Bob Marshall’s November 2014 BLS Analysis for Recruiters; 12/5/14
November BLS Preface
Bob Marshall – Training/Coaching Updates:
The Newport Group (TNG), Encinitas, CA, December 10-11, 2014
I have confirmed that I will conduct a training visit to The Newport Group (TNG) in Encinitas, CA on Wednesday and Thursday, December 10-11, 2014. This visit will consist of formal presentations and desk-level coaching.
**Now, if you are serious about increasing your billings, give my prized ‘$1,000,000 billing in one year’ coaching client, David Thaler (502-531-9890), a call. He will let you know what I did for him and what I can do for you to help you reach your maximum potential. If you are ready to invest in yourself and to receive the info you need, to bill at high levels, I can give you that information. Then it will be up to you to execute. The ball is in your court.
New for 2014, all of my coaching will be based on my new “TBMG 20 WEEK TRAINING FORMAT”. The syllabus for the format is available upon request.
*The descriptions of my coaching plans, and all of my products, are available to you on my website: www.themarshallplan.org or you can reach me at 770-898-5550 or email me at: 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.
4 Ways Your Company Is Contributing to the IT Skills Gap
CIO, Sharon Florentine, November12, 2014
As the adage says, if you aren’t part of the solution, you’re part of the problem — and so it goes with IT organizations that talk about the skills gap but do nothing to help themselves.
If you’re an IT or HR manager, you already know there’s a major disconnect between the skills, knowledge and experience your organization needs and the availability of those skills in the current talent pool.
In fact, a recent survey of 37,000 global employers performed by staffing firm Manpower reported that 36% say they’re having trouble filling available positions. Of those respondents, 35% cite a lack of hard skills or “technical competencies” as the reason, while 25% cite a lack of experience and 19% say a lack of soft skills makes it difficult to fill available roles.
Is There Really a Skills Gap?
Peter Cappelli, professor of management at The Wharton School at the University of Pennsylvania, has researched the skills gap question and says that it’s not so much of a gap, but more of a skills-mismatch issue, and one that can be addressed if employers take a hard look at their recruiting, hiring and retention practices to make sure they’re not part of the problem.
He expressed these ideas earlier this year in a column for the Center for Economic Policy Research (CEPR). According to Capelli, virtually all the evidence used to support the skills gap idea comes from employers, either via anecdotes, proprietary surveys from consulting firms or industry associations.
In other words, these don’t provide enough hard, objective data to accurately pinpoint where the problem areas actually lie. “The surveys report that employers have difficulty hiring but do not give a definition as to what ‘difficulty’ means nor ask why. My review of all these reports finds that many of them actually report contradictory evidence; a surprisingly large percentage of employers say that the difficulty they have stems from not paying enough, not providing training and not being able to anticipate their skill needs,” says Cappelli.
If you are in search of tech talent and you find yourself doing these 4 things, you may be your own worst enemy.
Trying to Find the Perfect Match
“Say you want to go out for dinner. If you are looking for a three-star Mediterranean restaurant that serves excellent baklava and also has an area for al fresco dining, well, your options are going to be much more limited than if you said, ‘I want an upscale restaurant with great food,'” says Tom Leung, CEO and founder of anonymous career matchmaking service Poachable.
That metaphor is also relevant when looking for talent in IT and engineering. Widening your search parameters can help you find the diamond in the rough.
“IT has a very deep taxonomy, but it can create a false sense of scarcity. Do you want to widen your net to find great candidates with skills that will translate? Or do you spend months, thousands of dollars and lose productivity trying to find that ‘Cinderella’ candidate for whom the glass slipper fits perfectly?” Leung says. In many cases, hiring companies fail to see the costs of waiting, and won’t consider excellent candidates who they could mold to fit the position.
From Leung’s perspective, it’s a matter of taking the long view and deciding where to invest. “It might take you a year to find that ‘perfect’ person, and then, once you do, you’re probably going to get into a bidding war for them. If they’re that good, you can be sure they’ll have other offers. Or, you could find a younger, less experienced person who’s hungry and eager to learn, train them and mold them to be the kind of employee you want in just a few months. Where do you want to put your money?,” say Leung.
Failing to Focus on Education and Training
Most employers are seeking to get the skills they need through hiring, and a significant part of those skills appears to come from work experience, according to Cappelli. This is even more so as opportunities for training and apprenticeships have dried up over the last few decades.
“Credible evidence on employer-provided training in the U.S. is remarkably hard to come by, especially recently. The data we do have suggests that in 1979, young workers received on average about 2.5 weeks of training per year. By 1991, Census data found only 17% of all employees reporting that they received any formal training that year. Several surveys of employers around 1995 indicate that somewhere between 42% and 90% of employers offered some training (the lower number indicating more programmatic training) with the amount of training an individual received per year averaging just under 11 hours,” says Cappelli revealing data accumulated for a forthcoming paper written for the Industry and Labor Relations Review (ILR Review).
The above data is now almost 20-years-old, and there is little new information from government sources. “In 2011, Accenture surveyed U.S. employees and found that only 21% had received any employer-provided formal training in the past 5 years. To be clear, that means almost 80% had no training in 5 years, and no doubt many of those had no training in the years before that, either,” says Cappelli.
Formal internal training has been on the decline. “In the past, there used to be a lot of on-the-job training opportunities, but those have dried up significantly as companies try and cut budgets,” says Sunil Sani, co-founder of recruiting and staffing firm CareerGlider.
Employers are expecting today’s IT professional to take up the slack. “Nowadays, companies are expecting employees to join the workforce with those skills already in place without having any infrastructure in place to train for the skills they need, but that’s just not happening,” says Sani.
While independent programming boot camps and e-learning providers are helping candidates help themselves gain valuable tech skills employers should consider investing in internal education programs and courses to foster talent and grow it from within.
“You need to be investing in educating and growing the talent you’ve got – that will pay off for you down the road, instead of putting all your eggs into the hiring basket,” says Sani.
Not Paying Enough to Compete
Cappelli’s research also uncovered an interesting trend. In the Manpower survey, for example, when asked what was driving the shortfall of applicants for available jobs, almost 20% of respondents say that the job seekers were not willing to accept positions at the rate of pay being offered, yet only 5% report that they were planning to raise pay in order to deal with difficulties in hiring.
“It’s not 2008 anymore. Businesses have to wake up and realize if they want to get talent with these in-demand, hot skills, they’re going to have to pay the market rate, which has increased,” says Leung. In Silicon Valley, the Pacific Northwest and other tech-heavy cities, software engineers and developers are demanding top dollar – and they’re getting it because smart, innovative companies understand the need to pay a premium for these skills. “If you’re not willing to pony up, you’re going to lose out,” says Leung.
Exacerbating the Problem through Outsourcing and H1B
The demands from companies to hire talent using H1-B visa quotas are just exacerbating the skills mismatch problem, according to CareerGlider’s Sani.
It’s great you’ve got someone there to do the job and solve the short-term problem but what then? “One of the issues is bringing in external talent that can get a warm body in a seat, but then you’re not able to promote, you’re not able to grow that talent – it’s a temporary fix. Why not invest in training and education for the talent you’ve got here at home instead?,” says Sani.
Organizations that go this route aren’t helping fix the skills gap problem if they’re not looking internally at how they can grow their own much-needed talent skills.
Look Within to Bridge the IT Skills Gap
If your business is struggling to fill open positions, it’s tempting to lay blame at the feet of candidates, or to assume that the “invisible hand of the market” is responsible. However many times those excuses don’t hold up under close scrutiny. If you want to attract and retain great talent, it’s up to you to take the first steps.
New CBRE Research Report Debunks Generational Myths about What Employees Want in the Workplace
Los Angeles, November 3, 2014
Contrary to Current Assumptions about Millennials, Report Finds Few Differences in Workplace Preferences across Generations
Age is less of a factor than widely thought when it comes to workplace preferences in the U.S., according to a new workplace strategy report by CBRE Group, Inc., Designing the office of the future? Don’t plan it around (what you think you know about) U.S. millennials. The study, based on aggregated CBRE Workplace Strategy surveys from more than 5,500 office workers across numerous industries, found that while current assumptions about millennials are driving the design of many workplaces today, there is actually little difference in workplace preferences between millennials, Generation Xers and baby boomers.
“The results of this study clearly suggest that variety, choice, access and transparency—attributes typically associated with what millennials want—are indeed important, but not only for millennials,” said Georgia Collins, CBRE’s senior managing director for Workplace Strategy. “Our study actually found that most of these attributes are equally important to Generation Xers and baby boomers.”
With millennials currently accounting for approximately 24% of the adult population in the U.S., and with a projected 75% of the workforce being millennials by 2025, much has been made about this new workforce generation, particularly when it comes to workplace strategy. While this is causing many companies today to debate how to balance the needs of millennials with those of a more tenured workforce, the CBRE study suggests that the generational divide is more perception than reality.
Among some of the most notable findings in the report:
- Millennials are collaborative—they report spending approximately 38 percent of their time interacting with others—but Gen Xers and baby boomers are equally as collaborative. In fact, millennials actually report spending slightly more time doing individual focused work than their colleagues from other generations.
- When asked what types of spaces would enhance a future workplace, millennials placed most of their value on spaces that allow them to think and concentrate, followed by spaces to meet and collaborate, and spaces for learning and training. Of least importance to millennials was space for socializing (although they still rank this as considerably more important than do their Generation X and baby boomer colleagues).
- Contrary to widespread assumptions, when asked how they would like to work in the future, millennials said they’d like to spend more time connecting via email and more time in formal meetings—and less time on company-sponsored social networks.
“These findings suggest that instead of putting too much focus on designing the workplace around the millennials, companies would yield better results by designing a well-balanced office that will accommodate the varied needs of different job functions and different preferences of individuals, independent of their age cohort,” said Collins.
The new ADP/Moody’s National Employment Report: 80% of all new job growth in November 2014 came from Small and Mid-size Companies
December 3, 2014
Private sector employment increased by 208,000 jobs from October to November (down from the increase of 230,000 jobs last month), according to the November 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: 101,000
1-19 employees 48,000
20-49 employees 53,000
Medium businesses: 65,000
50-499 employees 65,000
Large businesses: 42,000
500-999 employees 10,000
1,000+ employees 32,000
Goods producing 32,000
Service providing 176,000
Financial activities 5,000
Professional/business services 37,000
Payrolls for businesses with 49 or fewer employee increased by 101,000 jobs in November, down slightly from 103,000 in October. Job growth was down significantly over the month for medium-sized firms. Employment among companies with 50-499 employees rose by 65,000, well below October’s increase of 122,000. Employment at large companies – those with 500 or more employees – saw a rebound from 7,000 the previous month to 42,000 jobs added in November. Companies with 500-999 employees added 10,000 jobs, down from October’s 14,000. However, this drop was more than offset by the addition of 32,000 jobs by companies with over 1,000 employees.
Goods-producing employment rose by 32,000 jobs in November, down from 46,000 jobs gained in October. The construction industry added 17,000 jobs over the month, well below last month’s gain of 27,000. Meanwhile, manufacturing added 11,000 jobs in November, down slightly from October’s 13,000.
Service-providing employment rose by 176,000 jobs in November, down from 187,000 in October. The report indicates that professional/business services contributed 37,000 jobs in November. Expansion in trade/transportation/utilities grew by 49,000, just above October’s 48,000. The 5,000 new jobs added in financial activities were below last month’s 6,000.
“November continued to show solid job growth above 200,000,” said Carlos Rodriguez, president and chief executive officer of ADP. “Small businesses continued to drive job gains adding almost half the total for the month.”
Mark Zandi, chief economist of Moody’s Analytics, said, “Steady as she goes in the job market. Monthly job gains remain consistently over 200,000. At this pace the unemployment rate will drop by half a percentage point per annum. The tightening in the job market will soon prompt acceleration in wage growth.”
(The December 2014 ADP National Employment Report will be released at 8:15 a.m. ET on January 7, 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.
November 2014 Small Business Report Highlights
Total Small Business Employment: 101,000
|●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 Structural Unemployment
On November 13th, the BLS reported that there were 4,700,000 job openings on the last business day of September, little changed from 4,900,000 in August. The job openings rate was 3.3%. The 4,700,000 reflects published openings comprised of jobs that are advertised either online or in print format.
Hires (5,000,000) and separations (4,800,000) increased in September. Within separations, the quits rate (2.0%) increased and the layoffs and discharges rate (1.2%) was unchanged. 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.
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 September 2014, hires totaled 56,600,000 and separations totaled 54,000,000, yielding a net employment gain of 2,600,000. These
figures include workers who may have been hired and separated more than once during the year.
(The Job Openings and Labor Turnover Survey results for October 2014 are scheduled to be released on Tuesday, December 9th, 2014).
As we recruiters know, that 4,700,000 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 4,700,000 published job openings now become a total of 23,500,000 published and hidden job orders.
In November there were 9,110,000 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 9,110,000 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 Rose 170,200 in November
December 3, 2014
- November posts large gain following flat October
- California, Florida and Texas show strong gains along with MSAs New York, Los Angeles and Seattle
Online advertised vacancies rose 170,200 to 5,253,900 in November, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series, released December 3, 2014. The October Supply/Demand rate stands at 1.77 unemployed for each advertised vacancy with a total of 3,900,000 more unemployed workers than the number of advertised vacancies. The number of unemployed was 9,000,000 in October.
“November labor demand shows renewed strength, helping to boost a slow-growth second half of the year,” said Gad Levanon, Managing Director, Economic Outlook & Labor Markets at The Conference Board. “Gains were widespread across States and MSAs with continued positive trend growth across much of the U.S.”
In November, the Professional category saw strong gains in Management (17,100), Business and Finance (15,400) and Computer (12,800) with a loss in Healthcare (-11,400). The Services/Production category saw gains in Office/Admin (43,100), Food (20,100) and Transportation (16,900) with a small drop in Sales (-8,800). Supply/Demand rates continue to improve, providing better opportunities for job seekers.
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 December 2014 Conference Board Help Wanted OnLine® (HWOL) Data Series will be released at 10:00 am ET on Wednesday, January 7th, 2014).
In November, 2014 the regular unemployment number remained at 5.8%, but the broader U-6 measure was 11.4%, almost twice as high as the regular unemployment figure.
The above 11.4% 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 November U-6 numbers for the past 11 years:
November 2013 13.2%
November 2012 14.4%
November 2011 15.6%
November 2010 17.0%
November 2009 17.2%
November 2008 12.6%
November 2007 8.4%
November 2006 8.0%
November 2005 8.7%
November 2004 9.4%
November 2003 10.1%
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 5th, 2014, the BLS published the most recent unemployment rate for November, 2014 of 5.8% (actually it is 5.825% up by .069% from 5.756% in October, 2014).
The unemployment rate was determined by dividing the unemployed of 9,110,000 (—up from the month before by 115,000—since November, 2013 this number has decreased by 1,731,000) by the total civilian labor force of 156,397,000 (up by 119,000 from October, 2014). Since November 2013, our total civilian labor force has increased by 1,113,000 workers.
(The continuing ‘Strange BLS Math’ saga): The BLS continues to increase the total Civilian Noninstitutional Population—this time up to 248,844,000. This is an increase of 187,000 from last month’s increase. In one year’s time this population has increased by 2,277,000. The Civilian Noninstitutional Population has increased each month…)
|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 156,397,000 (up from October by 119,000).
Subtract the second number (‘civilian labor force’) from the first number (‘civilian noninstitutional population’) and you get 92,447,000 ‘Not in Labor Force’—up by 68,000 from last month’s 92,379,000. Since November, 2013, 1,164,000 US workers have vanished! Where did those 1,164,000 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—remained at 62.8%. November 2014 now shares the low rate of 62.8% recorded in April, May, June, August and October of this year and October and December of last year. And, before these eight months, the lowest rate since March 1978—just over one year into President Carter’s term of office, 36 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 November was 2.8% (this rate rose .1% from last month’s 2.7%). Or, you can look at it another way. We usually place people who have college degrees. That unemployment rate in November was 3.2% (this rate rose by .1% from last month’s 3.1%).
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!
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 November 25th, the Bureau of Economic Analysis announced the 3rd quarter, “second” estimate, of our real gross domestic product (GDP) — the value of the production of goods and services in the United States, adjusted for price changes — increased at an annual rate of 3.9% in the third quarter of 2014, (that is, from the second quarter of 2014 to the third quarter of 2014). In the second quarter, real GDP increased 4.6%. In the first quarter, real GDP decreased 2.1%.
The GDP 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 3.5%. With the second estimate for the third quarter, private inventory investment decreased less than previously estimated, and both personal consumption expenditures (PCE) and nonresidential fixed investment increased more. In contrast, exports increased less than previously estimated.
The increase in real GDP in the third quarter reflected positive contributions from PCE,
nonresidential fixed investment, federal government spending, exports, residential fixed investment, and state and local government spending that were partly offset by a negative contribution from private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased.
The deceleration in the percent change in real GDP reflected a downturn in private inventory investment and decelerations in exports, in nonresidential fixed investment, in state and local government spending, in PCE, and in residential fixed investment that were partly offset by a downturn in imports and an upturn in federal government spending.
*The economy needs to expand at about 3% to keep the unemployment rate from rising.
(The “third” estimate for the third quarter 2014, based on more complete data, will be released on December 23rd, 2014)
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 November “management, professional and related” types of worker category, you will find the following rates:
November 2013 3.1%
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 2013 3.4%
November 2012 3.9%
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 2014 rates for these two categories, 2.8% and 3.2%, 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 2004-2007 time frame. But regardless, these unemployment numbers usually include a good number of job hoppers, job shoppers and rejects. We, on the other hand, are engaged by our client companies to find those candidates who are happy, well-appreciated, making good money and currently working and we entice them to move for even better opportunities—especially where new technologies are expanding. This will never change. And that is why, no matter the unemployment rate, we still need to market to find the best possible job orders and we still need to recruit to find the best possible candidates.
Below are the numbers for the over 25 year olds:
Less 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