Bob Marshall’s August 2016 BLS Analysis for Recruiters; 9/2/16
August BLS Preface
TBMG Coaching Updates and News
Bob Marshall – Training/Coaching Updates:
The Nebraska Association of Personnel Consultants (NAPC) Fall Seminar, Omaha, Nebraska, September 23rd, 2016
I will be presenting to the NAPC Fall Seminar on Friday, September 23rd, 2016, in Omaha, Nebraska. My presentations will run from 9:00 am to 3:00 pm. The titles of the presentations will include: “3 Proven Methods to landing New Clients”; “How to Inject Urgency into the Candidate”; and “How to Inject Urgency into the Hiring Process”.
* Special Nebraska Note: For those of you in the Omaha area, if you are interested in my in-office training (individual and desk-level) and are available for that training during September 19-26, please let me know for a special offer. Since I will be in Omaha for my NAPC presentation, I will offer a discount on my usual fees and no charge for my airfare. First come, first served, so contact me for specific details as soon as possible. Thanks!
Top Echelon, Tuesday Recruiter Coaching Series, Webinar, December 13th, 2016
My next Top Echelon presentation will be on Tuesday afternoon, December 13th, 2016, at 1pm, Eastern Time. This Recruiter Coaching Series will be for TE members. The 60 minute presentation is entitled, “Make Placements by Overcoming Objections with Contract Staffing”.
Taking the first step…
Over 36 years ago I began a career that turned out to be the most dynamic and rewarding professional move I have ever made. With the opportunity to earn an unlimited income at my fingertips, I began my career as a Recruiter.
Soon I became a student of the business and transitioned into Coaching. I traveled extensively and learned and listened and I packaged my material in a unique way. I studied many of the top producers in the recruiting industry and developed a series of training tools based on their proven success—training techniques that work time and time again.
I developed these tools and coaching techniques to help others achieve their goals as top producing professional recruiters. I continue to base all of my coaching and training tools on the same “nuts and bolts” approach I used as a recruiter.
I realize that taking that first step to engage a Coach to help you reach a higher level of production is not as easy as it sounds. After all, your training investment – and your time – are important and deserve every consideration. I share your feelings. I believe that how you approach your recruitment career matters…that you should get what you pay for, and then some…that you should enjoy your time with your Coach as you are benefiting from it…and that you should never settle for the ordinary.
If you are ready to take the first step, you can read descriptions of my coaching plans, and all of my products, on my website @ www.themarshallplan.org. Then, call 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.
Average Starting Salaries to Rise 3.6% in 2017, according to Robert Half Research
PR Newswire, August 30, 2016
Newly released 2017 Salary Guides from Robert Half show that national average starting salaries for U.S. professional occupations are expected to increase 3.6% next year. The technology sector leads with a projected 3.8% average gain in pay, followed by accounting and finance roles, with salaries expected to rise an average of 3.7%. Workers in both the legal and creative fields can each anticipate average compensation increases of 3.6%, and administrative staff can expect starting pay gains of 3.5% in 2017.
“With skilled professionals in high demand and short supply, more employers are willing to negotiate compensation with potential hires,” said Paul McDonald, senior executive director at Robert Half. “To remain competitive, especially in the technology and finance fields, it’s crucial to have a solid understanding of salary trends for specific roles in your area and move quickly when making offers. Top candidates are receiving multiple job offers and will lose interest when faced with a lengthy hiring process.”
Survey finds most Engaged Industries are Consumer Goods, Insurance and Financial Services
Daily News, August 29, 2016
Almost three-quarters of the US workforce, 71%, is engaged, according to a survey released by the Hay Group division of Korn Ferry International Inc.
When considering specific industries, consumer goods, insurance and financial services industries rank highest, with an average of 74% of respondents engaged. The communications field and consumer services (such as retail, hospitality, leisure) also ranked high on the list at 72% each.
At the other end of the spectrum, the high-technology industry posted the lowest ranking on the engagement index, with only 64% of employees engaged. Also ranking low on the engagement scale are life sciences at 66% and public sector/not-for-profit at 67%.
“Full-time US employees work nearly 50 hours a week — equivalent to almost 6 working days,” said Mark Royal, senior principal, Korn Ferry Hay Group. “When you consider that nearly 1/3rd of employees are not engaged, that’s a lot of time wasted for both those employees and their employers who are not getting the full impact of their potential.”
Additional Korn Ferry Hay Group research demonstrates that an engaged workforce has a significant impact on the bottom line, boosting revenue growth up to 2½ times, depending on the level of engagement.
“Many factors go into creating a culture of engagement, including empowering and developing employees to make a meaningful impact on the success of the organization,” Royal said. “When this happens, employees will stay on the job and be productive, and their employers will reap the benefits.”
The Korn Ferry Hay Group composite engagement scores are based on responses to several questions, including: “Given your choice, how long would you plan to continue working for the company?” The largest percentage of employees across industries, 64%, said “more than 5 years.” By contrast, only 18% of employees said they plan on staying 2 years or less.
Consumer goods and industrial goods are the 2 industries with the highest percentage of employees who responded that they would stay on the job more than 5 years at 74% each. Consumer services and communications are the 2 industries with the lowest percentages, at 51% and 54% respectively.
According to the US Bureau of Labor, the average US employee stays on the job an average of 4.6 years.
“Leaders who are successful in keeping their best people will need to foster a positive view of future company prospects and opportunities for individual growth and development, focus on structuring work environments to support employees’ success in their roles and leverage employee input to promote high levels of effectiveness, and reinforce the balance between what employees contribute and what they get back from the organization in return.”
The analysis is based on engagement surveys from 139 companies and 1,300,000 US employees across 15 industries.
Yellen sees stronger case for interest rate hike
The New York Times, August 26, 2016
Federal Reserve Chairwoman Janet Yellen said today she sees a stronger case for raising the Fed’s benchmark interest rate, suggesting the central bank was likely to act in the coming months,
“In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months,” Yellen said at an annual policy conference in Wyoming, indicating that the Fed would consider raising rates at its next meeting in mid-September, though most analysts say they think the Fed is more likely to move in December.
GDP revised slightly downward
Daily News, August 26, 2016
US real gross domestic product grew at an annual rate of 1.1% in the second quarter, according to the second estimate of GDP growth by the US Commerce Department. The new estimate is down from an “advance” estimate that pegged growth at 1.2%.
In the first quarter, real GDP edged up 0.8%.
MarketWatch reports corporate profits fall for the 5th time in six quarters. However, hiring accelerated during the summer, manufacturers have shown some improvement and the slumping US energy industry appears to have stabilized.
“The second-quarter GDP report was disappointing, but growth should bounce back in the third quarter,” Stuart Hoffman, chief economist at PNC Financial Services, told MarketWatch.
Jason Furman, chairman of the Council of Economic Advisers, also commented on the GDP number in a blog post.
“Second-quarter economic growth was revised to 1.1% at an annual rate, down slightly (0.1%) from the advance estimate,” Furman wrote. “Consumer spending grew strongly at 4.4% in the second quarter — its second-fastest quarterly growth since 2006 — and, in contrast to the pattern in recent quarters, net exports also added to GDP. Some of this growth was offset by a large decline in inventory investment (one of the most volatile components of GDP), along with declines in business fixed investment, residential investment, and government spending. Overall, second-quarter growth in the most stable and persistent components of output — consumption and fixed investment — was revised up to 3.0%.”
Pay, Lack of Advancement Top Hurdles in Attracting and Keeping Workers
Daily News, August 24, 2016
Low pay is the top reason applicants turn down jobs, while lack of advancement opportunities is the main reason employees leave jobs, according to a survey of businesses by Express Employment Professionals.
Respondents were asked, “What hurdles stop applicants from accepting a job at your company?” Responses included:
* Low pay: 28%
* Lack of advancement/opportunity: 27%
* Long hours: 18%
* Perfect fit: 15%
* Inflexible schedule: 14%
Respondents were also asked, “What hurdles cause employees to leave a job?” The top answer was “lack of advancement/opportunity” at 40%, followed by low pay at 29%. This was almost the reverse of results from the same question in 2015, when 40% said low pay and 33% said lack of advancement. “Not a good cultural fit,” was the third highest answer at 28%, followed by long hours and unlikeable boss/management, both at 18%.
“Pay and advancement really do seem to be the driving factors when applicants and employees make decisions about the future of their careers,” Express CEO Bob Funk said. “In a way, this is reflective of the economy in general. Many companies still struggle to offer competitive wages and may not be growing fast enough to offer upward advancement.”
The survey of 390 businesses, which are current and former clients of Express Employment Professionals, covers hiring trends for the second quarter of 2016.
Cisco’s Layoffs are just the Tip of the Spear for Tech
Reuters, August 18, 2016
Companies dealing in hardware will be especially hard hit.
Cisco Systems’ announcement on Wednesday that it plans to lay off 5,500 employees is unlikely to be the last round of Silicon Valley pink slips as hardware companies struggle to keep up with rapid technology shifts, analysts and recruiters said.
Companies that traditionally have made most of their money selling computers, chips, servers, routers, and other equipment are especially vulnerable, analysts say, as mobile applications and cloud computing become increasingly important.
The Cisco layoffs come in the wake of Intel’s announcement in April that it was laying off 12,000 workers. Dell said in January it had shed 10,000 jobs and is expected to make further cuts after it closes a $67,000,000,000 deal to acquire data storage company EMC. So far this year, technology companies in the United States have shed about 63,000 jobs, according to outplacement consultant Challenger, Gray & Christmas.
“The high-tech industry is going through a serious deconstruction,” said Trip Chowdhry, an analyst at Global Equities Research. “There is more pain to come.”
Chowdhry said he expects job cuts to rise drastically as more companies subscribe to “super cloud” services from the likes of Amazon and Microsoft. These services manage hardware, software, networks, and databases and eliminate the need for workers to manage various technology layers, Chowdhry said.
In January, Chowdhry estimated that layoffs in the tech industry would hit 330,000 this year. On Wednesday, he said he had raised his estimate to 370,000. Some other analysts said that forecast was too bleak.
IBM, Hewlett Packard Enterprise, Oracle, and Dell could be the next to shed workers, analysts said. HPE, Dell, and Oracle declined comment and IBM could not be immediately reached for comment.
‘Tremors of Change’
“Tech incumbents are all bracing for the tremors of change,” said Glenn O’Donnell, an analyst at Forrester Research. “We fully expect a lot of collateral damage as this plays out—not just with Cisco.”
Cisco and other old-guard technology companies have been pursuing a challenging shift to software-oriented services. Margins in software services are higher than hardware because they bring recurring revenue and there are “fewer people involved on the cost side,” said Roger Kay, an analyst at Endpoint Technologies Associates.
That could mean more job cuts. Silicon Valley job recruiters offered mixed views about the fate of hardware engineers laid off at Cisco and other tech firms.
“Nobody wants to be laid off but if job elimination is going to happen, 2016 is not a bad time for it to happen,” said John Reed, senior executive director of the tech recruitment firm Robert Half Technologies.
Still, recruiters said, hardware engineers may need to be flexible and willing to retrain if they want to find work.
“Nobody wants hardware designers and engineers,” said Andy Price of executive search firm SPMB. “There was a moment in time when devices were hot and (action-camera maker) GoPro made everyone excited about devices, but a lot of those types of companies died on the vine.”
Currently, he said, “hardware engineers are probably the least attractive skill set imaginable in the Valley.”
More than 1/3rd are always searching for next job
Daily News, August 18, 2016
The rise of a new group who are always looking for the next job opportunity can make retention more challenging, according to according to a new report by ManpowerGroup Solutions.
The survey found more than 1/3rd of employees, 37%, are always searching for their next job opportunity. 29% of these continuous candidates applied to between 3 and 9 jobs in the last 6 months; 12% applied to more than 15 jobs during the previous 6 months — almost 3 times as many as their non-continuous counterparts.
The prevalence of continuous candidates in Mexico and the US far exceeds the global average, with 50% and 41% respectively agreeing with the statement, “I am always looking for the next job opportunity.”
Compensation ranked as the top reason candidates look for a new position at 33%.
“Looking at millennials and Gen Y, our research shows that it is the older millennials — with more work experience — who are most likely to be habitually looking for jobs,” said Kate Donovan, senior VP of ManpowerGroup Solutions and global RPO president. “In organizations where employers are not meeting their candidates’ expectations or aspirations for advancement, that is where individuals will be more likely to always be looking out for their next opportunity.”
The report provides 9 tips for companies to retain existing talent and better screen for prospective employees in today’s world of continuous candidates, some of which include:
- Speak fluent advancement: Hiring managers must be able to proactively articulate the opportunities for advancement to candidates, as career pathways are an increasingly important component of the employer value proposition.
- Foster “learnability”: Continuous candidates want continuous education, so learnability — the desire and ability to quickly grow and adapt one’s skills to remain employable — is important.
- Mentor, mentor, mentor: Skill acquisition, regular feedback, teamwork and exposure to successful role models strengthen the bond between an employee and the company they work for.
“Companies need to create a culture that people don’t want to leave — branding and trust are critical components of this,” said Sarah Peiker, head of RPO practice, ManpowerGroup Solutions Europe. “Employers are going to have to become an employer of choice.”
The survey included 4,479 job seekers representing a cross section of ages, incomes, career levels and industries; 28% of respondents were from the US.
Millennial Workers most likely to forego time off, survey finds
Daily News, August 17 2016
Millennial workers are the most likely generation to forfeit time off, even though they earn the least amount of vacation days, according to a report released today by Project: Time Off. The survey found millennials stay at work because they feel more fear and greater guilt about taking time away from the office than any other generation.
Compared to those in the boomer generation, millennials are at least twice as likely to find taking time off difficult because they don’t want to lose consideration for a raise or promotion, don’t want others to think they are replaceable, and want to show complete dedication, among other reasons.
The report also found 28% of millennials hold management roles, and nearly half of millennial managers, 47%, said that company pressure prevents them from approving time off requests for their direct reports, compared to just 34% of Generation X and 37% of boomers who feel the same.
“The ‘entitled millennial’ narrative is dead wrong when it comes to vacation,” said Project: Time Off Senior Director and report author Katie Denis. “As the largest generation in the workforce, one that is now stepping into management, millennials are developing vacation attitudes that will define and negatively affect America’s work culture. The circumstances of the millennial experience — the Great Recession and its aftershocks, growing student debt and an always-connected lifestyle — have created a perfect storm for their work martyr behavior.”
GfK conducted the online survey from Jan. 20 to Feb. 16, 2016. It included 5,641 American workers working at least 35 hours per week and who receive paid time off.
Technology Salaries go further in Austin and Seattle
Daily News, August 15. 2016
Austin, Texas, and Seattle beat out San Francisco to offer the best technology salaries when factoring in the cost of living adjustment, according to Indeed’s global research institute, the Hiring Lab. Researchers looked at salary and cost of living data to figure out where technology jobs pay the most.
Indeed’s report looks not only at technology workers generally, but also considers 15 specific technology jobs by city. For instance, the report finds that in San Francisco a technology worker earns an average annual salary of approximately $113,000, but a median rent of $3,357 takes up to 36% of monthly income. By contrast, Austin averages “only” $94,025 a year, but just 22% of monthly income is required to cover the median rent of $1,693.
“The data shows that the highest-cost cities often set the wages for in-demand technology talent,” said Paul D’Arcy, Indeed senior VP. “Once we factor in cost of living, we quickly see that technology workers have their pick of cities and can optimize for happiness, whether that means quality of life or location.”
The top 5 cities for tech search ranked by salary when adjusted for cost of living are:
- Austin, Texas: $95,247
- Seattle: $91,242
- San Francisco: $90,457
- Chicago: $89,091
- Dallas: $88,717
List ranks largest US Retained Search Firms by Revenue
Daily News, August 15, 2016
Korn Ferry International Inc. ranks as the largest retained search firm in the US in terms of retained search revenue last year, according to Staffing Industry Analysts’ 2016 report on the largest retained search firms. Spencer Stuart ranked second, followed by Heidrick & Struggles International Inc.
8 firms each generated at least $25,000,000 in retained search revenue in 2015. Combined, they generated $1,600,000,000 in such revenue and comprised an estimated 25% of the market.
Forecasters lower GDP, Employment Estimates for 2016
Daily News, August 12, 2016
Forecasters lowered their estimate for US economic growth in the new 3rd quarter survey of professional forecasters released today by the Federal Reserve Bank of Philadelphia. The forecast for employment growth also receded.
US gross domestic product is now expected to grow 1.5% in 2016, down from a projection made by forecasters in the 2nd quarter report that called for growth of 1.7%.
The forecasters also lowered their estimate of job growth in 2016. They now estimate the US will add 204,600 jobs a month in 2016, down from the previous forecast of 212,400 jobs per month.
Looking at just the 3rd quarter of 2016 only, forecasters project GDP growth at 2.6%, up from the previous forecast of 2.4%. However, new projections call for the US to add 183,700 jobs a month in the 3rd quarter, down from the previous forecast of 191,800 jobs per month.
Nearly a Quarter of Candidates lose interest within a week
Daily News, August 11, 2016
Are you taking too long to hire? Stretching out the hiring process can cause companies to lose out on the best candidates, according to the “Time to Hire” survey released today by Robert Half.
More than half of workers surveyed, 57%, reported the most frustrating part of the job search is the long wait after an interview to hear if they got the job. Nearly one-quarter, 23%, lose interest in the firm if they don’t hear back within 1 week after the initial interview, and another 46% lose interest if there’s no status update from 1-to-2 weeks post interview.
“Professionals in fields such as compliance, cybersecurity, big data and finance can receive 4 to 6 offers within a week,” said Paul McDonald, senior executive director of Robert Half. “Candidates with several options often choose the organization that shows the most interest and has an organized recruiting process.”
The survey asked, “In your opinion, how long is too long of a hiring process — that is, the period of time from which you initially interview for a job to the day a job offer is extended?” Responses include:
* 1 week or less: 10%
* 22 to 28 days: 10%
* 1 month to 6 weeks: 12%
* 6 weeks or more: 5%
When faced with a lengthy hiring process, 39% of survey respondents said they lose interest and pursue other roles, while 18% decide to stay put in their current job. Nearly one-third, 32%, said a protracted hiring process makes them question the organization’s ability to make other decisions.
“The hiring process provides a window into the overall corporate culture,” McDonald said. “If people feel their career potential will be stifled by a slow-moving organization they will take themselves out of the running.”
The survey included more than 1,000 US workers currently employed in office environments and was conducted an independent research firm.
Monster M&A Mash: What’s Driving Recruitment Industry Dealmaking
Japan’s Recruit Holdings & private equity investors are expected to lead the buying spree.
Renee Cordes, TheStreet, August 10, 2016
M&A appetite has never been stronger in the global recruitment sector, with Japan’s Recruit Holdings and private equity buyers expected to lead the charge, and markets like the U.K. still highly fragmented and ripe for further consolidation.
That’s the word from industry watchers after the Netherlands’ Randstad unveiled an agreement Tuesday to buy job site operator Monster Worldwide for an enterprise value of $429,000,000. Adecco, of Switzerland, has also been active, but said Wednesday it aims to keep a lid on costs this year after posting better-than-expected 2nd-quarter earnings.
Randstad is the world’s 2nd largest staffing company after Adecco, which recently snapped up London’s Penna Consulting plc for about £105,300,000 ($137,230,000) to boost its leading position in the U.K., its 3rd largest market after France and North America. Adecco’s latest earnings report, published on Wednesday, shows that revenues in the U.K. are starting to grow again, up 6% on an organic basis in the 2nd quarter.
Until recently, the industry’s largest players have mainly opted to return cash to shareholders to pay down debt, according to Mark Maunsell, a business services analyst with Clearwater International in London. He said that all changed in the past year when Randstad bought Proffice, of Sweden, to become No. 3 in the Nordic region, and when Adecco pounced on Penna, setting off a new M&A wave.
“Adecco spent 2 years looking for a transformational deal,” he said, finally opting for a target they understood well given a long-standing alliance with Adecco’s Lee Hecht Harrison unit. “They understand the business and the culture, so it will be a lot easier to integrate,” he said.
Other recent deals include Monster’s own acquisition in June of mobile job discovery app Jobr, and Randstad’s $100,000,000 purchase last September of San Jose, Calif.-based RiseSmart, which uses a digital platform to help departing employees find new jobs. Randstad CEO Jacques van den Broek said Tuesday that Monster is a natural complement to his company with its industry leading technology and easy to use digital, social and mobile solutions.
“This deal underscores how complex talent acquisition has become and is one example of an organization trying to tie more pieces of the hiring landscape into one company,” said Susan Vitale, chief marketing officer with iCIMS, a New Jersey-based provider of job applicant tracking systems and recruiting software, via e-mail.
In coming months, Randstad and Adecco are not expected to do much buying as they digest recent acquisitions. Randstad said Tuesday it will limit M&A in the medium term to €100,000,000 ($111,7000,000), while Adecco pledged Wednesday to maintain “price discipline and tight cost control,” as CEO Alain Dehaze told Reuters he was “absolutely not” under pressure to act after Randstad’s Monster move.
Milwaukee, Wis.-based Manpower Group, the global No. 3, has also been doing selective acquisitions, becoming No. 3 in Germany, Europe’s largest economy, through last year’s purchase of the 7S Group for €136,500,000.
It’s not just the “Big Three” that have been active buyers. They have plenty of competition from Recruit Holdings of Japan, which has been on a wild spending spree since raising ¥197,000,000,000 ($1,940,000,000) for its war chest on the Tokyo Stock Exchange in 2014 and aims to become the world’s biggest temporary jobs provider by 2020.
Recruit’s largest deal to date is the purchase completed earlier this year of USG People of the Netherlands, for €1,610,000,000 including debt, which followed a string of acquisitions in the U.S., the U.K. and Australia. Recruit is looking to USG People to expand in Europe, using USG People’s head office in Almere, the Netherlands as a base.
“We are seeking to grow our business platforms in Japan and abroad organically and through acquisitions,” said Recruit chairman and CEO Masumi Minegishi last December. “The acquisition of USG People is perfectly aligned with this strategy.”
Asked what Recruit is likely to go for next, one Benelux analysts predicts further deals in the €1,000,000,000 range, and most likely champions in France, Italy or Spain, rather than a pan-European player. Recruit “still seeks a sizeable European footprint,” said the analyst, who didn’t want to be named.
Maunsell predicted more private equity buying in the space, saying that many recruitment firms backed by buyout shops have “significant firepower” to do bolt-on acquisitions. Recent examples include Sovereign Capital-backed Synarbor Group, an education recruitment business adding Just Teachers in February, and TPG Capital’s TES Group in April buying ABC Teachers.
He also predicts a number of private equity investments coming up to their investment horizons in the next year or so, creating new opportunities for hungry acquirers. “We are basically in a situation where we had so many PE investors in 2013, that there’s now going to be a lot of investments coming up for sale, and we’ll see larger PE funds stepping in to buy,” he added.
Maunsell said there are plenty of buying opportunities especially in the U.K, which remains highly fragmented and highly attractive, though it’s too early to say what if any effect Brexit will have. “There are loads of buyers, loads of sellers, and loads of private equity funds at the moment with lots of cash to spend,” he said.
The new ADP/Moody’s National Employment Report: Over 60% of all new job growth in August, 2016 came from Small and Mid-size Companies!
August 31, 2016
Private sector employment increased by 177,000 jobs from July to August (a 2,000 job decrease from July’s 179,000 additions), according to the August ADP National Employment Report®, which is produced by ADP® 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: 63,000
1-19 employees 24,000
20-49 employees 38,000
Medium businesses: 44,000
50-499 employees 44,000
Large businesses: 70,000
500-999 employees 25,000
1,000+ employees 46,000
Goods producing <-6,000>
Service providing 183,000
Financial activities 15,000
Professional/business services 53,000
Franchise Jobs 19,200
Payrolls for businesses with 49 or fewer employees increased by 63,000 jobs in August, down from 68,000 in July. Employment at companies with 50-499 employees increased by 44,000 jobs, down from last month’s 71,000. Employment at large companies – those with 500 or more employees – increased by 70,000, up from July’s 56,000. Companies with 500-999 employees added 25,000 and companies with more than 1,000 employees added 46,000 in August.
Goods-producing employment was down by 6,000 jobs in August, following July losses of 5,000. The construction industry lost 2,000 jobs, following July losses of 5,000 jobs. Meanwhile, manufacturing jobs were flat in August, after gaining 5,000 in the previous month.
Service-providing employment rose by 183,000 jobs in August, fewer than July’s 199,000 jobs. The report indicates that professional/business services contributed 53,000 jobs, down from July’s 70,000. Trade/transportation/utilities increased by 26,000 jobs in August, down from 31,000 jobs added the previous month. Financial activities added 15,000 jobs, up from last month’s gain of 13,000 jobs.
“Job growth in August was stable and consistent with levels from previous months as consumer conditions improve,” said Ahu Yildirmaz, VP and head of the ADP Research Institute. “Continued strong growth in service-providing jobs is offset by weakness in goods-producing areas.”
Mark Zandi, chief economist of Moody’s Analytics, said, “The American job machine continues to hum along. Job creation remains strong, with most industries and companies of all sizes adding solidly to their payrolls. The U.S. economy will soon be at full employment.”
(The September 2016 ADP National Employment Report will be released at 8:15 a.m. ET on October 5, 2016).
Due to the important contribution that small businesses make to economic growth, employment data that is 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 2016 Small Business Report Highlights
Total Small Business Employment: 63,000
|●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 2016
On August 10th, the U.S. Bureau of Labor Statistics (BLS) reported that the number of job openings was little changed at 5,600,000 on the last business day of June, the U.S. Bureau of Labor Statistics reported today. Hires and separations were little changed at 5,100,000 and 4,900,000, respectively. Within separations, the quits rate was 2.0% and the layoffs and discharges rate was 1.1%. 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.
In June, there were 5,600,000 job openings, little changed from May. The job openings rate in June was 3.8%. The number of job openings was essentially unchanged for total nonfarm, total private, and government. Job openings increased in durable goods manufacturing (+37,000) and decreased in federal government (-15,000). In the regions, job openings increased in the South.
The number of hires was 5,100,000 in June, essentially the same as May. The hires rate was 3.6% in June. The number of hires was little changed for total private and for government. Hires was also little changed in all industries. The number of hires increased in the Northeast region.
Total separations includes quits, layoffs and discharges, and other separations. Total separations is referred to as turnover. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. Other separations includes separations due to retirement, death, disability, and transfers to other locations of the same firm.
There were 4,900,000 total separations in June, little changed from May. The total separations rate in June was 3.4%. The number of total separations was essentially unchanged over the month for total private and for government. The number of total separations was little changed over the month at the industry level and in all 4 regions.
The number of quits held steady in June at 2,900,000. The quits rate was 2.0%. Over the month, the number of quits was little changed for total private and increased for government (+18,000). The number of quits increased in state and local government education (+20,000) and was little changed in all other industries. The number of quits was little changed in all 4 regions.
There were 1,600,000 layoffs and discharges in June, essentially unchanged from May. The layoffs and discharges rate was 1.1%. The number of layoffs and discharges held steady over the month for total private and edged down for government (-19,000). Layoffs and discharges decreased in state and local government education (-14,000). The number of layoffs and discharges was little changed over the month in all 4 regions.
The number of other separations was little changed for total nonfarm, total private, and government in June. Other separations increased in educational services (+8,000). Other separations was essentially unchanged over the month in all 4 regions.
Net Change in Employment
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, hires totaled 62,300,000 and separations totaled 59,800,000, yielding a net employment gain of 2,500,000. 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 2016 are scheduled to be released on Wednesday, September 7, 2016.
As we recruiters know, that 5,600,000 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 5,600,000 published job openings now become a total of 28,000,000 published AND hidden job orders.
In August there were 7,849,000 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 7,849,000 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 1,900 in August
August 31, 2016
* August was essentially unchanged following a July increase of 156,800
* States and MSAs saw little movement
* Professional occupation category saw gains while Services/Production saw losses
Online advertised vacancies increased 1,900 to 4,816,100 in August, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series, released today. The July Supply/Demand rate stands at 1.61 unemployed for each advertised vacancy with a total of 3,000,000 more unemployed workers than the number of advertised vacancies. The number of unemployed was approximately 7,800,000 in July.
“A flat August shows no sign of renewed strength in online advertised vacancies,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “The large losses in the first half of 2016 still dominate the downward trend for advertised vacancies in 2016.”
The Professional category saw gains in Management (+10.2), Business/Finance (+13.3), and Computer/Math (+6.4) with a drop in Healthcare (-8.7) following a large gain in July. The Services/Production category showed losses in Food (-15.5), Sales (-10.1) and Transportation (-7.5).
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 August 2016 Conference Board Help Wanted OnLine® (HWOL) Data Series will be released at 10:00 AM ET on Wednesday, October 5, 2016).
In August, 2016 the regular unemployment number remained at 4.9%, and the broader U-6 measure remained at 9.7%, .1% less than twice as high as the regular unemployment figure.
The above 9.7% 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 13 years:
August 2015 10.3%
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 2nd, 2016, the BLS published the most recent unemployment rate for August, 2016 of 4.9% (actually it is 4.922%, up by .044% from 4.878% in July, 2016.
The unemployment rate was determined by dividing the unemployed of 7,849,000 (—up from the month before by 79,000—since August, 2015 this number has decreased by 169,000) by the total civilian labor force of 159,463,000 (up by 176,000 from July, 2016). Since August 2015, our total civilian labor force has increased by 2,402,000 workers.
(The continuing ‘Strange BLS Math’ saga): The BLS continues to increase the total Civilian Noninstitutional Population—this time up to 253,854,000. This is an increase of 234,000 from last month’s increase of 223,000. In one year’s time, this population has increased by 2,758,000. The Civilian Noninstitutional Population has increased each month by…)
|Up from July 2016||by||234,000|
|Up from June 2016||by||223,000|
|Up from May 2016||by||223,000|
|Up from April 2016||by||205,000|
|Up from March 2016||by||201,000|
|Up from February 2016||by||191,000|
|Up from January 2016||by||180,000|
|Up from December 2015||by||461,000|
|Up from November 2015||by||189,000|
|Up from October 2015||by||206,000|
|Up from September 2015||by||216,000|
|Up from August 2015||by||229,000|
|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 increased the Civilian Labor Force to 159,463,000 (up from July by 176,000).
Subtract the second number (‘civilian labor force’) from the first number (‘civilian noninstitutional population’) and you get 94,391,000 ‘Not in Labor Force’—up by 58,000 from last month’s 94,333,000. Since August, 2015, 356,000 US workers have vanished! Where did those 356,000 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 most of 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 survive 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—remainded at 62.8%. This is .4% above the historically low rate of 62.4% recorded in September and October—and, before that, the rate recorded in October 1977—9 months into Jimmy Carter’s presidency—38 years ago!
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 3.1% (this rate was .1% above last month’s 3.0%). Or, you can look at it another way. We usually place people who have college degrees. That unemployment rate in August was 2.7% (this rate was .2% above last month’s 2.5%).
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 26th, the US Bureau of Economic Analysis (BEA) announced the real gross domestic product (GDP) — the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes — increased at a downwardly revised annual rate of 1.1% in the 2nd quarter of 2016, according to the “second” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.8%.
The GDP estimate released today 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 1.2%. With this second estimate for the second quarter, the general picture of economic growth remains the same; revisions to the components of GDP are small. The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE) and exports that were partly offset by negative contributions from private inventory investment, residential fixed investment, state and local government spending and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased. The acceleration in real GDP in the second quarter primarily reflected an acceleration in PCE, a smaller decrease in nonresidential fixed investment, an upturn in exports, and a smaller decrease in federal government spending. These were partly offset by a larger decrease in private inventory investment and downturns in state and local government spending, in residential fixed investment, and in imports.
*The economy needs to expand at about +3% to keep the unemployment rate from rising.
(The “third” estimate for the 2nd Quarter 2016 GDP will be released on September 29th, 2016).
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. Currently, in 2015, workers in most states are eligible for up to 26 weeks of benefits from the regular state-funded unemployment compensation program, although eight states provide fewer weeks and two provide more. No additional weeks of federal benefits are available in any state: the temporary Emergency Unemployment Compensation (EUC) program expired at the end of 2013, and no state currently qualifies to offer more weeks under the permanent Extended Benefits (EB) program. 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 2015 2.9%
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 2015 2.5%
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%
The August 2016 rates for these two categories, 3.1% and 2.7%, respectively, are trending negatively this month, but are still close to the halcyon numbers we attained in the 2004, 2005, 2006, 2007 and part of 2008, time frames. 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 than 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