BLS Analysis for November 2013

Bob Marshall’s November 2013 BLS Analysis; 12/6/13

November BLS Preface

TBMG News

Bob Marshall – Training/Coaching Updates

IPA National Convention 2014, Las Vegas, NV, April 3-4, 2014 :

I will be presenting at the Inter-City Personnel Associates (IPA) National Convention at Bally’s, Las Vegas, NV on April 3-4, 2014. My topics will be determined at a later date.

COACHING**

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I. Coaching – Three Month Platinum Plan

This is a 3-month plan. In this plan, I will put in place all of the tools that you will need to become a profitable recruiter. My five major products (training manual, daily planner, QRG, forms and the ‘Classics’ audio series) are included in this selection. We will have a meeting, up to one hour, once per week and I will be available to continually work with you and answer your questions on a weekly,8am-5pm basis. Admission into the Illuminati Think Tank series is included, with access to select past recordings.

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This is a month-to-month plan. In this plan, I will be available to you for 4 separate meetings, up to one hour, to be parceled out as you choose, but must be used within a 4-5 week period. Admission into the Illuminati Think Tank series is included.

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This is an hourly ‘a la carte’ plan. Once you have selected a date/time for our one hour meeting, (for coaching and/or training) and confirmed that date/time with me (and prepaid via PayPal), this plan goes into effect. After the meeting, you are also entitled to follow-up emails during the next five days.

*All the details of my coaching plans, and products, are available to you on my website: www.themarshallplan.org or you can reach me at 770-898-5550 or email me at: bob@themarshallplan.org.

Preface

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.

The End of the Working Class Male?
David Gee, December 3, 2013

Sometime in 2010, women became the majority of the workforce for the first time in U.S. history. Most managers are now women too. And of the 15 job categories projected to show the most growth in the U.S., 12 are occupied primarily by women. Is today’s postindustrial society simply better suited to women?

That’s the question asked by author Hanna Rosin in her book, The End of Men and the Rise of Women. The book isn’t new, it came out in 2010, but the debate around it continues to this day, and I thought I would share some of Rosin’s hypothesis.

“The U.S. economy is becoming a traveling sisterhood,” opines Rosin, who is also senior editor at The Atlantic, and wrote a cover story by the same name as the book. ”The working class, which has long defined our notions of masculinity, is slowly turning into a matriarchy, with men increasingly absent from the home and women making all the decisions.”

“The working class, which has long defined our notions of masculinity, is slowly turning into a matriarchy, with men increasingly absent from the home and women making all the decisions.”

Rosin writes that 3/4ths of the 8,000,000 jobs lost in this most recent recession were lost by men, and most of those jobs aren’t coming back in the worst-hit, heavily male industries such as construction, manufacturing, and high finance.

Here are some numbers from the Bureau of Labor Statistics Rosin uses to further make her points:

  • Women now hold 51.4% of managerial and professional jobs—up from 26.1% in 1980.
  • Women make up 54% of all accountants and hold about 50% of all banking and insurance jobs.
  • 1/3rd of America’s physicians are now women,
  • Women comprise 45% of associates in law firms.
  • Women now earn almost 60% of all bachelor’s degrees, 60% of master’s degrees, about 50% of all law and medical degrees, and 42% of all M.B.A.s.
  • In 1950, roughly 1 in 20 men of prime working age was not working; today that ratio is about 1 in 5, the highest ever recorded.

“The postindustrial economy is indifferent to men’s size and strength,” writes Rosin. “The attributes that are most valuable today—social intelligence, open communication, the ability to sit still and focus—are, at a minimum, not predominantly male. In fact, the opposite may be true.”

Rosin’s core observations are supported by data and the use of some broad demographic trends that have been going on in the U.S. for some time; women are making economic progress and men are experiencing economic decline. Women are becoming better educated. Women are making up a larger percentage of the professions. Women are moving into some job areas that used to be considered “men’s work.”

However, it’s a bit of a leap to go from these economic shifts – be they cyclical or permanent – to ‘the end of men’.

Earlier this year Rosin gave an interview to Der Spiegel, sort of the TIME magazine of Germany, as her book was being published in German for the first time. Since several years had passed since her book was published in this country, you could say the German interview is a post script of sorts.

Der Spiegel: “You write that recent developments in the American economy have hit men harder than women, because women have reacted more flexibly to the changed demands of the job market. Can you back up that theory?”

Rosin: “It’s not necessarily that the rise of women is causing the end of men — it’s more the other way around. An increasing number of men are failing during their education, losing their jobs and then not managing to get back on their feet, so women have had to step in. The driving force here isn’t feminist conviction, it’s economic necessity. … That brings about the societal tensions I’ve just described: men who are the head of the family, but unemployed, and women who are the family breadwinner, but not by choice.”

Tech execs: 69% see tech talent shortages 
Daily News, November 12, 2013

Technology companies plan to hire new staff over the next 12 months but are concerned about a persistent shortage of tech talent, according to the 2nd annual National Survey of Technology, Policy and Strategic Issues released today by the Technology Councils of North America.

Of the 1,700-plus c-level executives surveyed, 63% said they intend to hire new staff over the next 12 months. Small companies (74%) and midsize firms (72%) are the most optimistic on hiring.

At the same time, 69% of executives perceive a shortage in the quantity and quality of tech talent available to them, and one quarter say the shortage is “significant.”

“Companies are feeling better about business conditions, but the talent shortage issue has the potential to sidetrack growth,”” said Steven G. Zylstra, TECNA chairman and president and chief executive officer of the Arizona Technology Council.

The talent shortage perception is greatest in the Midwest and West, where 72% of respondents said there’s a shortage. The Northeast and South were slightly lower at 67% and 65%, respectively.

TECNA, a non-profit trade association of regional technology organizations, conducted the online survey in September in partnership with CompTIA. It included 1,763 senior IT, technology and business executives belonging to one of the regional technology associations affiliated with TECNA.

Why the jobless rate is larger than you think
NBC News.com staff, December 5, 2013 

The unemployment rate is a magic monthly number that economists, politicians and journalists love to obsess over. It’s one of the most closely watched economic indicators, but it’s far from the last word on jobs. Sure, it measures how many people in the work force didn’t have a job last month, but the work force only includes people who have a job or are actively looking for work.

So, if you are tired of looking for work and you’ve given up the hunt, you won’t get counted even though you are still unemployed. To get the bigger picture, economists use the Long Term Unemployment Rate to look a little further back.

If you have been out of work for 6 months or more and you’re still actively looking for work, this number applies to you. It’s a subset of a bigger unemployment number and basically a measure of how tough it is to find a new job.

Now, let’s say you have a part time job, even though you want to work full time. That’s yet another indicator. And there is a separate measure of how many adults are working or actively applying for jobs. That’s the Labor Force Participation Rate.

So, OK, what’s the ‘real ‘unemployment number? Well ‘real’ is pretty subjective, but if you add up all the unemployed people who want to work, but aren’t looking, plus all of the people who have given up, plus all the people working part-time, even though they want to work full-time, you get a much higher number.

In October, 2013 the regular unemployment number was 7.3%, but that broader measure was 13.8%, almost twice as big as the regular unemployment figure.

(Editor’s Note: The above is referred to as the U6 unemployment rate (found in the monthly BLS Employment Situation Summary, Table A-15). 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. The number for November 2013 is 13.2%).

The new ADP/Moody’s National Employment Report
December 4, 2013

Private sector employment increased by 215,000 jobs from October to November, according to the November ADP National Employment Report®, which is produced by ADP®, a leading provider of human capital management 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. October’s job gains were revised upward from 130,000 to 184,000.

By Company Size 

Small businesses: 102,000 
1-19 employees 57,000
20-49 employees 45,000

Medium businesses: 48,000 
50-499 employees 48,000

Large businesses: 65,000 
500-999 employees <-5,000>
1,000+ employees 70,000

By Sector 

Goods producing 40,000
Service providing 176,000

Industry Snapshot 

Construction 18,000
Manufacturing 18,000
Trade/transportation/utilities 45,000
Financial activities 5,000
Professional/business services 38,000

Goods-producing employment rose by 40,000 jobs in November, up from 29,000 in October. Both construction and manufacturing payrolls added 18,000 jobs apiece. The gain for manufacturing was the largest since 2012.

Service-providing industries added 176,000 jobs in November, up from 156,000 in October. This was the largest gain in the service sector in a year. Among the service industries reported, trade/transportation/utilities added the most jobs with 45,000 over the month. Professional/business services employment rose by 38,000, while financial activities added 5,000 jobs.

“According to ADP National Employment Report findings, the U.S. private sector added 215,000 jobs during November making it the strongest month for job growth in 2013,” said Carlos A. Rodriguez, president and chief executive officer of ADP. “It’s an encouraging sign as we head toward the new year.”

Mark Zandi, chief economist of Moody’s Analytics, said, “The job market remained surprisingly resilient to the government shutdown and brinkmanship over the treasury debt limit. Employers across all industries and company sizes looked through the political battle in Washington. If anything, job growth appears to be picking up.”

(The December 2013 ADP National Employment Report will be released at 8:15 a.m. ET on January 8, 2014).

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 monthly in the ADP Small Business Report®, a subset of the ADP National Employment Report.

November 2013 Small Business Report Highlights

Total Small Business Employment: 102,000

?By Size
?1-19 employees 57,000
?20-49 employees 45,000
?By Sector for 1-49 Employees
?Goods Producing 11,000
?Service Producing 91,000
?By Sector for 1-19 Employees
?Goods Producing 6,000
?Service Producing 51,000
?By Sector for 20-49 Employees
?Goods Producing 5,000
?Service Producing 40,000

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 Structural Unemployment

On November 22nd, the BLS reported that there were 3,900,000 job openings on the last business day of September, unchanged from August. (The Job Openings and Labor Turnover Survey results for October 2013 are scheduled to be released on Tuesday, December, 10th, 2013). The 3,900,000 reflects published openings comprised of jobs that are advertised either online or in print format.

The hires rate (3.4%) and separations rate (3.2%) also were little changed in September. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by geographic region.

As we recruiters know, that 3,900,000 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 3,900,000 published job openings now become a total of 19,500,000 published and hidden job orders.

In November there were 10,907,000 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 10,907,000 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 Up 244,700 in November
December 4, 2013

  • November’s rise was not enough to push 2013 into healthy positive territory
  • Demand rose in November in 48 of the 50 States
  • Based on Supply/Demand rates, available jobs now outnumber unemployed workers in North Dakota, South Dakota, and Nebraska

Online advertised vacancies were up 244,700 in November to 5,171,500, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series released December 4, 2013. The October Supply/Demand rate stands at 2.3 unemployed for each vacancy with a total of 6.3 million more unemployed workers than the number of advertised vacancies.

“The theme for labor demand this year is up-one-month and down-the-next,” said June Shelp, Vice President of The Conference Board. “Eleven months into the year, we’ve seen six months up and five months down, with a net result of basically flat labor demand (a gain of fewer than 18,000 per month).”

Since November 2012 employers’ demand for labor has been cautious. While the overall demand for labor has hovered around 5 million this year, the largest numerical gains since last year are for sales workers (+101,000), transportation workers (+71,000), and food service workers (+54,000). The most striking pattern is that many of the high-wage professional occupations have very modest gains. Since last November, demand for computer and math occupations has risen just 6,100 while business and finance occupations are up 4,700. Over the same period, the gains for construction workers (up 8,100) and production/manufacturing workers (up 7,000) are in the middle of the pack with relatively modest gains.

(The December 2013 Conference Board Help Wanted OnLine® (HWOL) Data Series will be released at 10:00 am ET on January 8th, 2014).

The November 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 December 6th, 2013, the BLS published the most recent unemployment rate for November, 2013 of 7.0% (actually it is 7.023%, down .257% from 7.280% in October, 2013).

The unemployment rate was determined by dividing the unemployed of 10,907,000 (—down from the month before by 365,000—since November, 2012 this number has decreased by 1,135,000) by the total civilian labor force of 155,294,000 (up by 455,000 from October, 2013). Since November 2012, our total civilian labor force has decreased by 25,000 workers.

(The continuing ‘Strange BLS Math’ saga): The BLS continues to increase the total Civilian Working Population—this time up to 246,567,000. In one year’s time this population has increased by 2,393,000. This is an increase of 186,000 from last month’s increase. The Civilian Working Population has increased each month…

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 155,294,000 (up from October by 455,000).

Subtract the second number (‘civilian labor force’) from the first number (‘civilian working population’) and you get 91,273,000 ‘Not in Labor Force’—slightly better than last month’s 91,541,000. Since November, 2012, 2,418,000 US workers have vanished! Where did those 2,418,000 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???”

Our Employment Participation Rate—the population 16 years and older working or seeking work—rose .2% to 63.0%This is the lowest Employment Participation Rate recorded—other than last month’s historic low of 62.8%–since April 1978…when our president was Jimmy Carter, 35 years ago! One year ago, our Participation Rate in November was 63.6%.

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 November was 3.1% (this rate fell .3% from last month’s 3.4%). Or, you can look at it another way. We usually place people who have college degrees. That unemployment rate in November was 3.4% (this rate fell .4% from last month’s 3.8%).

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 below the 4-6% threshold for full employment…we find no unemployment! None! Zilch!

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 5th, the Bureau of Economic Analysis announced the third-quarter, “second” estimate, of our real gross domestic product (GDP) — the output of goods and services produced by labor and property located in the United States. GDP increased at an annual rate of 3.6% in the third quarter of 2013 (that is, from the second quarter to the third quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.1% (revised), down from 1.8% in the second estimate. In the second quarter, real GDP increased 2.5%.

The Bureau emphasized that the third-quarter “second” estimate is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.8%. With this second estimate for the third quarter, the increase in private inventory investment was larger than previously estimated. The “final” or “third” estimate will be released on December 20th, 2013.

The increase in real GDP in the third quarter primarily reflected positive contributions from private inventory investment, personal consumption expenditures (PCE), exports, nonresidential fixed investment, residential fixed investment, and state and local government spending that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP growth in the third quarter primarily reflected an acceleration in private inventory investment, a deceleration in imports, and an acceleration in state and local government spending that were partly offset by decelerations in exports, in PCE, and in nonresidential fixed investment.

The economy needs to expand at about 3% just to keep the unemployment rate from rising. Two consecutive quarters of a falling GDP indicate Recession.

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:

1. 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.

2. 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.

3. 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.

4. 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.

5. 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:

1. 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. Just recently the government re-extended the eligibility for unemployment benefits from 26 weeks to as much as 73 weeks. Studies suggest that this reduces the incentive of the unemployed to seek and accept less desirable jobs.

2. 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 November “management, professional and related” types of worker category, you will find the following rates:

November 2012 3.6%
November 2011 4.2%
November 2010 4.7%
November 2009 4.6%
November 2008 3.2%
November 2007 1.8%
November 2006 1.7%
November 2005 2.1%
November 2004 2.4%
November 2003 2.9%
November 2002 2.9%

Here are the rates, during those same time periods, for “college-degreed” workers:

November 2012 3.8%
November 2011 4.4%
November 2010 5.1%
November 2009 4.9%
November 2008 3.2%
November 2007 2.2%
November 2006 1.9%
November 2005 2.2%
November 2004 2.5%
November 2003 3.1%
November 2002 2.9%

So, while November’s 2013 rates for these two categories, 3.1% and 3.4%, respectively, are trending 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 2002-2008 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 job orders and we still need to recruit to find the best candidates.