attracting job seekers from other markets.
Tech salaries, bonuses rise in 2014, survey finds
Daily News, January 22, 2015
Salaries for technology professionals rose 2% in 2014 to $89,450 on average annually, according to a salary survey released today by job board operator Dice Holdings Inc. Additionally, 37% of tech pros cited receiving a bonus in 2014, up slightly from 34% in 2013. The average bonus in 2014 rose 2% year over year to $9,538.
More than half, 61%, of technology professionals earned higher salaries in 2014, most frequently citing a merit raise as the reason for the increase. Another 25% say they received higher wages due to changing employers within the year.
The Pacific region as a whole saw the highest bump in salaries and tech professionals in Silicon Valley are again the highest paid in the country, earning $112,610 on average, up 4% year over year.
Big data and cloud dominate the skills which earn the highest paychecks in 2014:
- PAAS: $130,081
- Cassandra: $128,646
- MapReduce: $127,315
- Cloudera: $126,816
- HBase: $126,369
- Pig: $124,563
- ABAP: $124,262
- Chef: $123,458
- Flume: $123,186
- Hadoop: $121,313
“As demand for technology professionals rises and highly-skilled talent is harder to find, the pressure is being reflected where it counts: paychecks,” said Shravan Goli, president of Dice.com. “Still, tech pros are less happy with their earnings, signaling to companies that in order to recruit and retain the best candidates, offering more will be necessary.”
The Dice salary survey was administered online with 23,470 employed technology professionals responding between Sept. 29 and Nov. 17, 2014.
Engineering grads to post highest starting salary at $62,998
Daily News, January 9, 2015
Engineering majors are projected to post the highest starting salary, at $62,998, among graduates of the class of 2015, according to salary survey data released by the National Association of Colleges and Employers. Within the reported engineering disciplines, petroleum engineering majors are likely to earn the highest salaries with an anticipated average salary of $80,600.
At the master’s degree level, computer science majors have the highest salary projection for the class of 2015 at $71,140.
The average projected salaries by discipline for bachelor’s degrees include:
- Engineering: $62,998
- Computer science: $61,287
- Math and sciences: $56,171
- Business: $51,508
- Agriculture and natural resources: $51,220
- Healthcare: 50,839
- Communications: $49,395
- Social sciences: $49,047
- Humanities: $45,042
The top five industries that are projecting the highest starting salaries to 2015 bachelor’s degree graduates, regardless of major, are:
- Oil and gas extraction: $67,800
- Motor vehicle manufacturing: $64,867
- Chemical (pharmaceutical) manufacturing: $64,621
- Food and beverage manufacturing: $62,982
- Computer and electronics manufacturing: $61,598
The January 2015 Salary Survey included 316 NACE employer members, who reported their projected salaries for their anticipated new hires from the class of 2015. It was conducted from Aug.11 through Nov. 24, 2014.
The new ADP/Moody’s National Employment Report: 80% of all new job growth in January, 2015 came from Small and Mid-size Companies
February 4, 2015
Private sector employment increased by 213,000 jobs from December to January (down from the increase of 241,000 jobs last month), according to the January ADP National Employment Report®, which is produced by ADP®, a leading global provider of Human Capital Management (HCM) solutions, in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.
By Company Size
Small businesses: 78,000
1-19 employees 38,000
20-49 employees 40,000
Medium businesses: 95,000
50-499 employees 95,000
Large businesses: 40,000
500-999 employees 14,000
1,000+ employees 26,000
Goods producing 31,000
Service providing 183,000
Financial activities 11,000
Professional/business services 42,000
Payrolls for businesses with 49 or fewer employees increased by 78,000 jobs in January, down from 115,000 in December. Employment among companies with 50-499 employees was the only segment showing an increase in January. These businesses added 95,000 jobs, up from December’s increase of 78,000. Employment at large companies – those with 500 or more employees – decreased from 61,000 the previous month to 40,000 jobs added in January. Companies with 500-999 employees added 14,000 jobs, down from December’s 23,000. Companies with over 1,000 employees added 26,000 jobs, down from December’s 39,000.
Goods-producing employment rose by 31,000 jobs in January, down from 47,000 jobs gained in December. The construction industry added 18,000 jobs, down from last month’s gain of 26,000. Meanwhile, manufacturing added 14,000 jobs in January, below December’s 23,000.
Service-providing employment rose by 183,000 jobs in January, down from 207,000 in December. The report indicates that professional/business services contributed 42,000 jobs in January, a large drop-off from December’s 72,000. Expansion in trade/transportation/utilities grew by 54,000, a sharp increase from December’s 40,000. The 11,000 new jobs added in financial activities is down from last month’s 14,000, but still well above the average of the past twelve months.
“January marks another month of solid job gains and is in line with the NER’s twelve-month average of over 200,000 jobs added per month,” said Carlos Rodriguez, president and chief executive officer of ADP.
Mark Zandi, chief economist of Moody’s Analytics, said, “Employment posted another solid gain in January, although the pace of growth is slower than in recent months. Businesses in the energy and supplying industries are already scaling back payrolls in reaction to the collapse in oil prices, while industries benefiting from the lower prices have been slower to increase their hiring. All indications are that the job market will continue to improve in 2015.
(The February 2015 ADP National Employment Report will be released at 8:15 a.m. ET on March 4, 2015).
Due to the important contribution that small businesses make to economic growth, employment data that are specific to businesses with 49 or fewer employees is reported each month in the ADP Small Business Report®, a subset of the ADP National Employment Report.
January 2015 Small Business Report Highlights
Total Small Business Employment: 78,000
|●By Sector for 1-49 Employees|
|●By Sector for 1-19 Employees|
|●By Sector for 20-49 Employees|
Bottom-line: To my audience of recruiters, always remember this: Our ‘bread and butter’, especially on the contingency side of the house, has historically been, and continues to be, small and medium-sized client companies. Along with the large companies, these companies need to be in included in your niche!
Job Openings and Structural Unemployment
On January 13th, the BLS reported that there were 5,000,000 job openings on the last business day of November, little changed from 4,800,000 in October. Hires (5,000,000) were little changed and separations (4,600,000) declined in November. Within separations, the quits rate (1.9%) was unchanged and the layoffs and discharges rate (1.2%) was little changed. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions.
The job openings rate was 3.4%. The number of job openings was little changed for total private and increased for government in November. Job openings increased for nondurable goods manufacturing and for state and local government. The number of job openings was little changed in all four regions.
The number of job openings (not seasonally adjusted) increased over the 12 months ending in November for total nonfarm, total private, and government. Job openings increased over the year for many industries, including professional and business services, health care and social assistance, and accommodation and food services. Job openings decreased in arts, entertainment, and recreation. The number of openings increased over the year in all four regions.
The hires rate in November was 3.6%. The number of hires was little changed for total private and government. Hires decreased over the month in professional and business services.
Over the 12 months ending in November, the number of hires (not seasonally adjusted) increased for total nonfarm and total private, and was little changed for government. Hires increased over the year in several industries, including retail trade and accommodation and food services.
Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining. Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising. Over the 12 months ending in November 2014, hires totaled 57,600,000 and separations totaled 54,900,000, yielding a net employment gain of 2,700,000. These figures include workers who may have been hired and separated more than once during the year.
(The Job Openings and Labor Turnover Survey results for December 2014 are scheduled to be released on Tuesday, February 10th, 2015).
As we recruiters know, that 5,000,000 number only represents 20% of the jobs currently available in the marketplace. The other 80% of job openings are unpublished and are filled through networking or word of mouth or by using a RECRUITER. So, those 5,000,000 published job openings now become a total of 25,000,000 published and hidden job orders.
In January there were 8,979,000 unemployed workers. What was the main reason why those workers were unemployed? Two Words: Structural Unemployment. If we can’t figure out how to educate and/or reeducate those 8,979,000 unemployed, then they will keep reappearing each month as a BLS unemployment statistic—as they have. In the meantime, our recruitment marketplace flourishes!
Online Labor Demand Increased 150,400 in January
February 4, 2015
- 2015 starts with widespread increases in labor demand across States and MSAs
- Large State gains in California, Florida, Texas, New York, and Ohio
- Note: January data incorporates the HWOL annual revision
Online advertised vacancies rose 150,400 to 5,267,100 in January, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series. The December Supply/Demand rate stands at 1.70 unemployed for each advertised vacancy with a total of 3,600,000 more unemployed workers than the number of advertised vacancies. The number of unemployed was 8,700,000 in December.
“Online labor demand begins 2015 with a large gain, suggesting that labor markets are continuing to improve,” said Gad Levanon, Managing Director, Macroeconomic and Labor Market Research. “In January, all large States and MSAs showed solid growth with the increase spread across the major occupational categories.”
In January, the Professional category saw strong gains in Management (14,000), Business and Finance (12,400) and Healthcare (11,800). The Services/Production category saw large gains in Sales (21,300), Office/Admin (29,200) and Transportation (27,200). Supply/Demand rates have also continued to show improvement.
The Conference Board Help Wanted OnLine® Data Series (HWOL) measures the number of new, first-time online jobs and jobs reposted from the previous month for over 16,000 Internet job boards, corporate boards and smaller job sites that serve niche markets and smaller geographic areas.
(The February 2015 Conference Board Help Wanted OnLine® (HWOL) Data Series will be released at 10:00 AM ET on Wednesday, March 4, 2014).
In January, 2015 the regular unemployment number rose to 5.7%, but the broader U-6 measure was at 11.3%, almost twice as high as the regular unemployment figure.
The above 11.3% is referred to as the U6 unemployment rate (found in the monthly BLS Employment Situation Summary, Table A-15; Table A-12 in 2008 and before). It counts not only people without work seeking full-time employment (the more familiar U-3 rate), but also counts “marginally attached workers and those working part-time for economic reasons.” Note that some of these part-time workers counted as employed by U-3 could be working as little as an hour a week. And the “marginally attached workers” include those who have gotten discouraged and stopped looking, but still want to work. The age considered for this calculation is 16 year and over.
Here is a look at the January U-6 numbers for the past 12 years:
January 2014 12.7%
January 2013 14.4%
January 2012 15.1%
January 2011 16.1%
January 2010 16.5%
January 2009 14.0%
January 2008 9.0%
January 2007 8.3%
January 2006 8.4%
January 2005 9.3%
January 2004 9.9%
January 2003 9.9%
The January BLS Analysis
The unemployment rate is published by the Bureau of Labor Statistics, a division of the US Department of Labor. The rate is found by dividing the number of unemployed by the total civilian labor force. On February 6th, 2015, the BLS published the most recent unemployment rate for January, 2015 of 5.7% (actually it is 5.713 up by .148% from 5.565 in December, 2014).
The unemployment rate was determined by dividing the unemployed of 8,979,000 (—up from the month before by 291,000—since January, 2014 this number has decreased by 1,301,000) by the total civilian labor force of 157,180,000 (up by 1,051,000 from December, 2014). Since January 2014, our total civilian labor force has increased by 1,694,000 workers.
(The continuing ‘Strange BLS Math’ saga): The BLS continues to increase the total Civilian Noninstitutional Population—this time up to 249,723,000. This is an increase of 696,000 from last month’s increase. In one year’s time this population has increased by 2,808,000. The Civilian Noninstitutional Population has increased each month by…)
|Up from December 2014||by||696,000|
|Up from November 2014||by||143,000|
|Up from October 2014||by||187,000|
|Up from September 2014||by||211,000|
|Up from August 2014||by||217,000|
|Up from July 2014||by||206,000|
|Up from June 2014||by||209,000|
|Up from May 2014||by||192,000|
|Up from April 2014||by||183,000|
|Up from March 2014||by||181,000|
|Up from February 2014||by||173,000|
|Up from January 2014||by||170,000|
|Up from December 2013||by||170,000|
|Up from November 2013||by||178,000|
|Up from October 2013||by||186,000|
|Up from September 2013||by||213,000|
|Up from August 2013||by||209,000|
|Up from July 2013||by||203,000|
|Up from June 2013||by||204,000|
|Up from May 2013||by||189,000|
|Up from April 2013||by||188,000|
|Up from March 2013||by||180,000|
|Up from February 2013||by||167,000|
|Up from January 2013||by||165,000|
|Up from December 2012||by||313,000|
|Up from November 2012||by||176,000|
|Up from October 2012||by||191,000|
|Up from September 2012||by||211,000|
|Up from August 2012||by||206,000|
|Up from July 2012||by||212,000|
|Up from June 2012||by||199,000|
|Up from May 2012||by||189,000|
|Up from April 2012||by||182,000|
|Up from March 2012||by||180,000|
|Up from February 2012||by||169,000|
|Up from January 2012||by||335,000|
|Up from December 2011||by||2,020,000|
And this month the BLS has increased the Civilian Labor Force to 157,180,000 (up from December by 1,051,000).
Subtract the second number (‘civilian labor force’) from the first number (‘civilian noninstitutional population’) and you get 92,543,000 ‘Not in Labor Force’—down by 355,000 from last month’s 92,898,000. Since January, 2014, 1,115,000 US workers have vanished! Where did those 1,115,000 potential workers disappear to in one year’s time? I am assuming they still have to eat and pay their rent. They still need money, don’t they? The government tells us that these NILFs got discouraged and just gave up looking for a job. My monthly recurring question is: “If that is the case, how do they live when they don’t earn any money because they don’t have a job? Are they ALL relying on the government to support them??”
This month our Employment Participation Rate—the population 16 years and older working or seeking work—rose slightly to 62.9%. This is .2% above the historically low rate of 62.7% recorded in September and December of last year.
Some Interesting Math: From January 2009 to December 2014, the folks Not In Labor Force (NILF) have increased by 11,875,000. To find our more realistic unemployment rate, let’s add back that NILF number to our Civilian Labor Force (CLF) of 156,129,000. That new CLF is now 168,004,000. Now, since these folks are not working, let’s add back that NILF number to our Unemployed number of 8,688,000. That new Unemployed number is now 20,563,000. Now, let’s divide that 20,563,000 by 168,004,000. We find our new unemployment rate is approximately 12.2%…more than double the official BLS 5.6% that was reported.
An Interesting Fact: For those who think that these declines in our labor force are due to an “aging work force” and retirees, think again. Robert Oak (at the Economic Populist) gave us a very detailed analysis of the December numbers which said, in part:
“The December unemployment rate dropped by almost half a million more people considered not part of the labor force. The labor participation rate went back to 38 year record lows … From a year ago, the number of people considered not in the labor force has increased by 1,200,000… The low labor participation rate is not all baby boomers and people entering into retirement.
Consider the labor participation rate for those between the ages of 25 to 54. These are the prime working years, so one cannot blame baby boomer and other retirements and college on the declining participation rate. The 25 to 54 age bracket labor participation rates have not been this low since the 1980’s recession and the rate stands at a 3 month static 80.8%.”
Final take on these numbers: Fewer people looking for work will always bring down the unemployment rate.
Anyway, back to the point I am trying to make. On the surface, these new unemployment rates are scary, but let’s look a little deeper and consider some other numbers.
The unemployment rate includes all types of workers—construction workers, government workers, etc. We recruiters, on the other hand, mainly place management, professional and related types of workers. That unemployment rate in January was 2.9% (this rate rose .2% from last month’s 2.7%). Or, you can look at it another way. We usually place people who have college degrees. That unemployment rate in January was 2.8% (this rate dropped by .1% from last month’s 2.9%).
Now stay with me a little longer. This gets better. It’s important to understand (and none of the pundits mention this) that the unemployment rate, for many reasons, will never be 0%, no matter how good the economy is. Without boring you any more than I have already, let me add here that Milton Friedman (the renowned Nobel Prize-winning economist), is famous for the theory of the “natural rate of unemployment” (or the term he preferred, NAIRU, which is the acronym for Non-Accelerating Inflation Rate of Unemployment). Basically, this theory states that full employment presupposes an ‘unavoidable and acceptable’ unemployment rate of somewhere between 4-6% with it. Economists often settle on 5%, although the “New Normal Unemployment Rate” has been suggested to fall at 6.7%.
Nevertheless (if you will allow me to apply a ‘macro’ concept to a ‘micro’ issue), if this rate is applied to our main category of Management, Professional and Related types of potential recruits, and/or our other main category of College-Degreed potential recruits, we are well below the 4-6% threshold for full employment…we find no unemployment! None! Zilch! A Big Goose Egg!
THE IMPORTANCE OF GDP
“The economic goal of any nation, as of any individual, is to get the greatest results with the least effort. The whole economic progress of mankind has consisted in getting more production with the same labor…Translated into national terms, this first principle means that our real objective is to maximize production. In doing this, full employment—that is, the absence of involuntary idleness—becomes a necessary by-product. But production is the end, employment merely the means. We cannot continuously have the fullest production without full employment. But we can very easily have full employment without full production.”
—Economics in One Lesson, by Henry Hazlitt, Chapter X, “The Fetish of Full Employment”
On January 30th, the Bureau of Economic Analysis (BEA) announced the real gross domestic product (GDP) — the value of the production of goods and services in the United States, adjusted for price changes — increased at an annual rate of 2.6% in the fourth quarter of 2014, according to the “advance” estimate released by the BEA. In the third quarter, real GDP increased 5.0%.
The Bureau emphasized that the fourth-quarter advance estimate is based on source data that are incomplete or subject to further revision by the source agency. The “second” estimate for the fourth quarter, based on more complete data, will be released on February 27, 2015.
The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The deceleration in real GDP growth in the fourth quarter primarily reflected an upturn in imports, a downturn in federal government spending, and decelerations in nonresidential fixed investment and in exports that were partly offset by an upturn in private inventory investment and an acceleration in PCE.
*The economy needs to expand at about 3% to keep the unemployment rate from rising.
Real GDP increased 2.4% in 2014 (that is, from the 2013 annual level to the 2014 annual level), compared with an increase of 2.2% in 2013.
The increase in real GDP in 2014 reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, private inventory investment, state and local government spending, and residential fixed investment that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The acceleration in real GDP growth in 2014 reflected an acceleration in nonresidential fixed investment, a smaller decrease in federal government spending, and accelerations in private inventory investment, in PCE, and in state and local government spending that were partly offset by an acceleration in imports and a deceleration in residential fixed investment.
(The “second” estimate for the fourth quarter 2014 and the Annual 2014 numbers, will be released on February 27th, 2015)
IT IS IMPOSSIBLE FOR UNEMPLOYMENT EVER TO BE ZERO
‘Unemployment’ is an emotional ‘trigger’ word…a ‘third rail’, if you will. It conjures up negative thoughts. But it is important to realize that, while we want everyone who wants a job to have the opportunity to work, unemployment can never be zero and, in fact, can be disruptive to an economy if it gets too close to zero. Very low unemployment can actually hurt the economy by creating an upward pressure on wages which invariably leads to higher production costs and prices. This can lead to inflation. The lowest the unemployment rate has been in the US was 2.5%. That was in May and June 1953 when the economy overheated due to the Korean War. When this bubble burst, it kicked off the Recession of 1953. A healthy economy will always include some percentage of unemployment.
There are five main sources of unemployment:
- Cyclical (or demand-deficient) unemployment – This type of unemployment fluctuates with the business cycle. It rises during a recession and falls during the subsequent recovery. Workers who are most affected by this type of unemployment are laid off during a recession when production volumes fall and companies use lay-offs as the easiest way to reduce costs. These workers are usually rehired, some months later, when the economy improves.
- Frictional unemployment – This comes from the normal turnover in the labor force. This is where new workers are entering the workforce and older workers are retiring and leaving vacancies to be filled by the new workers or those re-entering the workforce. This category includes workers who are between jobs.
- Structural unemployment – This happens when the skills possessed by the unemployed worker don’t match the requirements of the opening—whether those be in characteristics and skills or in location. This can come from new technology or foreign competition (e.g., foreign outsourcing). This type of unemployment usually lasts longer than frictional unemployment because retraining, and sometimes relocation, is involved. Occasionally jobs in this category can just disappear overseas.
- Seasonal unemployment – This happens when the workforce is affected by the climate or time of year. Construction workers and agricultural workers aren’t needed as much during the winter season because of the inclement weather. On the other hand, retail workers experience an increase in hiring shortly before, and during, the holiday season, but can be laid off shortly thereafter.
- Surplus unemployment – This is caused by minimum wage laws and unions. When wages are set at a higher level, unemployment can often result. Why? To keep within the same payroll budget, the company must let go of some workers to pay the remaining workers a higher salary.
Other factors influencing the unemployment rate:
- Length of unemployment – Some studies indicate that an important factor influencing a workers decision to accept a new job is directly related to the length of the unemployment benefit they are receiving. As of August 25th, workers in most states are eligible for up to 26 weeks of benefits from the regular state-funded unemployment compensation program, although 8 states provide fewer weeks and 2 provide more. (Emergency Unemployment Compensation, a temporary federal program that provided additional weeks of benefits to workers who exhausted their regular state UI before finding a job, expired at the end of 2013 and efforts to revive it have been unsuccessful so far.) Studies suggest that additional weeks of benefits reduce the incentive of the unemployed to seek and accept less desirable jobs.
- Changes in GDP – Since hiring workers takes time, the improvement in the unemployment rate usually lags behind the improvement in the GDP.
WHERE RECRUITERS PLACE
Now back to the issue at hand, namely the recruiting, and placing, of professionals and those with college degrees.
If you take a look at the past few years of unemployment in the January “management, professional and related” types of worker category, you will find the following rates:
January 2014 3.1%
January 2013 3.9%
January 2012 4.3%
January 2011 4.7%
January 2010 5.0%
January 2009 4.1%
January 2008 2.2%
January 2007 2.0%
January 2006 2.1%
January 2005 2.4%
January 2004 3.0%
January 2003 3.2%
January 2002 3.1%
Here are the rates, during those same time periods, for “college-degreed” workers:
January 2014 3.2%
January 2013 3.8%
January 2012 4.2%
January 2011 4.2%
January 2010 4.8%
January 2009 3.9%
January 2008 2.1%
January 2007 2.1%
January 2006 2.1%
January 2005 2.4%
January 2004 2.9%
January 2003 3.0%
January 2002 2.9%
So, while January’s 2015 rates for these two categories, 2.9% and 2.8%, respectively, are trending very positively, when looking at the big picture, it’s not anything to be very happy about either—especially when we see how well we had it during the 2004-2008 time frame. But regardless, these unemployment numbers usually include a good number of job hoppers, job shoppers and rejects. We, on the other hand, are engaged by our client companies to find those candidates who are happy, well-appreciated, making good money and currently working and we entice them to move for even better opportunities—especially where new technologies are expanding. This will never change. And that is why, no matter the unemployment rate, we still need to market to find the best possible job orders and we still need to recruit to find the best possible candidates.
Below are the numbers for the over 25 year olds:
Less that H.S. diploma – Unemployment Rate
H.S. Grad; no college – Unemployment Rate
Some College; or AA/AS – Unemployment Rate
BS/BS + – Unemployment Rate
Management, Professional & Related – Unemployment Rate
For a total Management, Professional & Related workforce of…(,000)
Management, Business and Financial Operations – Unemployment Rate
Professional & Related – Unemployment Rate
Sales & Related – Unemployment Rate