Bob Marshall’s August 2015 BLS Analysis for Recruiters; 9/4/15
August BLS Preface
Bob Marshall – Training/Coaching Updates:
The Newport Group (TNG), September 8-9, 2015
I will conduct my fourth training visit to The Newport Group, in Encinitas, CA, on Tuesday and Wednesday, September 8-9, 2015. This visit will consist of formal presentations and desk-level coaching.
The Illuminati, September 23, 2015
I am super pleased to announce our next Illuminati guest. His name is Mike Pietrack and I am sure that many of you know him through his past exploits. Mike specializes in the Medical Science Liaison (MSL) niche and is known as the MSL Recruiter. Mike will participate in our thirty-seventh Illuminati Think-Tank teleconference to be held Wednesday, September 23rd, 2015, at 3pm (Eastern Time), noon (Pacific Time). After the event, I will send a recording link of this session to all of the attendees. This is an open-mike event, so come with all of the questions you would like to ask Mike.
The Ohio Recruiters Association (ORA) Fall Workshop, October 19, 2015
I will be presenting to the ORA Fall Workshop on Monday, October 19, 2015 at the Nationwide Hotel and Conference Center in Columbus Ohio. My presentations will run from 9:45 am to 3:30 pm. The titles of the presentations will include: Your Desk as a Manufacturing Plant; How to Establish Elegant Rapport through Elegant Communication; How to Teach a Recruiter to Bill $1,010,349.50 in One Year; & Recruiting the ‘Placeable’ Candidate.
Top Echelon, Free Recruiter Training Webinar, December 8, 2015
My Top Echelon presentation (title to be announced) will be on Tuesday afternoon, December 8, 2015, at 1pm, Eastern Time.
TBMG Silver Coaching Plan, (revised 2015)
*An affordable investment for those you want the accountability factor;
*We have twice per month telephone meetings—basically every other week (although I will be available at any time should the need to talk arise);
*Your numbers will be tracked on a weekly basis (recommended);
*$600 per month; 3-month commitment;
*The goal with this plan is to double your current levels of production;
And that is basically that!
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.
Unemployment at 7-Year Low after Economy Adds 173,000 Jobs in August
Associated Press, September 4, 2015
The U.S. unemployment rate fell to a 7-year low in August as employers added a modest 173,000 jobs, a key piece of evidence for the Federal Reserve in deciding whether to raise interest rates from record lows later this month.
The Labor Department says the unemployment rate fell to 5.1% from 5.3%, the lowest since April 2008.
Hiring in August was the lowest in 5 months, but the government revised up the June and July job growth by a combined 44,000. From June through August, the economy generated a solid 221,000 jobs a month, up from an average of 189,000 in March through May.
Steady hiring could encourage the Fed to raise rates at its meeting on Sept. 16-17 for the first time in a decade. Still, stock market turbulence, a persistently low inflation rate and a sharp slowdown in China could complicate its decision.
After 3 years of solid job growth that has put nearly 8,000,000 Americans back to work, Fed officials are probably satisfied with the job market’s progress. Once the Fed begins raising borrowing rates, higher rates are likely to eventually ripple through the economy. Americans could face higher costs for mortgages and other loans, though the increases would likely be modest and gradual.
A stumbling global economy and stronger dollar, which makes U.S. exports costlier overseas, could slow growth for the next 12 months, according to Goldman Sachs.
Joseph LaVorgna, chief U.S. economist at Deutsche Bank, cautioned before Friday’s report that job growth for August typically falls short of later revisions. The elimination of millions of summer jobs in August tends to cause the government to undershoot the actual job gain for the month.
A key question is how the stock market turbulence and China’s troubles might affect the overall U.S. economy. The answer probably won’t be clear for months. So far, the effect has been minimal.
Smaller companies and services firms, which are largely insulated from global trends, are still doing well. Service sector companies, such as restaurants, retailers, banks and construction companies are expanding at the fastest pace in nearly a decade, according to a survey by the Institute for Supply Management.
The number of Americans seeking unemployment remains very low by historical standards – evidence that companies are still confident enough about customer demand to maintain their staff levels.
There are other signs that the U.S. job market remains solid. Americans, overall, have a brighter outlook: According to the Conference Board’s consumer confidence survey, nearly 22% of Americans said jobs were plentiful in August. That matched the proportion who said jobs were hard to get – the first time since the Great Recession began in 2007 that the 2 figures have been equal.
GDP growth gets upward revision to 3.7% for Q2; ‘Welcome relief’
Daily News, August 27, 2015
US real GDP rose in the second quarter at an annual rate of 3.7%, according to a second estimate that revises an earlier, advance estimate of 2.3%, the US Bureau of Economic Analysis reported. The new estimate beat economists’ forecasts and was a bigger improvement over the anemic first quarter.
“After a lackluster start to the year, during which growth averaged just 0.6% annualized, the 3.7% during Q2 is a welcome relief, with both the sheer magnitude of the acceleration and the breadth of the improvement indicating that the US economy is in fact on a solid growth trajectory,” wrote Michael Dolega, senior economist at TD Economics, in a research report.
Bloomberg reports today’s estimate exceeded the median forecast of 79 economists surveyed, which called for a 3.2% gain in GDP. Michael Feroli, chief US economist at JPMorgan Chase & Co. in New York, projected 3.4% GDP growth.
“The economy is looking solid,” Feroli told Bloomberg. “There’s a pretty broad-based pickup in domestic demand.”
Jason Furman, chairman of the Council of Economic Advisors wrote in a blog post on Whitehouse.gov. “Real GDP growth in the second quarter was revised markedly upward, as consumers spent more and businesses invested more than previously estimated. The economy grew at a much faster pace in the second quarter than in the first, with strong personal consumption leading the rebound.”
State and Local Tax Burdens
Tax Foundation, August 26, 2015
Highest State Tax Rates
- New York 12.6%
- New Jersey 12.3%
- Connecticut 11.9%
- California 11.4%
- Wisconsin 11.0%
Lowest State Tax Rates
- Wyoming 6.9%
- Alaska 7.0%
- South Dakota 7.1%
- Texas 7.5%
- Louisiana 7.6%
Survey finds 20% of employed actively seeking new job
Daily News, August 24, 2015
Most people are open to new job opportunities, according to the 2015 Job Search Methods Survey released today by PrideStaff. More than 20% of respondents are employed but actively looking for another position, the report found, and nearly ⅓ are “passive job seekers,” who are open to learning about new opportunities even though they are currently employed.
Respondents were asked, “Which of the following options best matches your current employment status?” Answers included:
- Currently unemployed and looking for work: 33.1%
- Currently employed but actively looking for another job: 20.4%
- Currently employed and open to listening to new opportunities if presented to me: 32.8%
- Currently employed and not open to new opportunities: 13.7%
Among those who are actively searching for work, nearly ½ of respondents initiated their search to find better pay, culture and training, or to switch careers.
Respondents reported their top tactics for conducting their latest job search were online job boards, 73.5%; employment agency/recruiter, 69.6%; and friends/family referral or recommendation, 45.6%.
“While job search behaviors and trends are quite diverse, highly desirable candidates are able to find opportunities quickly and may only be on the job market for a brief period,” PrideStaff COO Tammi Heaton said.
The online survey was conducted in March and included nearly 900 individuals.
US adds 70,500 tech jobs in first half of year, CompTIA says
Daily News, August 24, 2015
The US information technology industry added 70,500 jobs in the first half of 2015 for a total of almost 5,000,000 jobs, according to an IT employment midyear update report released by CompTIA. The industry gained jobs in 14 of the past 18 months.
The IT services sector led the job growth, adding 45,700 jobs from January to June 2015, according to CompTIA. Manufacturing and software followed, adding 10,300 and 4,900 jobs respectively.
“With steady job growth, the IT industry continues to outperform many other sectors of the US economy,” said Tim Herbert, senior VP, research and market intelligence, CompTIA.
Most facets of IT employment remain strong, with the largest gains during the first half of 2015 recorded in IT services, up 2.4%, and software, up 1.5%. Tech manufacturing grew less than 1%, mirroring the 0.9% growth rate for the telecommunications and internet services sector.
“The continuing trends of ‘everything-as-a-service,’ ‘software-defined everything’ and the proliferation of devices and applications requiring integration and support have spurred hiring by a wide range of IT companies,” Herbert said.
Job postings for IT occupations increased 20% during the second quarter compared to the first quarter. Cybersecurity jobs, software developers, data scientists, Web developers and network architects showed the largest increases.
“The data confirms the breadth and demand for technology expertise,” Herbert said. “Beyond traditional employers of IT workers, sectors such as healthcare, defense, retail and finance are now represented among the top 20 of companies with hiring intent.”
CompTIA cautioned the unemployment rate for computer and mathematical positions moved higher in back-to-back months, hitting 3.4% in July, which is still lower than the overall national rate of 5.3%. CompTIA said it is still too soon to say whether this is a momentary blip or the start of a trend.
Can Résumé-Reviewing Software Be As Biased As Human Hiring Managers?
NBC News, Julianne Pepitone, August 17, 2015
Computer software is increasingly involved in tasks like winnowing down job applicants’ résumés, or deciding whether a bank should grant a home loan. But what if that seemingly neutral algorithm was unwittingly built with human bias baked in?
Researchers have developed a new test to measure whether these decision-making programs can be as biased as humans — as well as a method for fixing them.
A team of computer scientists from the University of Utah, the University of Arizona and Haverford College presented research last week on a technique that can figure out if these software programs discriminate unintentionally. The group was also able to determine whether a program violated the legal standards for fair access to employment, housing and other situations.
The test uses a machine-learning algorithm, which itself is similar to these decision-making computer programs. If the test is able, for example, to accurately predict an applicant’s race or gender based on the data provided to the algorithms — even though race and gender are explicitly hidden — there is a potential for bias.
“There’s a growing industry around doing résumé filtering and résumé scanning to look for job applicants … If there are structural aspects of the testing process that would discriminate against one community … that is unfair,” Suresh Venkatasubramanian, a University of Utah associate professor who led the research, said in a press release.
If the test does reveal a potential issue with the algorithm, Venkatasubramanian said it’s easy to redistribute the data being analyzed — therefore preventing the algorithm from seeing the information that can create the bias.
“The irony is that the more we design artificial intelligence technology that successfully mimics humans, the more that A.I. is learning in a way that we do, with all of our biases and limitations,” Venkatasubramanian said.
Survey finds 26% of employers hiring H-1B visa workers this year
Daily News, August 7, 2015
26% of employers said they are hiring workers with H-1B visas this year, according to a new CareerBuilder survey. And 13% of all employers said they tried to hire workers with H-1B visas this year, but were denied, in part, due to the volume of companies applying for them. Others said they didn’t apply in time or didn’t meet requirements.
Among occupations for which employers are recruiting workers with H-1B visas this year are:
- Software engineers: 19%
- Systems analysts and programmers: 11%
- Database administrators: 9%
- Network administrators: 9%
- Sales and distribution managers: 9%
- Financial analysts: 9%
- Electrical and electronic engineers: 8%
- Mechanical engineers: 8%
The survey also found extended vacancies are causing extensive problems, with 36% of employers surveyed currently have positions that stay open for 12 weeks or longer. On average, these companies reported losing about $14,000 for every job that stays vacant for this length of time; about one in six loses $25,000 or more.
Among the challenges employers have faced due to extended job vacancies are:
- Loss of revenue: 34%
- Lower quality of work due to employees being overworked: 36%
- Declines in customer service: 35%
- Work simply not getting done: 48%
The survey was conducted online by Harris Interactive on behalf of CareerBuilder among 2,321 hiring managers and human resource professionals. The survey was conducted between May 14 and June 3, 2015.
Survey finds 60% of businesses expect no wage increases
Daily News, August 12, 2015
Despite the recent drop in unemployment and rising expectations that wage increases will follow, a survey released today by Express Employment Professionals casts doubt on the belief that workers’ paychecks will soon see increases.
The survey found 60% of businesses expect wages in their market to stay the same and 39% expect an increase; only 1% said wages would decrease.
The study reinforces last week’s US Department of Labor report that showed wage growth last quarter was the slowest in 33 years.
Businesses were also asked in which areas they plan to hire people in the third quarter. “Commercial and light industrial” was the most popular choice at 40%. Notably, 25% said they didn’t have plans to hire.
- Commercial and light industrial: 40%
- Administrative and office clerical: 19%
- Accounting and finance: 10%
- Engineering: 8%
- Marketing: 6%
- Information technology: 4%
- Healthcare: 2%
- Other: 19%
- None: 25%
“It’s a mixed bag for the rest of the year,” said Express CEO Bob Funk. “Businesses are the ones ultimately making hiring decisions, and most aren’t expecting to see wage growth in their communities.”
The survey of 373 businesses was conducted in July 2015; the respondents are current and former clients of Express Employment Professionals.
The new ADP/Moody’s National Employment Report: 79% of all new job growth in August, 2015 came from Small and Mid-size Companies!
September 2, 2015
Private sector employment increased by 190,000 jobs from July to August (up from the increase of 185,000 jobs last month), according to the August 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: 85,000
1-19 employees 50,000
20-49 employees 35,000
Medium businesses: 66,000
50-499 employees 66,000
Large businesses: 40,000
500-999 employees 5,000
1,000+ employees 34,000
Goods producing 17,000
Service providing 173,000
Financial activities 13,000
Professional/business services 29,000
Payrolls for businesses with 49 or fewer employees increased by 85,000 jobs in August, an increase of over 1/3rd from July. Employment among companies with 50-499 employees increased by 66,000 jobs, 5,000 more than the previous month. Employment gains at large companies – those with 500 or more employees – fell from July, adding 40,000 jobs in August, down from 53,000. Companies with 500-999 employees added 5,000 jobs. Companies with over 1,000 employees added 34,000 jobs.
Goods-producing employment rose by 17,000 jobs in August, more than double the 7,000 gained in July. The construction industry added 17,000 jobs in August, up from 15,000 last month. Meanwhile, manufacturing added 7,000 jobs in August, after gaining only 1,000 in July.
Service-providing employment rose by 173,000 jobs in August, up slightly from 170,000 in July. The report indicates that professional/business services contributed 29,000 jobs in August, up 3,000 from July. Trade/transportation/utilities grew by 28,000, down from 34,000 the previous month. The 13,000 new jobs added in financial activities was a gain from last month’s 10,000.
“The job growth numbers for August improved slightly from July,” said Carlos Rodriguez, president and chief executive officer of ADP. “The employment gains for the month are in line with the year to date average.”
Mark Zandi, chief economist of Moody’s Analytics, said, “Recent global financial market turmoil has not slowed the U.S. job market, at least not yet. Job growth remains strong and broad-based, except in the energy industry, which continues to shed jobs. Large companies also remain more cautious in their hiring than smaller ones.”
(The September 2015 ADP National Employment Report will be released at 8:15 a.m. ET on September 30, 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.
August 2015 Small Business Report Highlights
Total Small Business Employment: 85,000
|●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 Labor Turnover Summary – June 2015
On August 12th, the U.S. Bureau of Labor Statistics (BLS) reported that the number of job openings was little changed at 5,200,000 on the last business day of June. The number of hires and separations were also little changed at 5,200,000 and 4,900,000, respectively. Within separations, the quits rate remained at 1.9% for the 3rd month in a row and the layoffs and discharges rate was little changed at 1.3%. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by 4 geographic regions.
Job openings were little changed at 5,200,000 on the last business day of June. The job openings rate for June 2015 remained at 3.6% for the 3rd month in a row. The number of job openings was little changed for total private and government. Job openings decreased in nondurable goods manufacturing and were little changed in all 4 regions.
The number of job openings (not seasonally adjusted) increased over the 12 months ending in June for total nonfarm and total private. The number of job openings for government was little changed. Job openings rose over the year for several industries with the largest increases occurring in professional and business services and in health care and social assistance. Job openings decreased over the year in mining and logging and in finance and insurance. The number of job openings increased over the year in the South and Midwest regions.
The number of hires was 5,200,000 in June, little changed from May. The hires rate was 3.7%. The number of hires was little changed for total private and government in June. There was little change in the number of hires in all industries and regions over the month.
Over the 12 months ending in June, the number of hires (not seasonally adjusted) increased for total nonfarm, total private, and government. At the industry level, hires increased in construction, other services, and state and local government. Among the industries, the number of hires decreased over the year in mining and logging. The number of hires increased in the Midwest region.
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 June 2015, hires totaled 60,600,000 and separations totaled 57,900,000, yielding a net employment gain of 2,700,000. These totals include workers who may have been hired and separated more than once during the year.
(The Job Openings and Labor Turnover Survey results for July 2015 are scheduled to be released on Wednesday, September 9th, 2015).
As we recruiters know, that 5,200,000 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 5,200,000 published job openings now become a total of 26,000,000 published and hidden job orders.
In August there were 8,029,000 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 8,029,000 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 Rises 34,200 in August
September 2, 2015
*Following the July increase, labor demand registers only a small increase in August
*Michigan, California, Texas, and Pennsylvania have largest increases
*STEM jobs show strength in August
Online advertised vacancies rose 34,200 to 5,418,600 in August, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series. The July Supply/Demand rate stands at 1.54 unemployed for each advertised vacancy with a total of 2,900,000 more unemployed workers than the number of advertised vacancies. The number of unemployed was 8,300,000 in July.
“Labor demand remained little changed in August, maintaining a basic flat trend over the past 6 months,” said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board. “The recent flat trend is not particularly troublesome given the continuing high monthly levels of employer demand in the labor market.”
In August, the Professional category showed some strength with Healthcare Practitioners (+14.3), Management (+12.1), Business and Finance (+5.2) and Computer (+3.1). The Services/Production category saw gains in Production (+6.4) and Transportation (+4.9) but a large loss in Office and Administration.
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 September 2015 Conference Board Help Wanted OnLine® (HWOL) Data Series will be released at 10:00 AM ET on Wednesday, September 30, 2015).
In August, 2015 the regular unemployment number fell to 5.1%, and the broader U-6 measure dropped to 10.3%, a little more than twice as high as the regular unemployment figure.
The above 10.3% 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 August U-6 numbers for the past 12 years:
August 2014 12.0%
August 2013 13.6%
August 2012 14.7%
August 2011 16.2%
August 2010 16.7%
August 2009 16.8%
August 2008 10.9%
August 2007 8.4%
August 2006 8.4%
August 2005 8.9%
August 2004 9.5%
August 2003 10.2%
The August 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 September 4th, 2015, the BLS published the most recent unemployment rate for August, 2015 of 5.1% (actually it is 5.112%, down by .149% from 5.261% in July, 2015.
The unemployment rate was determined by dividing the unemployed of 8,029,000 (— down from the month before by 237,000—since August, 2014 this number has decreased by 1,539,000) by the total civilian labor force of 157,065,000 (down by 41,000 from July, 2015). Since August 2014, our total civilian labor force has increased by 1,047,000 workers.
(The continuing ‘Strange BLS Math’ saga): The BLS continues to increase the total Civilian Noninstitutional Population—this time up to 251,096,000. This is an increase of 220,000 from last month’s increase. In one year’s time, this population has increased by 2,867,000. The Civilian Noninstitutional Population has increased each month by…)
|Up from July 2015||by||220,000|
|Up from June 2015||by||213,000|
|Up from May 2015||by||208,000|
|Up from April 2015||by||189,000|
|Up from March 2015||by||186,000|
|Up from February 2015||by||191,000|
|Up from January 2015||by||176,000|
|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 decreased the Civilian Labor Force to 157,065,000 (down from July by 41,000).
Subtract the second number (‘civilian labor force’) from the first number (‘civilian noninstitutional population’) and you get 94,031,000 ‘Not in Labor Force’—up by 261,000 from last month’s 93,770,000. Since August, 2014, 1,821,000 US workers have vanished! Where did those 1,821,000 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—remained (for the third month in a row) at the significantly low of 62.6%. This is .1% below the historically low rate of 62.7% recorded in March, and in September and December of last year– and, before that, the rate recorded in February 1978—one year into President Jimmy Carter’s term of office, 36 years ago! Before this the lowest Employment Participation Rate was 62.4% reached in October 1977!
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 August was 2.9% (this rate was .2% lower than last month’s 3.1%). Or, you can look at it another way. We usually place people who have college degrees. That unemployment rate in August was 2.5% (this rate was .1% lower than last month’s 2.6%).
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 August 27th, 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 +3.7% in the second quarter of 2015, according to the “second” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.6%.
The GDP estimate is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.3%. With the second estimate for the second quarter, nonresidential fixed investment and private inventory investment increased. With the advance estimate, both of these components were estimated to have slightly decreased.
The increase in real GDP in the second quarter reflected positive contributions from personal consumption expenditures (PCE), exports, state and local government spending, nonresidential fixed investment, residential fixed investment, and private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased.
*The economy needs to expand at about +3% to keep the unemployment rate from rising.
(The “third” estimate for the 2nd Quarter 2015 GDP will be released on September 25th, 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 August “management, professional and related” types of worker category, you will find the following rates:
August 2014 3.4%
August 2013 3.8%
August 2012 4.5%
August 2011 4.9%
August 2010 5.1%
August 2009 5.4%
August 2008 3.3%
August 2007 2.6%
August 2006 2.4%
August 2005 2.5%
August 2004 2.9%
August 2003 3.6%
August 2002 3.4%
Here are the rates, during those same time periods, for “college-degreed” workers:
August 2014 3.2%
August 2013 3.5%
August 2012 4.1%
August 2011 4.3%
August 2010 4.6%
August 2009 4.7%
August 2008 2.7%
August 2007 2.1%
August 2006 1.8%
August 2005 2.1%
August 2004 2.7%
August 2003 3.1%
August 2002 2.8%
So, while August’s 2015 rates for these two categories, 2.9% and 2.5%, 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 2005-2007 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