Bob Marshall’s July 2016 BLS Analysis for Recruiters; 8/5/16
July BLS Preface
TBMG Coaching Updates and News
Bob Marshall – Training/Coaching Updates:
Top Echelon, Tuesday Training Series, Webinar, Part II, August 23rd, 2016
Part Two (on the heels of my July 26th Top Echelon presentation) will be on Tuesday afternoon, August 23rd, 2016, at 1pm, Eastern Time. This Tuesday Training will again be for TE members. The 30 minute presentation is entitled, “Marketing a Blended Desk – Part II” and will focus on ‘how’ to work a blended desk.
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, July 26th, 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 Cost-Per-Hire is about $4,100, SHRM says
Daily News, August 3, 2016
The average cost-per-hire is about $4,100, and the average time it takes to fill a position is 42 days, according to the new Human Capital Benchmarking Report from the Society for Human Resource Management.
Findings in the report came from an analysis of data collected from 2,048 respondents.
In addition to cost-per-hire and time-to-fill, other findings in the report included:
*Average employee tenure is 8 years.
*Annual turnover rate is 19%, and the involuntary turnover rate is 8%.
*The percent of employers offering tuition reimbursement is 61%. The average maximum reimbursement for tuition/education expenses last year was approximately $4,000.
*The average annual salary increase was 2.7% each year. The average target bonus percentage for nonexecutives was 4.7% compared with 10.2% for executives.
*An average of 66% of employers participated in a 401(k) or similar plan.
*34% of firms had a succession plan.
GDP posts weak growth in second quarter
Daily News, July 29, 2016
US real gross domestic product grew at an annual rate of 1.2% in the second quarter, according to an “advance” estimate of GDP growth by the US Commerce Department. This follows an (downwardly revised) increase of 0.8% in the first quarter.
“Second-quarter growth came in well below expectations and provides more evidence that the economy has weakened so far this year,” according to The Conference Board. “The economy continues to operate at two speeds, with businesses feeling some uneasiness while consumers remain buoyant. Businesses, though, continue to show more wariness about the strength of the economy which is reflected in the largest quarterly drop in private investment numbers since the beginning of the expansion.”
This is the third consecutive quarter that growth is close to 1%, demonstrating that the growth trend of the American economy seems on a path of dropping off significantly from its assumed 2% growth trend, according to The Conference Board.
MarketWatch reports the pace of growth in the spring was well below forecast as a big rebound in consumer spending was overshadowed by the largest drop in business investment since the end of the Great Recession.
Jason Furman, chairman of the Council of Economic Advisers, also commented on the GDP number in a blog post:
“The economy grew 1.2% at an annual rate in the second quarter of 2016, due in part to a large decline in inventory investment (one of the most volatile components of GDP), along with declines in business investment, residential investment and government spending,” Furman wrote. “However, consumer spending grew strongly at 4.2% and, in contrast to the pattern in recent years, net exports also added to GDP. Overall, the most stable and persistent components of output — consumption and fixed investment — rose a solid 2.7% in the second quarter.”
Good Jobs in Minority despite Ongoing Recovery
US News & World Report, Andrew Soergel, July 26, 2016
The U.S. is nearly a decade removed from the Great Recession. So why are many Americans unhappy with their job prospects?
There’s nothing modest about the more than 14,000,000 new positions created during the labor market’s ongoing 69 consecutive months of job growth. Nor is there anything modest about a national unemployment rate hovering near pre-recessionary lows, all while U.S. employers actively recruit for a record number of domestic vacancies.
To the casual observer, it looks as if there’s never been a better time to land a decent job.
And yet the job market’s progress in the aftermath of the Great Recession has arguably represented the most low-profile recovery the country has ever seen. A whopping 72% of nearly 3,000 respondents to a November Public Religion Research Institute poll said the U.S. was still in a recession – something that hasn’t been true since mid-2009.
More than a third of respondents to a separate Fox News poll said they didn’t think the economy had “really recovered at all” from the Great Recession. And 71% of respondents to a Marketplace-Edison Research poll published last month said the economy was “rigged” to favor certain groups, while 62% said “good jobs are difficult to find in the area where they live.”
So what gives? How could the labor market see so much improvement while so many Americans remain pessimistic?
Part of the problem lies in the unevenness of the recovery. Although more Americans are employed today than has been the case at any other point in U.S. history, not all industries have enjoyed the same kind of post-recessionary rebound. The labor market held more than 1,000,000 fewer construction jobs and more than 1,600,000 fewer manufacturing positions in June than was the case 9 years ago, before the Great Recession hit.
The country’s most prominent labor improvements over the last several years, it seems, are largely concentrated at the extremes. High-skill positions that require some sort of advanced education or specialized training – or both – have seen opportunities skyrocket in recent years.
Computer and information systems managers, for example, have seen their payrolls grow by 29% and mean annual wages climb 24% over the last 9 years, according to the Bureau of Labor Statistics. Both are well above the 2.6% employment uptick and 18% wage growth seen in the broader labor market.
Low-skill service positions, likewise, have enjoyed a similar pace of growth, though their wage improvement hasn’t been nearly as dramatic. Positions in the leisure and hospitality industry, for example, have ballooned nearly 16% over the last 9 years, with more than 15,500,000 Americans now employed in the sector. But the average hourly earnings of these employees clocks in at just $14.28 – more than $10 less per hour than the country’s average private-sector employee.
The jobs recovery, in short, has been skewed mostly toward the lowest and highest paying positions. For the millions of Americans whose skill sets float somewhere in the middle, it’s deceptively tricky to find a decent job for which they’re qualified.
In fact, a study published Tuesday by employment hub Indeed found that only about 15% of U.S. jobs in 2015 had seen meaningful wage growth over the last decade and were considered to be well-paying – with an average annual salary of more than $57,700, or the inflation-adjusted purchasing power of the median U.S. household in 2000.
All told, an estimated 92% of these so-called “opportunity jobs” were confined to just 5 mostly high-skill employment categories: health care practitioners, management, computers and mathematics, business and finance, and architecture and engineering.
What all this means is that many of the recruiters for these desirable jobs aren’t actively looking for employees who lack technical proficiency. Indeed’s analysis found that 75% of the job postings for these positions required a college degree – bad news for the roughly 70% of the country that hasn’t acquired such a diploma.
“Right now, the slice of pie is relatively thin in terms of opportunity jobs in the U.S.,” Tara Sinclair, Indeed’s chief economist, said in a statement accompanying the report.
But what is and isn’t considered a “good job” is often relative, and Indeed sets the bar pretty high. At the other end of the spectrum, Gallup estimates about 46% of America’s adult population held a good job in June, which Gallup defines as a full-time job with at least 30-hour workweeks.
Though some would argue the Gallup good job threshold sets the employment bar too low, both Indeed’s and Gallup’s metrics clearly convey the same message – those with good, stable jobs in the U.S. sit solidly in the minority.
“We often hear that the U.S. job market is strong and employer demand is at record levels. But we also know there is a deep strain of discontent among workers, with many feeling they’re stuck in neutral in terms of salary and career growth,” Indeed said in a press release Tuesday. “This is negative for the economy not only because workers are dissatisfied, but because fewer people have money in their pockets to spend.”
Allegis Study says 83% of Business Leaders report Talent is an Issue
Daily News, July 22, 2016
The vast majority of business leaders, 83%, believe attracting and retaining talent is an issue for their organization, according to the Talent Advisory Industry Benchmark study released by Allegis Group Inc. And more than half of organizations reported open positions for which they cannot find quality candidates.
The report also found it takes an average of 55 days to fill full-time positions and an average of 50 days before a new hire is productive. However, applicant quality was the top-rated performance metric – rated 80% more important than speed.
“In today’s increasingly volatile market, hiring the highest quality talent is more critical than ever before,” the report stated. “Businesses face a variety of complex challenges, including fluctuations in the market, the global economy, an aging workforce, and a greater reliance on contingent labor.”
Key findings include:
*83% of executives believe attracting and retaining talent is an issue for their company.
*80% of companies cite quality of applicants as a challenge in their current workforce strategy, with 40% reporting it as a significant issue.
*51% of companies have open positions for which they can’t find quality candidates.
*72% of hiring managers say they provide clear job descriptions, compared to 36% of candidates who say they are provided with clear job descriptions.
*43% of organizations say they discovered a new hire did not have the skills he or she claimed.
*Companies report the average time before a new hire is productive at 50 days.
*When hiring managers are completely ready for the new hire’s first day, candidate satisfaction increases an average of 38%.
*85% of candidates rate consistent communication throughout the process as the top driver of satisfaction with the recruitment experience.
This study was conducted in December 2015 and represents insights from more than 1,400 employers and 13,000 job seekers from North America; Europe, the Middle East and Africa; and Asia Pacific regions.
More than Half of Workers say 9-to-5 Work Day is Thing of Past
Daily News, July 21, 2016
More than half of workers, 59%, believe the 9-to-5 work day is a thing of the past, according to a survey of 3,244 full-time US workers by CareerBuilder.
Older workers more likely viewed the traditional 8-hour work day as a thing of the past. Among workers ages 45 to 54, the survey found that 65% believed the 8-hour work day was history. For workers ages 55 and older, 61% said the same.
However, for workers ages 18 to 24, the survey found only 42% believe the 8-hour work day is in the past.
CareerBuilder’s survey also found that 45% of all workers said they completed work outside of office hours, and 49% said they check or answer emails when they leave work.
“While smartphones and other technology allow us to remain connected to the office out of normal business hours, it may not always be a good thing as workers are having trouble disconnecting from their jobs,” said Rosemary Haefner, chief human resources officer for CareerBuilder.
Job Satisfaction Highest Since 2005
Daily News, July 20, 2016
Nearly half of US workers, 49.6%, are satisfied with their jobs, according to The Conference Board Job Satisfaction survey. This is up from 48.3% in 2014 and the highest level since 2005.
“The rise in workers’ job satisfaction is directly influenced by labor market improvements, and the latest annual job satisfaction trends mirror overall gains in the labor market,” said Michelle Kan, associate director, Knowledge Organization, and a co-author of the report. “The rapidly declining unemployment rate, combined with increased hiring, job openings and quits, signals a seller’s market, where the employer demand for workers is greater than the available supply.”
In addition to overall job satisfaction, the report looks at 23 components that contribute to job satisfaction, including wages, job security, promotion polices and health plans. The report finds that workers are most satisfied with their colleagues, 58.9%; interest in their work, 58.8%; their supervisors, 56.8%; the commute, 56.7%; and the physical workspace, 55.6%.
According to the report, US employees expressed the lowest satisfaction levels with aspects of work that are dependent on their evaluated performance. The job component with the lowest satisfaction is promotion policies at 23.8%, followed by bonus plans and the performance review process at 24.3% and 28.7% respectively.
“When the labor market tightens, employers have a more difficult time finding enough qualified and willing job candidates to fill available job openings,” said Gad Levanon, chief economist, North America at The Conference Board. “In these labor market conditions, workers are more satisfied with their jobs in several different ways. These include layoff rates and greater job security, more job opportunities and more job switching, increased wages and increased employer efforts to retain workers.”
The Conference Board Job Satisfaction survey results are based on workers’ perceptions of their current role and workplace environment. The survey questions are asked as part of The Conference Board Consumer Confidence Survey.
Employment Trends Steady, NABE Survey Finds
Daily News, July 18, 2016
The National Association for Business Economics’ June 2016 business conditions survey indicates job gains were more common than job losses in the 2nd quarter, but plans for the 3rd quarter hiring eased from 3 months ago.
“The results of the most recent NABE Business Conditions Survey are mixed,” said NABE President Lisa Emsbo-Mattingly, director of research, global asset allocation at Fidelity Investments. “Sales growth rebounded strongly in the 2nd quarter among survey participants’ firms, but profit margins were flat, on balance. While net capital spending and employment trends were steady, the number of firms that cut employment and capital spending declined notably. In addition, panelists have ratcheted down their expectations for overall growth, with nearly 2/3rds expecting GDP growth of 2% or lower over the next 4 quarters.”
The share of respondents reporting rising employment at their firms over the past 3 months edged up to 30% from 29% in the April survey, while the share reporting a decrease in employment fell to 11% from 18% in the same survey 3 months ago.
The 30% share of respondents whose firms added workers is close to previous levels, but the 11% share reporting their firms had fewer workers is the smallest since the April 2015 survey.
The share of respondents who anticipate their firms will add workers in the next quarter fell to 29% in June from 35% in the April survey, while the share expecting job reductions held nearly steady at 18%. This results in a net rising index of 10, the lowest index reading since the NABE survey first asked this question in July 2014. As with responses covering the past 3 months, respondents in the goods-producing and transportation, utilities, information and communications sectors expect reduced headcounts at their firms, while respondents in the finance, insurance and real estate sectors and services sectors expect their firms will add employees.
The survey also asked panelists if their firms had difficulties filling open positions over the past 3 months; 31% reported their firms had difficulty filling open positions, down from 34% in the April survey.
NABE is a professional association for business economists and others who use economics in the workplace. The survey included 110 NABE members and was conducted between June 20 and June 29.
The new ADP/Moody’s National Employment Report: Over 72% of all new job growth in July, 2016 came from Small and Mid-size Companies!
August 3, 2016
Private sector employment increased by 179,000 jobs from June to July (a 7,000 job increase from June’s 172,000 additions), according to the July 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: 61,000
1-19 employees 22,000
20-49 employees 39,000
Medium businesses: 68,000
50-499 employees 68,000
Large businesses: 50,000
500-999 employees 16,000
1,000+ employees 33,000
Goods producing <-6,000>
Service providing 185,000
Financial activities 11,000
Professional/business services 59,000
Franchise Jobs 21,200
Payrolls for businesses with 49 or fewer employees increased by 61,000 jobs in July, down from 86,000 (downwardly revised from the initially reported 95,000 jobs) in June. Employment at companies with 50-499 employees increased by 68,000 jobs, up from last month’s 56,000 (upwardly revised from the initially reported 52,000 jobs). Employment at large companies – those with 500 or more employees – increased by 50,000, up from June’s 34,000 (upwardly revised from the initially reported 25,000 jobs). Companies with 500-999 employees added 16,000 (down from last month’s 21,000) and companies with over 1,000 employees added 33,000 (up from last month’s 4,000).
Goods-producing employment was down by 6,000 jobs in July, following June losses of 28,000. The construction industry lost 6,000 jobs, following June losses of 4,000 jobs. Meanwhile, manufacturing gained 4,000 jobs after losing 15,000 the previous month.
Service-providing employment rose by 185,000 jobs in July, fewer than June’s 203,000 jobs (downwardly revised from the initially reported 208,000). The report indicates that professional/business services contributed 59,000 jobs, down from June’s 78,000. Trade/transportation/utilities increased by 27,000 jobs in July, down from 41,000 jobs added the previous month. Financial activities added 11,000 jobs, following last month’s gain of 9,000 jobs.
“This month’s employment number falls short of the 12-month average primarily because of slowing in small business hiring”, said Ahu Yildirmaz, VP and head of the ADP Research Institute. “As the labor market continues to tighten, small businesses may increasingly face challenges when it comes to offering wages that can compete with larger businesses.”
Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth remains strong, but is moderating as the economy approaches full employment. Businesses are having a more difficult time filling open job positions, which are near record highs. The nation’s biggest economic problem will soon be the lack of available workers.”
(The August 2016 ADP National Employment Report will be released at 8:15 a.m. ET on August 31, 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.
July 2016 Small Business Report Highlights
Total Small Business Employment: 61,000
|●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 – May 2016
On July 12th, the U.S. Bureau of Labor Statistics (BLS) reported that the number of job openings decreased to 5,500,000 on the last business day of May, the U.S. Bureau of Labor Statistics reported today. Hires and separations were both little changed at 5,000,000. Within separations, the quits rate was 2.0% and the layoffs and discharges rate was 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 4 geographic regions.
Job Openings decreased in May by 345,000 to 5,500,000. The prior 3-month average change in job openings was +80,000. The job openings rate in May 2016 was 3.7%. The number of job openings decreased for total private and was little changed for government. Job openings decreased in a number of industries, with the largest changes occurring in wholesale trade (-104,000), other services (-98,000), and real estate and rental and leasing (-53,000). In the regions, job openings decreased in the South and the Midwest.
The number of hires was little changed at 5,000,000 in May. The hires rate was 3.5%. The number of hires was little changed for total private and for government. Hires were little changed in all industries and in all regions in May.
Total separations include 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 include separations due to retirement, death, and disability, as well as transfers to other locations of the same firm.
There were 5,000,000 total separations in May, little changed from April. The total separations rate in May was 3.4%. The number of total separations was little changed over the month for total private and for government. In May, total separations decreased in state and local government education (-17,000) and in federal government (-8,000). The number of total separations was little changed over the month in all 4 regions.
The number of quits was little changed in May at 2,900,000. The quits rate was 2.0%. Over the month, the number of quits was little changed for total private and for government. By industry, quits increased in educational services (+17,000). The number of quits increased in the Northeast region.
There were 1,700,000 layoffs and discharges in May, little changed from April. The layoffs and discharges rate was 1.2%. The number of layoffs and discharges was little changed over the month for total private and for government. Layoffs and discharges declined in state and local government education (-15,000) and in mining and logging (-9,000). 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 May. Other separations increased in professional and business services (+29,000) and in educational services (+4,000). Other separations decreased in information (-6,000) and in federal government (-5,000). Other separations were little changed 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 May, 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 June 2016 are scheduled to be released on Wednesday, August 10, 2016.
As we recruiters know, that 5,500,000 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 5,500,000 published job openings now become a total of 27,500,000 published and hidden job orders.
In July there were 7,770,000 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 7,770,000 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 156,800 in July
August 3, 2016
* The July gain offsets much of the June loss of 226,700
* Large gains for California, Texas, New York, and Florida
* Widespread gains across most occupational categories
Online advertised vacancies increased 156,800 to 4,814,300 in July, according to The Conference Board Help Wanted OnLine®(HWOL) Data Series, released today. The June Supply/Demand rate stands at 1.67 unemployed for each advertised vacancy with a total of 3,100,000 more unemployed workers than the number of advertised vacancies. The number of unemployed was approximately 7,900,000 in June.
“The first half of 2016 has shown a substantial drop in the level of online advertised vacancies,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “July’s gain is a positive sign. However, recovery from earlier losses will require continued improvements throughout the rest of 2016.”
In July, virtually all major occupational categories saw increases. The Professional category saw strong gains in Healthcare (+37.3), Computer (+15.8), Business/Finance (+7.8), and Management (+6.1). The Services/Production category saw strong gains in Installation/Repair (+15.2), Sales (+13.9), Transportation (+12.9), and Office/Admin (+11.3).
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 July 2016 Conference Board Help Wanted OnLine® (HWOL) Data Series will be released at 10:00 AM ET on Wednesday, August 31, 2016).
In July, 2016 the regular unemployment number remained at 4.9%, and the broader U-6 measure rose to 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 July U-6 numbers for the past 13 years:
July 2015 10.4%
July 2014 12.2%
July 2013 13.9%
July 2012 14.9%
July 2011 16.1%
July 2010 16.5%
July 2009 16.4%
July 2008 10.4%
July 2007 8.3%
July 2006 8.5%
July 2005 8.9%
July 2004 9.5%
July 2003 10.3%
The July 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 August 5th, 2016, the BLS published the most recent unemployment rate for July, 2016 of 4.9% (actually it is 4.878%, down by .021% from 4.899% in June, 2016.
The unemployment rate was determined by dividing the unemployed of 7,770,000 (—down from the month before by 13,000—since July, 2015 this number has decreased by 479,000—exactly the same as last month) by the total civilian labor force of 159,287,000 (up by 407,000 from June, 2016). Since July 2015, our total civilian labor force has increased by 2,172,000 workers.
(The continuing ‘Strange BLS Math’ saga): The BLS continues to increase the total Civilian Noninstitutional Population—this time up to 253,620,000. This is an increase of 223,000 from last month’s increase of 223,000. In one year’s time, this population has increased by 2,744,000. The Civilian Noninstitutional Population has increased each month by…)
|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 159,287,000 (up from June by 407,000).
Subtract the second number (‘civilian labor force’) from the first number (‘civilian noninstitutional population’) and you get 94,333,000 ‘Not in Labor Force’—down by 184,000 from last month’s 94,517,000. Since July, 2015, 572,000 US workers have vanished! Where did those 572,000 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 .1% to 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 July was 3.0% (this rate was .2% above last month’s 2.8%). Or, you can look at it another way. We usually place people who have college degrees. That unemployment rate in July was 2.5% (this rate was the same as 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 July 29th, 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 an annual rate of 1.2% in the 2nd quarter of 2016, according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased at a downwardly revised 0.8%.
The GDP second-quarter “advance” estimate released on July 29th is based on source data that are incomplete or subject to further revision by the source agency. The “second” estimate for the second quarter, based on more complete data, will be released on August 26th, 2016. The increase in real GDP in the 2nd quarter reflected positive contributions from personal consumption expenditures (PCE) and exports that were partly offset by negative contributions from private inventory investment, nonresidential fixed investment, residential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased. Revisions for the first quarter of 2016 For the first quarter of 2016, real GDP is now estimated to have increased 0.8%; in the previously published estimates, first-quarter GDP was estimated to have increased 1.1%. The 0.3% point downward revision to the percent change in 1st quarter real GDP primarily reflected downward revisions to residential fixed investment, to private inventory investment, and to exports that were partly offset by upward revisions to nonresidential fixed investment, to PCE, to state and local government spending, to imports, and to federal government spending.
*The economy needs to expand at about +3% to keep the unemployment rate from rising.
(The “second” estimate for the 2nd Quarter 2016 GDP will be released on August 26th, 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 July “management, professional and related” types of worker category, you will find the following rates:
July 2015 3.1%
July 2014 3.5%
July 2013 4.1%
July 2012 4.8%
July 2011 5.0%
July 2010 5.0%
July 2009 5.5%
July 2008 2.9%
July 2007 2.5%
July 2006 2.5%
July 2005 2.7%
July 2004 3.1%
July 2003 3.7%
July 2002 3.5 %
Here are the rates, during those same time periods, for “college-degreed” workers:
July 2015 2.6%
July 2014 3.1%
July 2013 3.8%
July 2012 4.1%
July 2011 4.3%
July 2010 4.5%
July 2009 4.7%
July 2008 2.5%
July 2007 2.1%
July 2006 2.1%
July 2005 2.4%
July 2004 2.7%
July 2003 3.1%
July 2002 3.0%
July’s 2016 rates for these two categories, 3.0% and 2.5%, respectively, are trending negatively this month, but are still close to the halcyon numbers we attained in the 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