Bob Marshall’s June 2015 BLS Analysis for Recruiters; 7/2/15
June BLS Preface
Bob Marshall – Training/Coaching Updates:
On June 10, 2015, I had three more of my presentations captured on film at Next Level Exchange (NLE). They now have a total of eight. These three titles are: “Desk Building…Using the classic technique, ‘The Concept of Inverted Cones’”, “The Daily Planner, Modularization & The 100 Point Sheet”, & “Secrets of the Big Billers.”
Those of you on NLE, keep your eyes peeled for the three release dates. And those of you not members yet, you might consider joining. NLE is a division of Kaye-Bassman (KBIC) based in Plano, TX. They can be reached at: www.nextlevelexchange.com.
The Newport Group (TNG), September 9-10, 2015
I will conduct my third training visit to The Newport Group on Wednesday and Thursday, September 9-10, 2015. This visit will consist of formal presentations and desk-level coaching.
Top Echelon, Free Recruiter Training Webinar, December 8, 2015
My presentation (title to be announced) will be on Tuesday afternoon at 1pm, Eastern Time.
TBMG Silver Coaching Plan, (revised 2015)
*An affordable investment for those you want the accountability factor;
*We have twice per month telephone meetings—basically every other week (although I will be available at any time should the need to talk arise);
*Your numbers will be tracked on a weekly basis (recommended);
*$600 per month; 3-month commitment;
*The goal with this plan is to double your current levels of production;
And that is basically that!
You can also read the descriptions of my other coaching plans, and all of my products, on my website @ www.themarshallplan.org or you can reach me directly at 770-898-5550 or email me @ email@example.com.
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.
New estimate shows GDP contracted less in Q1
Daily News, June 24, 2015
A new estimate says US real GDP decreased in the first quarter at an annual rate of 0.2%, revising an earlier estimate that cited a decrease of 0.7%, according to the US Bureau of Economic Analysis.
Real GDP rose by 2.2% in the fourth quarter of 2014.
Exports decreased less than previously estimated in the first quarter, while personal consumption expenditures and imports increased more.
Bloomberg reports today’s estimate matched the median forecast of 76 economists surveyed. Michael Feroli, chief US economist at JPMorgan Chase & Co. in New York, correctly forecast the GDP.
“What we are seeing here does validate the story that the first-quarter weakness was transitory,” Feroli told Bloomberg. “The consumer is coming back to overall decent growth.”
“The small 1st quarter decline in overall GDP was driven by a number of factors including harsh winter weather and tepid foreign demand,” Jason Furman, chairman of the Council of Economic Advisers, wrote in a blog post on Whitehouse.gov. “However, the combination of consumption and investment — the most stable and persistent components of output — continued to rise at a robust year-over-year pace. This solid trend matches the strong pace of job growth and employment reduction observed over the last year.”
Are Companies Any Good at Picking Stars?
Rachel Feintzeig, The Wall Street Journal, June 16, 2015
Despite new assessment tools, the hunt for high-potential employees is more art than science
Companies are searching for future stars and they’re stumped.
At a time when firms have more data than ever on employees’ habits and productivity, predicting which employees will excel in bigger jobs remains more art than science. These “high potentials” can help companies ensure they have leaders for the long-term, but managers say their picks don’t always work out.
“People are horrible at predicting the future,” says Tom Rauzi, director of global talent at Dell Inc.
For the moment, algorithms aren’t much better. Some makers of human-resources software say they’re working on developing new ways to predict potential but aren’t quite there yet. And companies like Nokia Corp., American Express Co. and SAP SE are rethinking how to gauge employee potential—focusing on new metrics, using games to identify traits like perseverance or classifying workers’ abilities differently—but have not yet developed a quantitative approach that cracks the code.
Most employers currently rely on managers’ judgment or performance reviews to determine who gets on the high-potential track. Managers said they accurately predicted employee potential just over half of the time, according to a survey of 134 companies by consultancy Talent Strategy Group LLC. That suggests a good chunk of the estimated $70 billion to $75 billion U.S. companies outlay on training is misspent.
At Dell, some managers rate employees’ potential, sending chosen workers to network with leaders or tapping them for special assignments. The approach results in some “false positives and false negatives,” says Mr. Rauzi, partly because Dell has no companywide criteria for high potentials.
“Everybody bats the term around, but we’re not really sure what the other person’s talking about,” he says.
This summer he will kick off a research project to analyze data like employees’ education, trajectories and performance feedback in hopes of unearthing telltale markers for people suited to ascend Dell’s ranks.
When managers are in charge of high-potential rosters, they tend to pick protégés who are like them. In a survey of more than 9,500 managers by CEB Inc., nearly a quarter said they rely on gut instinct when picking future stars, a finding that may explain why some companies say they’re struggling to find fresh thinkers and diverse hires.
Employees who feel they’re being tracked for bigger things tend to stay on longer and put in more effort at work, according to research from Christopher Collins, an associate professor at Cornell University’s School of Industrial and Labor Relations and director of its Center for Advanced Human Resource Studies.
Yet those who aren’t tapped for the high-potential, or ‘hi-po’, track may grow embittered. At business-software maker SAP, about 8% to 10% of employees were designated hi-pos, but some 70% were thought of as po-pos, “pissed off and passed over,” according to Jewell Parkinson, head of HR for SAP North America. As a result, the company did away with its official high-potential distinction.
At Coca-Cola Co., Carie Davis observed that the soda maker’s high-potential program was filled with Type ‘A’ employees with similar profiles. Ms. Davis, who until March was the company’s global director of innovation and entrepreneurship, advised some of the group during a session on innovation, but found they spent more time talking and “jostling for power” than executing new ideas.
“It rubbed me the wrong way,” recalls Ms. Davis, who left Coke after about 13 years to start her own consulting firm. She says she worries that employees capable of coming up with new, creative ideas are “squashed.”
A Coke spokeswoman declined to comment.
Companies are bringing in assessments, similar to those used to vet executive-level talent, to evaluate thousands of employees at many levels of the organization, according to Matt Paese, a vice president at assessment company Development Dimensions International Inc.
Later this summer, DDI will begin marketing a new line of tools designed as a cheaper, lighter version of assessments traditionally given to executives.
Some human-resources leaders say the tests currently on offer from assessment companies cost too much to offer them widely, though DDI says its prices have come down in recent years. Others say the assessments stoke employees’ anxieties.
Lori Bradley, a talent management executive who has expanded the use of assessments at PVH Corp., the owner of brands like Calvin Klein, says workers often worry about who sees their answers, and whether those results affect pay or performance ratings.
“We have to do a lot of reassuring,” she says.
Makers of HR software are beginning to develop their own solutions, claiming that algorithms built using an array of metrics—from an individual’s 401(k) contribution to promotions to connections on the corporate social network—can yield information about high potentials.
Ultimate Software Group Inc., for example, says its UltiPro High Performer Predictor tool scores workers on the likelihood that they will excel in the months to come. Steve VanWieren, the company’s principal data scientist, notes that future performance isn’t the same as potential, which he defines as the ability to move up a couple layers in an organization.
The company is currently at work modeling possible predictors of potential. But even that won’t be fail-safe, he says. “There’s always going to be something the data misses.”
Culture, brand are top recruiting advantages, survey finds
Daily News, June 16, 2015
Organizational culture and employer brand are top competitive advantages when recruiting talent, according to a global executive survey by Futurestep, a division of Korn Ferry.
The survey found 63% of respondents said organizational culture is the top recruiting advantage for global organizations, followed by a leading employer brand at 26%. Higher salaries and promoting quickly may not be as competitive when recruiting talent, with responses at 6% and 5% respectively.
However, the survey found salary does rank as the top negotiating sticking point for new hires.
“Focusing on culture and how that brand is represented in the marketplace has a critical impact on attracting and retaining the talent that will drive business success,” said Neil Griffiths, Futurestep global practice leader – talent communications and employer brand. “The survey results indicate that employers need to think more broadly about what attracts top talent to their organization.”
When asked about finding qualified job candidates, 61% of respondents said it was harder to find qualified job candidates than a year ago compared to 39% who said it was easier to find qualified job candidates than a year ago.
Survey participants were asked, “What is the top negotiating sticking point for new hires?” Responses include:
- Salary: 53%
- Flexibility: 33%
- Title: 11%
- Vacation: 4%
Survey participants were asked, “What’s the top thing that gives a company a competitive advantage for hiring the best in the industry?” Responses include:
- Organizational culture: 63%
- Leading employer brand: 26%
- Higher salaries: 6%
- Reputation for promoting quickly: 5%
The global survey included more than 1,000 responses and took place in May 2015.
Where do people love their jobs? Study uses tweets to find out
Daily News, June 11, 2015
Those who love their job enough to tweet about it in the US live in the Western half of the country, according to new research released by Monster and social intelligence company Brandwatch. The social media study of more than 1,100,000 tweets in the US analyzed who, what, when, where and why people take to Twitter to discuss how they feel about their jobs.
“It’s certainly not just the weather nor differences in temperament that drove the disparity between people in the East hating their jobs and people in the West loving them,” said Joanie Courtney, senior VP, global market insights at Monster. “Job satisfaction is an often fluid, temporary sensation, and social channels deliver people the opportunity to express those sentiments with greater ease than ever before. The results indicate an opportunity for companies to focus on embracing existing talent to move the ‘love-hate needle,’ as well as those tweeting to translate their skills for new opportunities to find something better.”
8 out of the top 10 states where people tweet about loving their job at a higher ratio to hating their job are in the Western half of the country:
The top 10 states in which people on Twitter have a higher ratio of discussing hating their job versus loving their job are all exclusively in the Eastern half of the US, with approximately half of those job-hating states in the Northeast region:
- West Virginia
- New Jersey
- Rhode Island
In July, after the halfway point of the calendar year and when many people begin their summer vacation, positive Twitter conversations about loving jobs dipped and steadily declined until another sharp drop in October, a time often seen as a crunch period for companies ramping up hiring for holiday sales or end-of-year deadlines, according to the report. Once past the New Year, a more positive attitude returns and slowly makes its way to a peak in March; conversations about hating their jobs also peak around this time.
“The ease and ability for people to publicly post their opinions via Twitter — from their latest meal to what’s happening on their subway ride — shows that everyone has a point of view,” said Nate Walton, director of analytics, Brandwatch. “According to our analysis, sentiment toward jobs is no exception.”
“Although, this analysis revealed conversations about people loving their jobs dropping over the weekend, when it came to conversations around hating their job, there were no boundaries,” Walton said. “We learned that if people hate their job enough to talk about it on social media, they hate it no matter the day of the week. An interesting finding from this study identifies that workers in certain industries are more prudent when posting about their jobs — with tech and IT employees avoiding much public Twitter chatter about hating their job.”
Monster and Brandwatch analyzed more than 1,100,000 tweets in the US over the course of the 12-month period from March 2014 to March 2015.
The new ADP/Moody’s National Employment Report: 87% of all new job growth in June, 2015 came from Small and Mid-size Companies!
July 1, 2015
Private sector employment increased by 237,000 jobs from May to June (up from the increase of 201,000 jobs last month), according to the June ADP National Employment Report®, which is produced by ADP®, a leading global provider of Human Capital Management (HCM) solutions, in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.
By Company Size
Small businesses: 120,000
1-19 employees 71,000
20-49 employees 49,000
Medium businesses: 86,000
50-499 employees 86,000
Large businesses: 32,000
500-999 employees 27,000
1,000+ employees 5,000
Goods producing 12,000
Service providing 225,000
Financial activities 19,000
Professional/business services 61,000
Payrolls for businesses with 49 or fewer employees increased by 120,000 jobs in June, the same as May. Employment among companies with 50-499 employees increased by 86,000 jobs, up from 63,000 the previous month. Employment gains at large companies – those with 500 or more employees – increased from May, adding 32,000 jobs in June, up from 19,000. Companies with 500-999 employees bounced back to 27,000 jobs added after shedding 1,000 jobs in May. Companies with over 1,000 employees added 5,000 jobs, down from 21,000 the previous month.
Goods-producing employment rose by 12,000 jobs in June, after adding 11,000 in May. The construction industry had another solid month in June adding 19,000 jobs, down from 28,000 last month. Meanwhile, manufacturing lost 7,000 jobs in June, after losing 2,000 in May.
Service-providing employment rose by 225,000 jobs in June, a strong rise from 192,000 in May. The report indicates that professional/business services contributed 61,000 jobs in June, almost double May’s 32,000. Trade/transportation/utilities grew by 50,000, the same as the previous month. The 19,000 new jobs added in financial activities was an increase from last month’s 12,000.
“June job numbers came in at their highest level since December 2014,” said Carlos Rodriguez, president and chief executive officer of ADP. “Small businesses continue to lead the way adding over half of the total jobs this month.”
Mark Zandi, chief economist of Moody’s Analytics, said, “The U.S. job machine remains in high gear. The current robust pace of job growth is double that needed to absorb the growth in the working age population. The only blemish in the job market is the loss of jobs in the energy sector. Most encouraging is the healthy rate of job growth among the nation’s smallest companies.”
(The July 2015 ADP National Employment Report will be released at 8:15 a.m. ET on August 5, 2015).
Due to the important contribution that small businesses make to economic growth, employment data that are specific to businesses with 49 or fewer employees is reported each month in the ADP Small Business Report®, a subset of the ADP National Employment Report.
June 2015 Small Business Report Highlights
Total Small Business Employment: 120,000
|●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 – April 2015
On June 9th, the BLS reported that there were 5,400,000 job openings on the last business day of April, the highest since the series began in December 2000, the U.S. Bureau of Labor Statistics reported today. The number of hires was little changed at 5,000,000 in April and the number of separations was little changed at 4,900,000. Within separations, the quits rate was 1.9% and the layoffs and discharges rate was 1.3%, both little different from the previous month. 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 rose to 5,400,000 on the last business day of April, the highest point since the series began in December 2000. The job openings rate for April 2015 was 3.7%. The number of job openings increased for total private and was essentially unchanged for government. At the industry level, job openings rose over the month in health care and social assistance but fell in arts, entertainment, and recreation. In the regions, job openings increased in the West.
The number of job openings (not seasonally adjusted) increased over the 12 months ending in April for total nonfarm, total private, and government. Job openings increased over the year for many industries with the largest changes occurring in professional and business services and in health care and social assistance. Job openings decreased over the year in mining and logging and in arts, entertainment, and recreation. The number of job openings increased over the year in all four regions.
The number of hires was 5,000,000 in April, little changed from March. The hires rate was 3.5%. The number of hires was little changed for total private and government in April. There was little change in the number of hires in all industries and regions over the month.
Over the 12 months ending in April, 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 accommodation and food services and in state and local government. The number of hires decreased over the year in mining and logging and in arts, entertainment, and recreation. The number of hires was essentially unchanged over the year in all four regions.
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 April 2015, hires totaled 60,000,000 and separations totaled 57,200,000, yielding a net employment gain of 2,800,000. 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 May 2015 are scheduled to be released on Tuesday, July 7th, 2015).
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 June there were 8,299,000 unemployed workers. What was the main reason why those workers were unemployed? Two Words: Structural Unemployment. If we can’t figure out how to educate and/or reeducate those 8,299,000 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 Falls 144,300 in June
July 1, 2015
- Weak June leaves the second quarter with a net loss
- Large losses in the Services/Production occupational category in June
Online advertised vacancies fell 144,300 to 5,300,700 in June, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series, released today. The May Supply/Demand rate stands at 1.59 unemployed for each advertised vacancy with a total of 3,200,000 more unemployed workers than the number of advertised vacancies. The number of unemployed was 8,700,000 in May.
“The first half of 2015 shows moderate growth with a strong first quarter partially offset by a weak second quarter,” said Gad Levanon, Managing Director, Macroeconomic and Labor Market Research. “Overall employer demand for labor still continues at a very high level.”
In June, the Services/Production category saw large losses in Office/Admin (−32,100), Sales (−21,000), Installation/ Maintenance (−14,000), Construction (−12,700), and Food (−10,200) with only a small increase in Transportation (+6,800). While the Professional category also saw losses, it was much smaller than those in Services/Production with Healthcare showing a small gain (+1,600).
Occupational Changes for the Month of June
In June, 8 of the largest online job categories posted decreases while 2 posted increases.
Office and Administrative Support ads saw the largest drop, 32,100, to 580,200 due to declines in bookkeeping, accounting, and auditing clerks, customer service representatives, and executive secretaries and executive administrative assistants. Their supply/demand rate is 1.56, i.e. about two unemployed per opening.
Sales and related ads dropped 21,000 to 558,300 due to losses in sales representatives, wholesale and manufacturing, except technical and scientific products, retail salespersons, and first-line supervisors of retail sales workers. Their supply/demand rate is 1.67, i.e. about two unemployed per opening.
Installation, Maintenance, and Repair ads decreased 14,000 to 218,800. The supply/demand rate lies at 0.97, i.e. about one unemployed job-seeker for every advertised available opening.
Food Preparation and Serving-Related ads declined 10,200 to 230,400. The supply/demand rate lies at 3.44, i.e. more than three unemployed job-seekers for every advertised available opening.
Business and Financial Operations declined 9,300 to 328,800.
Computer and Math ads decreased 7,300 to 588,200. The supply/demand rate for these occupations lies at 0.12, i.e. about 8 advertised available openings for every job-seeker.
Transportation ads rose 6,800 to 394,300. The supply/demand rate for these occupations lies at 1.77, i.e. about two unemployed job-seekers for every advertised available opening.
Healthcare Practitioners and Technical ads gained 1,600 in June to 603,100. The supply/demand rate for these occupations lies at 0.34, i.e. about 2.9 advertised available openings for every job-seeker.
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 2015 Conference Board Help Wanted OnLine® (HWOL) Data Series will be released at 10:00 AM ET on Wednesday, August 5, 2015).
In June, 2015 the regular unemployment number dropped to 5.3%, and the broader U-6 measure dropped to 10.5%, almost twice as high as the regular unemployment figure.
The above 10.5% 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 June U-6 numbers for the past 12 years:
June 2014 12.1%
June 2013 14.2%
June 2012 14.8%
June 2011 16.2%
June 2010 16.5%
June 2009 16.5%
June 2008 10.1%
June 2007 8.3%
June 2006 8.4%
June 2005 9.0%
June 2004 9.6%
June 2003 10.3%
The June 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 July 2nd, 2015, the BLS published the most recent unemployment rate for June, 2015 of 5.3% (actually it is 5.285%, down by .223% from 5.508% in May, 2015.
The unemployment rate was determined by dividing the unemployed of 8,299,000 (— down from the month before by 375,000—since June, 2014 this number has decreased by 1,154,000) by the total civilian labor force of 157,037,000 (down by 432,000 from May, 2015). Since June 2014, our total civilian labor force has increased by 1,337,000 workers.
(The continuing ‘Strange BLS Math’ saga): The BLS continues to increase the total Civilian Noninstitutional Population—this time up to 250,663,000. This is an increase of 208,000 from last month’s increase. In one year’s time, this population has increased by 2,849,000. The Civilian Noninstitutional Population has increased each month by…)
|Up from May 2015||by||208,000|
|Up from April 2015||by||189,000|
|Up from March 2015||by||186,000|
|Up from February 2015||by||191,000|
|Up from January 2015||by||176,000|
|Up from December 2014||by||696,000|
|Up from November 2014||by||143,000|
|Up from October 2014||by||187,000|
|Up from September 2014||by||211,000|
|Up from August 2014||by||217,000|
|Up from July 2014||by||206,000|
|Up from June 2014||by||209,000|
|Up from May 2014||by||192,000|
|Up from April 2014||by||183,000|
|Up from March 2014||by||181,000|
|Up from February 2014||by||173,000|
|Up from January 2014||by||170,000|
|Up from December 2013||by||170,000|
|Up from November 2013||by||178,000|
|Up from October 2013||by||186,000|
|Up from September 2013||by||213,000|
|Up from August 2013||by||209,000|
|Up from July 2013||by||203,000|
|Up from June 2013||by||204,000|
|Up from May 2013||by||189,000|
|Up from April 2013||by||188,000|
|Up from March 2013||by||180,000|
|Up from February 2013||by||167,000|
|Up from January 2013||by||165,000|
|Up from December 2012||by||313,000|
|Up from November 2012||by||176,000|
|Up from October 2012||by||191,000|
|Up from September 2012||by||211,000|
|Up from August 2012||by||206,000|
|Up from July 2012||by||212,000|
|Up from June 2012||by||199,000|
|Up from May 2012||by||189,000|
|Up from April 2012||by||182,000|
|Up from March 2012||by||180,000|
|Up from February 2012||by||169,000|
|Up from January 2012||by||335,000|
|Up from December 2011||by||2,020,000|
And this month the BLS has decreased the Civilian Labor Force to 157,037,000 (down from May by 432,000).
Subtract the second number (‘civilian labor force’) from the first number (‘civilian noninstitutional population’) and you get 93,626,000 ‘Not in Labor Force’—up by 640,000 from last month’s 92,986,000. Since June, 2014, 1,512,000 US workers have vanished! Where did those 1,512,000 potential workers disappear to in one year’s time? I am assuming they still have to eat and pay their rent. They still need money, don’t they? The government tells us that these NILFs got discouraged and just gave up looking for a job. My monthly recurring question is: “If that is the case, how do they live when they don’t earn any money because they don’t have a job? Are they ALL relying on the government to support them??”
This month our Employment Participation Rate—the population 16 years and older working or seeking work—dropped significantly to 62.6%. This is .1% below the historically low rate of 62.7% recorded in March, and in September and December of last year– and, before that, the rate recorded in February 1978—one year into President Jimmy Carter’s term of office, 36 years ago! Before this the lowest Employment Participation Rate was 62.4% reached in October 1977!
Final take on these numbers: Fewer people looking for work will always bring down the unemployment rate.
Anyway, back to the point I am trying to make. On the surface, these new unemployment rates are scary, but let’s look a little deeper and consider some other numbers.
The unemployment rate includes all types of workers—construction workers, government workers, etc. We recruiters, on the other hand, mainly place management, professional and related types of workers. That unemployment rate in June was 2.9% (this rate was .5% higher than last month’s 2.4%). Or, you can look at it another way. We usually place people who have college degrees. That unemployment rate in June was 2.5% (this rate was .2% lower than last month’s 2.7%).
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 June 24th, the Bureau of Economic Analysis (BEA) announced the real gross domestic product (GDP) — the value of the production of goods and services in the United States, adjusted for price changes — decreased at an annual rate of <0.2%> in the first quarter of 2015, according to the “third” estimate released by the BEA. In the fourth quarter, real GDP increased 2.2%.
The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the decrease in real GDP was <0.7%>. With the third estimate for the first quarter, exports decreased less than previously estimated, and personal consumption expenditures (PCE) and imports increased more.
The decrease in real GDP in the first quarter primarily reflected negative contributions from exports, nonresidential fixed investment, and state and local government spending that were partly offset by positive contributions from PCE, private inventory investment, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
The “third” estimate of the first-quarter percent change in GDP is 0.5 percentage point, or $23.6 billion, more than the second estimate issued last month, primarily reflecting upward revisions to exports, to personal consumption expenditures, to private inventory investment, to nonresidential fixed investment, and to state and local government spending that were partly offset by an upward revision to imports.
*The economy needs to expand at about +3% to keep the unemployment rate from rising.
(The “advance” estimate for the 2nd Quarter 2015 GDP will be released on July 30th, 2015).
IT IS IMPOSSIBLE FOR UNEMPLOYMENT EVER TO BE ZERO
‘Unemployment’ is an emotional ‘trigger’ word…a ‘third rail’, if you will. It conjures up negative thoughts. But it is important to realize that, while we want everyone who wants a job to have the opportunity to work, unemployment can never be zero and, in fact, can be disruptive to an economy if it gets too close to zero. Very low unemployment can actually hurt the economy by creating an upward pressure on wages which invariably leads to higher production costs and prices. This can lead to inflation. The lowest the unemployment rate has been in the US was 2.5%. That was in May and June 1953 when the economy overheated due to the Korean War. When this bubble burst, it kicked off the Recession of 1953. A healthy economy will always include some percentage of unemployment.
There are five main sources of unemployment:
- Cyclical (or demand-deficient) unemployment – This type of unemployment fluctuates with the business cycle. It rises during a recession and falls during the subsequent recovery. Workers who are most affected by this type of unemployment are laid off during a recession when production volumes fall and companies use lay-offs as the easiest way to reduce costs. These workers are usually rehired, some months later, when the economy improves.
- Frictional unemployment – This comes from the normal turnover in the labor force. This is where new workers are entering the workforce and older workers are retiring and leaving vacancies to be filled by the new workers or those re-entering the workforce. This category includes workers who are between jobs.
- Structural unemployment – This happens when the skills possessed by the unemployed worker don’t match the requirements of the opening—whether those be in characteristics and skills or in location. This can come from new technology or foreign competition (e.g., foreign outsourcing). This type of unemployment usually lasts longer than frictional unemployment because retraining, and sometimes relocation, is involved. Occasionally jobs in this category can just disappear overseas.
- Seasonal unemployment – This happens when the workforce is affected by the climate or time of year. Construction workers and agricultural workers aren’t needed as much during the winter season because of the inclement weather. On the other hand, retail workers experience an increase in hiring shortly before, and during, the holiday season, but can be laid off shortly thereafter.
- Surplus unemployment – This is caused by minimum wage laws and unions. When wages are set at a higher level, unemployment can often result. Why? To keep within the same payroll budget, the company must let go of some workers to pay the remaining workers a higher salary.
Other factors influencing the unemployment rate:
- Length of unemployment – Some studies indicate that an important factor influencing a workers decision to accept a new job is directly related to the length of the unemployment benefit they are receiving. As of August 25th, workers in most states are eligible for up to 26 weeks of benefits from the regular state-funded unemployment compensation program, although 8 states provide fewer weeks and 2 provide more. (Emergency Unemployment Compensation, a temporary federal program that provided additional weeks of benefits to workers who exhausted their regular state UI before finding a job, expired at the end of 2013 and efforts to revive it have been unsuccessful so far.) Studies suggest that additional weeks of benefits reduce the incentive of the unemployed to seek and accept less desirable jobs.
- Changes in GDP – Since hiring workers takes time, the improvement in the unemployment rate usually lags behind the improvement in the GDP.
WHERE RECRUITERS PLACE
Now back to the issue at hand, namely the recruiting, and placing, of professionals and those with college degrees.
If you take a look at the past few years of unemployment in the June “management, professional and related” types of worker category, you will find the following rates:
June 2014 3.5%
June 2013 4.2%
June 2012 4.4%
June 2011 4.7%
June 2010 4.9%
June 2009 5.0%
June 2008 2.7%
June 2007 2.0%
June 2006 2.4%
June 2005 2.6%
June 2004 2.9%
June 2003 3.5%
June 2002 3.3%
Here are the rates, during those same time periods, for “college-degreed” workers:
June 2014 3.3%
June 2013 3.9%
June 2012 4.1%
June 2011 4.4%
June 2010 4.4%
June 2009 4.7%
June 2008 2.4%
June 2007 2.3%
June 2006 2.1%
June 2005 2.3%
June 2004 2.7%
June 2003 3.1%
June 2002 3.0%
So, while June’s 2015 rates for these two categories, 2.9% and 2.5%, respectively, are trending very positively, when looking at the big picture, it’s not anything to be very happy about either—especially when we see how well we had it during the 2005-2008 time frame. But regardless, these unemployment numbers usually include a good number of job hoppers, job shoppers and rejects. We, on the other hand, are engaged by our client companies to find those candidates who are happy, well-appreciated, making good money and currently working and we entice them to move for even better opportunities—especially where new technologies are expanding. This will never change. And that is why, no matter the unemployment rate, we still need to market to find the best possible job orders and we still need to recruit to find the best possible candidates.
Below are the numbers for the over 25 year olds:
Less that H.S. diploma – Unemployment Rate
H.S. Grad; no college – Unemployment Rate
Some College; or AA/AS – Unemployment Rate
BS/BS + – Unemployment Rate
Management, Professional & Related – Unemployment Rate
For a total Management, Professional & Related workforce of…(,000)
Management, Business and Financial Operations – Unemployment Rate
Professional & Related – Unemployment Rate
Sales & Related – Unemployment Rate