Bob Marshall’s December 2015 BLS Analysis for Recruiters; 1/8/16
December BLS Preface
TBMG Coaching Updates and News
Bob Marshall – Training/Coaching Updates:
Top Echelon, Free Recruiter Training Webinar, May 10, 2016
My Top Echelon presentation (title to be announced) will be on Tuesday afternoon, May 10, 2016, at 1pm, Eastern Time.
The Nebraska Association of Personnel Consultants (NAPC) Fall Seminar, Omaha, Nebraska, September 9, 2016
I will be presenting to the NAPC Fall Seminar on Friday, September 9th, 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”.
Taking the first step…
Over 35 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.
January 6th is busiest job search day of the year
Daily News, January 6, 2016
January 6th is anticipated to be the top job search day of 2016, according to analysis of proprietary data released by Monster Worldwide Inc. The research is based on 2014 and 2015 data showing that there were 70% more job searches on the first Wednesday of the year when compared to an average day on Monster that year.
“This historic uptick could be attributed to a combination of many things, but we believe as people return to work after the holidays, they are more motivated and aware that better is out there,” said Vicki Salemi, career expert for Monster. “If Monday and Tuesday are all about getting back into the swing of things, it’s that first “hump day” – Wednesday – that seems to give us an extra push to see what’s out there. So if you’re searching today, you’re not alone.”
Recent data also found that job seekers in 2015 searched most for part-time jobs, sales jobs and accounting jobs. These areas have grown exponentially, according to Monster. For example, “gig economy” jobs have been trending as people, particularly millennials, are having more of an entrepreneurial mindset seeking part-time jobs to pay the bills while they achieve something bigger.
Census Bureau: US Population Nearly 323 Million on New Year’s Day
January 1, 2016
International migration in the New Year will add one person to the U.S. population every 29 seconds, the Census Bureau estimates.
In its New Year’s Day forecast, the bureau projects the U.S. population will hit 322,762,018 on January 1 – an increase of 0.77% from January 1, 2015.
“Net international migration is expected to add one person to the U.S. population every 29 seconds,” the bureau reports in its statement, projecting also there will be 1 birth every 8 seconds and 1 death every 10 seconds in 2016.
Survey says nearly 87% of firms to hire in 2016
Daily News, December 28, 2015
Nearly 87% of companies plan to add to their workforce in 2016, according to the “2016 Hiring Trends” report released by LaSalle Network, a staffing a recruiting firm headquartered in Chicago.
The majority of companies, 55%, plan to hire up to 10 people in 2016 and 21% plan to hire between 11 and 50 new employees, according to the report. Only 13% reported no plans to hire.
The healthcare, technology and education industries reported the most optimistic hiring plans, regardless of company size.
Additional survey results include:
- 84% of respondents reported they are hiring for full-time positions
- 44% are having trouble finding technically skilled candidates
- 45% are facing challenges finding candidates who fit the company
“The economy is strong and has been strong for a while,” said Tom Gimbel, founder and CEO of LaSalle Network. “Companies are hiring and investing resources into their businesses again, especially in high growth sectors like technology and healthcare.”
LaSalle Network surveyed 1,500 HR professionals and managers between October and November 2015.
1/5th of employees to seek new job in 2016
Daily News, December 28, 2015
More than 1/5th of employees, 21%, plan leave their current employers in 2016, according to a survey from CareerBuilder. This is an increase from 16% in last year’s survey.
Looking at only workers between 18 and 34 years old, 30% expect to have a new job by the end of 2016, up from 23% last year.
The survey also found 34% of employees are regularly searching for job opportunities, even though they’re currently employed, up from 30% last year.
“Just because a person is satisfied with their job doesn’t necessarily mean they aren’t looking for new work,” said Rosemary Haefner, chief human resources officer at CareerBuilder. “Because of this, it’s critical to keep up with your employees’ needs and continue to challenge them with work they feel is meaningful.”
When asked what factors rank as more important than salary when considering a position, responses included:
- Job stability: 65%
- Affordable benefits: 59%
- Location: 56%
- Good boss: 51%
- Good work culture: 46%
When asked if they could choose extra perks to make their workplace more satisfying, the most popular choices workers pointed to include:
- Half-day Fridays: 38%
- On-site fitness center: 23%
- Daily catered lunches: 22%
- Massages: 18%
- Being able to wear jeans: 16%
This survey was conducted online within the US by Harris Poll on behalf of CareerBuilder among 3,252 employees between Nov. 4 and Dec. 1, 2015.
Optimism up for small businesses despite interest rate hike
Daily News, December 21, 2015
Optimism among small business owners edged up this month, according to the SurePayroll Small Business Scorecard survey for December, with 69% saying they are optimistic about the small business economy, up from 68% in November’s survey.
The report also surveyed the small business owners about the impact of the Federal Reserve’s recent interest rate hike, with 45% reporting it will have no impact.
Those in the financial services industry said it may actually help, as it could increase the cash value of life insurance policies, for instance.
Some said higher rates would make it more difficult to take out lines of credit and those in real estate worried about the cost of borrowing for home buyers. However, many entrepreneurs and startup founders are using non-bank alternative sources of lending or borrowing from friends and family.
Most small businesses, 61%, said they have not benefited from the low rate environment, while 39% said it facilitated things like better cash flow and hiring more staff.
“Certainly affordable access to capital is a positive for someone trying to grow a business, and hopefully that will continue as rates are still relatively low,” said SurePayroll General Manager Andy Roe. “On the other hand, many small businesses only have a few employees with small offices, or offices in their homes, so they don’t tend to do much borrowing. For them, it’s probably business as usual.”
In other findings from the SurePayroll survey, 66% of small businesses said they were profitable in 2015, compared to 61% in 2014. Looking forward to the 2016, 64% are forecasting increased profitability.
Legal hiring to hold steady, Robert Half survey finds
Daily News, December 17, 2015
Hiring in the legal field is holding steady, according to a survey of attorneys by Robert Half Legal, a division of Robert Half International Inc. that specializes in staffing lawyers, paralegals and other legal professionals. The survey found 24% plan to expand or add new positions, down only slightly from 26% in a similar survey 1 year ago.
54% of attorneys in the most recent survey said they expect only to fill vacant posts while 15% said they would neither fill vacant positions nor create new ones. Just 1% anticipate staff reductions.
The survey also found 61% of lawyers said finding skilled legal professionals is somewhat or very challenging while 31% expressed concern about losing legal personnel to other job opportunities in the next 6 months.
Survey respondents included 100 lawyers at law firms with 20 or more employees and 100 lawyers at companies with 1,000 or more employees.
US Federal Reserve raises interest rates
Daily News, December 17, 2015
The US Federal Reserve voted yesterday, December 16th, to increase the federal funds rate to a target range of 0.25% to 0.5%. It’s the first time in almost 10 years the board has raised interest rates.
“The important part of this statement was not the rise in interest rates, which came as a surprise to no one, but the message it gave to financial participants on the path of future rate hikes,” James Marple, senior economist and director at TD Economics, wrote in a research note. “On this front, the Fed reaffirmed that the pace of rate hikes would be slow relative to history, and the length of the cycle, by extension, would be longer.”
That the Federal Reserve now feels it’s appropriate to tap the brakes means they feel the economy is now strong enough to not tip into recession, said Steven Drexel, president and CEO of Cornerstone Staffing Solutions, a longtime staffing industry veteran and close watcher of the economy.
Hiring process slows in candidate-driven market, survey finds
Daily News, December 16, 2015
Many companies have been in growth mode throughout 2015, but the hiring process has slowed in the executive, managerial and professional sector, according to the 2015 second half edition of the MRINetwork Recruiter Sentiment Study.
Candidates now receive an offer 3 to 6 weeks from the candidate’s first interview, compared to 1 to 4 weeks in previous years of the survey. Lengthy hiring practices are common among many employers, but further extension of the process, suggests that recruitment may be competing with employee retention efforts. Employers are now faced with making fundamental changes to prevent their talent management efforts from outweighing recruitment of the brightest talent in 2016 and beyond.
The report also found 90% of recruiters surveyed continue to feel the labor market is candidate-driven, a percentage point that has remained steady since the first half of 2015. This environment provides candidates with the confidence to reject undesirable job offers, with 47% of recruiters listing “accepted another offer” as the primary reason for offer objections. A long-standing reason for offer rejections, this sentiment is up from 37% in the first half of 2015.
Key findings from the MRINetwork survey also include:
- Key strategic hires, followed by employee engagement and retention, were identified as top priorities for employers in 2016.
- Newly created positions continue to be the primary reason for job openings at 51%, followed by vacancies from resignations at 30%.
- Vacancies from retirements are increasing, rising 4% since the first half of 2015. This coincides with succession planning which MRINetwork recruiters indicated will be important to employers in 2016.
- In addition to accepting other offers, low compensation packages and counteroffers were also top reasons for rejected offers.
- The time between the first interview and the rejected offer is shrinking, with a 6% increase from the second half of 2014, for candidates that rejected offers after 2 weeks from the first interview.
The Web-based survey included 446 recruiters and was conducted between Oct. 30 and Nov. 14, 2015.
NABE economists lower GDP projections in new survey
Daily News, December 7, 2015
Economists surveyed by the National Association for Business Economics lowered their growth projects for the US economy in 2015 and 2016, according to survey.
The forecaster’s median forecast is for inflation-adjusted US gross domestic product (real GDP) to grow at an annualized rate of 2.4% in 2015 in the new survey, down from 2.5% in the October 2015 survey.
Annualized real GDP growth is expected to improve slightly next year to 2.6%. However, that number is down from 2.7% forecasted in the previous survey’s 2016 forecast.
The survey included 49 forecasters, and was conducted from Nov. 6 to Nov. 18, 2015.
“Looking further ahead, two-thirds of the panelists expect potential economic growth to average between 2.0% and 2.5% during the next five years,” NABE President Lisa Emsbo-Mattingly said. “This lackluster growth potential is the consequence of tepid productivity gains which have been hindered by low capital formation, financial, environmental, and other regulatory constraints, low innovation, and workforce development/education issues.”
Panelists foresee nonfarm payroll growth above 200,000 jobs per month through the end of 2016. But following weak September payroll data, the outlook for 2015 has been revised downward to 202,000 jobs per month from 212,000 per month in October’s survey. The 2016 forecast for job creation is unchanged from the October survey, just north of 210,000. Unemployment rate expectations are slightly more optimistic compared with those in the October survey; the unemployment rate is expected to decline to 4.7% by the fourth quarter of 2016, compared to 4.8% in the October survey.
The new ADP/Moody’s National Employment Report: 62% of all new job growth in December, 2015 came from Small and Mid-size Companies!
January 6, 2016
Private sector employment increased by 257,000 jobs from November to December (an increase from November’s 217,000 additions), according to the December 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: 95,000
1-19 employees 51,000
20-49 employees 44,000
Medium businesses: 65,000
50-499 employees 65,000
Large businesses: 97,000
500-999 employees 39,000
1,000+ employees 58,000
Goods producing 23,000
Service providing 234,000
Financial activities 13,000
Professional/business services 66,000
Payrolls for businesses with 49 or fewer employees increased by 95,000 jobs in December, up from November’s downwardly revised 72,000. Employment among companies with 50-499 employees increased by 65,000 jobs—up about 10% from last month. Employment at large companies – those with 500 or more employees – came in 97,000 an increase from the upwardly revised 80,000 jobs added in November. Companies with 500-999 added 39,000 jobs, while companies with over 1,000 employees gained 58,000 jobs.
Goods-producing employment rose by 23,000 jobs in December, well up from a downwardly revised <-2,000> the previous month. The construction industry added 24,000 jobs, which was roughly in line with the 21,000 average monthly jobs gained for the year. Meanwhile, manufacturing stayed in positive territory for the second straight month adding 2,000 jobs.
Service-providing employment rose by 234,000 jobs in December, up from an upwardly revised 213,000 in November. The report indicates that professional/business services contributed 66,000 jobs, the largest increase in this sector in 2015. Trade/transportation/utilities grew by 38,000, off a bit from an upwardly revised 41,000 the previous month. The 13,000 new jobs added in financial activities were right in line with the average for the year.
“2015 had a strong close with December showing the largest job gains of the year,” said Ahu Yildirmaz, VP and head of the ADP Research Institute. “Overall, the average monthly employment growth was just under 200,000 for the year in contrast to almost 240,000 jobs per month in 2014. Weakness in the energy and manufacturing sectors was mostly responsible for the drop off.”
Mark Zandi, chief economist of Moody’s Analytics, said, “Strong job growth shows no signs of abating. The only industry shedding jobs is energy. If this pace of job growth is sustained, which seems likely, the economy will be back to full employment by mid-year. This is a significant achievement, given that the last time the economy as at full employment was nearly a decade ago.”
(The January 2016 ADP National Employment Report will be released at 8:15 a.m. ET on February 3, 2016).
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.
December 2015 Small Business Report Highlights
Total Small Business Employment: 95,000
|●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 – October 2015
On December 8th, the U.S. Bureau of Labor Statistics (BLS) reported that the number of job openings was little changed at 5,400,000 on the last business day of October. Hires and separations were little changed at 5,100,000 and 4,900,000, respectively. Within separations, the quits rate was 1.9% for the 7th consecutive month, and the layoffs and discharges rate remained unchanged at 1.2%. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions.
Job openings were little changed at 5,400,000 in October. The job openings rate for September was 3.6%. The number of job openings was little changed in October for total private and government. Job openings decreased in professional and business services (-137,000) and in the West region.
The number of job openings (not seasonally adjusted) increased over the 12 months ending in October for total nonfarm and total private and government. Job openings rose over the year in health care and social assistance (+225,000), retail trade (+141,000), state and local government (+51,000), and federal government (+15,000). Job openings decreased over the year in finance and insurance (-55,000) and mining and logging (-17,000). The number of job openings increased over the year in 3 out of the 4 regions—Northeast, South, and Midwest—and was little changed in the West.
The number of hires was 5,100,000 in October, little changed from September. The hires rate was 3.6%. The number of hires was little changed for total private and government in October. There was little change in the number of hires in all industries while hires increased in the West region over the month.
Over the 12 months ending in October, the number of hires (not seasonally adjusted) was little changed for total nonfarm and total private, and increased for government. At the industry level, hires increased in state and local government (+33,000). The number of hires was little changed in all four regions over the year.
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 October 2015, hires totaled 61,000,000 and separations totaled 58,300,000, 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 November 2015 are scheduled to be released on Tuesday, January 12, 2016.)
As we recruiters know, that 5,400,000 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 5,400,000 published job openings now become a total of 27,000,000 published and hidden job orders.
In December there were 7,904,000 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 7,904,000 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 276,800 in December
January 6, 2016
- Large December drop offsets November’s gain
- Most large States and MSAs saw over the year gains, but a number of smaller States saw losses
Online advertised vacancies decreased 276,800 to 5,407,700 in December, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series. The November Supply/Demand rate stands at 1.40 unemployed for each advertised vacancy with a total of 2,300,000 more unemployed workers than the number of advertised vacancies. The number of unemployed was around 7,900,000 in November.
“Labor demand in 2015 continued at the same slow steady pace of 2014, averaging about a 24,000 monthly increase,” said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board. “While labor demand growth has been somewhat slow over the past 2 years, the monthly employer demand levels have remained consistently high, providing a strong basis for a healthy labor market.”
In 2015, the Professional category saw an over-the-year increase of 4.2%. Much of the gain came from the Healthcare category with small gains in most of the other areas. The Services/Production category saw a stronger over-the-year increase at 7.2%. Much of this gain came from the Transportation category and the Food category with additional gains in the Sales, Healthcare Support and Office/Administration categories.
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 January 2016 Conference Board Help Wanted OnLine® (HWOL) Data Series will be released at 10:00 AM ET on Wednesday, February 3, 2015).
In December, 2015 the regular unemployment number remained at 5.0%, and the broader U-6 measure remained at 9.9%, almost twice as high as the regular unemployment figure.
The above 9.9% 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 December U-6 numbers for the past 13 years:
December 2014 11.2%
December 2013 13.1%
December 2012 14.4%
December 2011 15.2%
December 2010 16.6%
December 2009 17.2%
December 2008 13.7%
December 2007 8.7%
December 2006 7.9%
December 2005 8.6%
December 2004 9.3%
December 2003 9.9%
December 2002 9.9%
The December 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 January 8th, 2016, the BLS published the most recent unemployment rate for December, 2015 of 5.0% (actually it is 5.008%, down by .038% from 5.046% in November, 2015.
The unemployment rate was determined by dividing the unemployed of 7,904,000 (—down from the ‘revised’ month before by 20,000—since December, 2014 this number has decreased by 800,000) by the total civilian labor force of 157,833,000 (up by 466,000 from the ‘revised’ November, 2015). Since December 2014, our total civilian labor force has increased by 1,691,000 workers.
(The continuing ‘Strange BLS Math’ saga): The BLS continues to increase the total Civilian Noninstitutional Population—this time up to 251,936,000. This is an increase of 189,000 from last month’s increase. In one year’s time, this population has increased by 2,909,000. The Civilian Noninstitutional Population has increased each month by…)
|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 157,833,000 (up from November by 466,000).
Subtract the second number (‘civilian labor force’) from the first number (‘civilian noninstitutional population’) and you get 94,103,000 ‘Not in Labor Force’—down by 277,000 from last month’s ‘revised’ 94,380,000. Since December, 2014, 1,218,000 US workers have vanished! Where did those 1,218,000 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—rose slightly to 62.6%. This is .2% 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 December was 2.0% (this rate was .1% lower than last month’s 2.1%). Or, you can look at it another way. We usually place people who have college degrees. That unemployment rate in December was 2.5% (this rate was the same as the last four 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 December 22nd, the 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 an annual rate of +2.0% in the third quarter of 2015, according to the “third” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.9%.
The GDP estimate is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was 2.1%. With the third estimate for the third quarter, the general picture of economic growth remains the same; private inventory investment decreased more than previously estimated. The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, state and local government spending, residential fixed investment, and exports that were partly offset by a negative contribution from private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased. The deceleration in real GDP in the third quarter primarily reflected a downturn in privateinventory investment and decelerations in exports, in PCE, in nonresidential fixed investment, and in state and local government spending that were partly offset by a deceleration in imports.
*The economy needs to expand at about +3% to keep the unemployment rate from rising.
(The “advance” estimate for the 4th Quarter and Annual 2015 GDPs will be released on January 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 December “management, professional and related” types of worker category, you will find the following rates:
December 2014 2.7%
December 2013 2.9%
December 2012 3.9%
December 2011 4.2%
December 2010 4.6%
December 2009 4.6%
December 2008 3.3%
December 2007 2.0%
December 2006 1.7%
December 2005 2.0%
December 2004 2.5%
December 2003 2.8%
December 2002 2.8%
Here are the rates, during those same time periods, for “college-degreed” workers:
December 2014 2.9%
December 2013 3.4%
December 2012 4.0%
December 2011 4.0%
December 2010 4.8%
December 2009 4.9%
December 2008 3.7%
December 2007 2.1%
December 2006 1.9%
December 2005 2.2%
December 2004 2.5%
December 2003 3.0%
December 2002 2.9%
December’s 2015 rates for these two categories, 2.0% and 2.5%, respectively, are trending very positively and are approaching the halcyon numbers we attained in the 2005 to 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 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