Bob Marshall’s November 2016 BLS Analysis for Recruiters; 12/2/16
November BLS Preface
TBMG Coaching Updates and News
Bob Marshall – Coaching & Speaking Updates:
CyberWeek Event Offer (good until Sunday, December 4th, 2016)
Time is running out…
“The Classics” Audio Teleconference Series – The complete 43 sessions – $500 (regular price, $1499)
This is an update of my Audio Series which is based on “The Classics” tried and true methods to help insure your success in this, or any, economy. These 43 sessions are not intended to be some sort of magic wand, just proven techniques and real solutions that really work…especially in a sluggish economy. The presentations include:
*Scintillating marketing presentations using the Feature-Accomplishment-Benefit (FAB) format;
*When to Stop Beating Dead Horses (Employers and Candidates);
*Techniques of the Superstars;
*The Concept of Inverted Cones – the natural progression to become a ‘Power Broker’;
*Sales Linkage – a quick way to make a non-adversarial presentation and to determine if objections are real or imagined;
*The Eight Point Candidate Prep;
*Planning & Organization, Part I & Part II
*Your Desk as a Manufacturing Plant;
…and 35 more…
This set is on 4 DVD discs, MP3 format, and includes documents that are provided in both Adobe Acrobat & MS Word. Contact us and we will ship this set the next day.
Greensboro, North Carolina, December 6th-8th, 2016*
I will be working with two of my Greensboro, NC clients in-office from Tuesday, December 6th to Thursday, December 8th, 2016.
* Special North Carolina Note:
So, for those of you in North Carolina, if you are interested in my in-office training (group and/or individual desk-level) and are available for that training during the week of December 5th-December 9th, please let me know. I can arrange a one-day tune-up or a two-day regular visit; I can concentrate on one recruiter or focus on the whole office. And some sample topics can include anything from how to pick an MPC, how to construct a scintillating FAB presentation, how to Qualify JOs, how to establish elegant rapport through elegant communication and how to work your Desk as a Manufacturing Plant. All of the cards are on the table…you pick!
Since I will already be in NC, I will offer a substantial discount on my usual in-office fees and no charge for my airfare. First come, first served, so contact me for specific details as soon as possible.
Why You Need A Coach!
“A coach is someone who tells you what you don’t want to hear, who has you see what you don’t want to see, so you can be who you have always known you could be.”
—Tom Landry (head coach, Dallas Cowboys, 1960-1988)
“Practice doesn’t make perfect. Perfect practice makes perfect.”
—Bobby Ross (Georgia Tech football coach, 1987-1991)
“I’ve known, worked with, observed, analyzed and watched Bob’s evolution since 1980—over 30 years!! In my opinion, there is not a person in his space more valuable to you than Bob Marshall. As a student of our business, a trainer in our business and an overall consultant in our business, Bob has no peer in my opinion. I don’t believe there is another person you could work with that would bring to each of you, as well as your AE’s, a greater insight into the dynamics of our profession. This insight, coupled with his passion, has enabled me to rate him #1 in his field.”
—Alan Schonberg (legendary CEO, Management Recruiters International, February, 2013)
So for those of you who have been toying with the idea of working with a recruitment coach (like me), now may be the time. Only you can come to that decision point. According to an old proverb, “When the student is ready, the teacher will appear.”
If you are ready, so am I.
Top Echelon, Tuesday Recruiter Coaching Series, Webinar, December 13th, 2016
My next Top Echelon presentation will be on Tuesday afternoon, December 13th, 2016, at 1pm, Eastern Time. This Recruiter Coaching Series will be for TE members. This presentation is entitled, “Make Placements by Overcoming Objections with Contract Staffing”.
Taking the first step…
Over 36 years ago I began a career that turned out to be the most dynamic and rewarding professional move I have ever made. With the opportunity to earn an unlimited income at my fingertips, I began my career as a Recruiter.
Soon I became a student of the business and transitioned into Coaching. I traveled extensively and learned and listened and I packaged my material in a unique way. I studied many of the top producers in the recruiting industry and developed a series of training tools based on their proven success—training techniques that work time and time again.
I developed these tools and coaching techniques to help others achieve their goals as top producing professional recruiters. I continue to base all of my coaching and training tools on the same “nuts and bolts” approach I used as a recruiter.
I realize that taking that first step to engage a Coach to help you reach a higher level of production is not as easy as it sounds. After all, your training investment – and your time – are important and deserve every consideration. I share your feelings. I believe that how you approach your recruitment career matters…that you should get what you pay for, and then some…that you should enjoy your time with your Coach as you are benefiting from it…and that you should never settle for the ordinary.
If you are ready to take the first step, you can read descriptions of my coaching plans, and all of my products, on my website @ www.themarshallplan.org. Then, call me directly at 770-898-5550 or email me @ 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.
Job Growth decelerates in IT and Engineering in October
Daily News, November 21, 2016
The number of IT jobs in the US edged up 0.13% in October from September to almost 5,200,000, reported TechServe Alliance, an association of IT and engineering staffing companies.
“While the rate of growth in IT employment is at its low ebb for the year, the slowdown is not uniformly distributed across all skill sets and sectors,” said TechServe Alliance CEO Mark Roberts. “The unemployment rate for some IT occupations is under 2% — below what would be considered full employment. Further, there remains a significant imbalance between supply and demand for highly sought after skill sets in both IT and engineering.”
Year over year, IT employment in the US rose by 2.9% in October, representing an increase of 146,500 IT jobs.
The number of US engineering jobs added remained sluggish, edging up only 0.02% in October from September to more than 2,500,000 jobs. Year over year, the increase was an anemic 0.6%, representing 15,100 engineering jobs.
Tech Candidate Survey finds disconnect with Recruiters*
Daily News, November 16, 2016
*(Special Bob Note: the ‘Candidates’ cited in this article are really ‘Applicants’, i.e., those looking for work)*
Of all the methods tech professionals use to look for a job, the majority say that working with recruiters gives them the best experience, according to a tech candidate experience survey by Matrix Resource Inc., a provider of technology staffing. However, the survey also found the biggest trend across the board was the lack of communication that happens between recruiters, hiring managers and candidates. Furthermore, a lack of transparency makes it hard for candidates to get the feedback they need to improve before their next job application.
The survey asked, “In what ways do you seek or otherwise learn about potential job opportunities?” Responses included:
Web searches for jobs: 78%
Communication with recruiters: 65%
Direct visits to employer websites: 57%
Push notifications: 47%
Social media: 37%
Sponsored job ads on non-employment websites: 10%
Of these ways to find job opportunities, the largest number of respondents, 28%, said communication with recruiters provides the best experience. However, while 48% said a higher likelihood of getting a job offer was the greatest value they get from working with an agency recruiter, 38% also cited a lack of communication during job search as the main struggles encountered while working with a recruiter. Other struggles included:
Lack of communication during job search: 38%
I feel like recruiters don’t have my best interest at heart: 36%
Recruiter doesn’t understand technologies I work with: 34%
Recruiter doesn’t understand my career goals: 19%
Recruiter doesn’t give honest feedback: 17%
Recruiter doesn’t prepare me well for client interviews: 9%
“The survey data highlights a disconnect between IT job seekers and talent acquisition professionals,” said Matrix Executive VP Jon Davis. “To improve candidate experience, recruiters have to get better at communicating with candidates and understanding their expectations for communication and transparency.”
The survey also found 55% of technical professionals say they look at job opportunities daily or weekly, and 26% review job opportunities on a monthly basis. On a scale from one to 10, with 10 being most likely, the average respondent answered seven when asked how likely they would be to change jobs in the next 12 months. The primary job function that stands out against the daily trend are developers. Java developers report looking for jobs weekly, .NET developers say monthly, while developers in the “other” category report they rarely look at job opportunities.
Matrix Resources conducted the survey online between Aug. 1 and Aug. 30, 2016, among 1,418 technical professionals across the US. 42% of respondents report having no relationship with Matrix, 33% have spoken but not worked with Matrix, and 25% are current or prior Matrix contractors.
Trump’s election may bring H-1B reform
Computer World, Patrick Thibodeau, November 14, 2016
President-elect Donald Trump gave laid-off IT workers something his rival, Hillary Clinton, did not during the campaign: Attention and a promise to reform the H-1B visa program.
The IT workers that Trump wanted to appeal to don’t work for startups, Google, Facebook or Microsoft. They run IT systems at insurance firms, banks, utilities and retailers. They live in Rust Belt cities and in New York City, but are too spread out for pollsters to measure.
Trump recognized that IT workers are aggrieved and so did Sen. Jeff Sessions (R-Ala.), who worked with the president-elect on this issue. Sessions, after being appointed in early 2015 as the chairman of the Senate immigration subcommittee, set out to become “the voice of the American IT workers who are being replaced with guest workers.”
Sessions emerged as one of the visa program’s harshest critics. He is now set to play a major role in a Trump administration.
Forecasters lower GDP estimates for next 3 years, but revise up jobs
Daily News, November 14, 2016
Forecasters lowered their estimate slightly for US economic growth in the new fourth-quarter survey of professional forecasters released today by the Federal Reserve Bank of Philadelphia. However, on the employment front, estimates for job gains in 2016 and 2017 were revised upward.
US gross domestic product is still expected to grow 1.5% in 2016. However, the forecasters now expect GDP to grow 2.2% in 2017, down from a projection made in the third-quarter report that called for growth of 2.3%; for 2018, forecasters predict GDP to grow 2.1%, down from 2.3% in the prior report.
The forecasters raised their estimate of job growth in 2016. They now estimate the US will add 206,000 jobs a month in 2016, up from the previous forecast of 204,600 jobs per month.
The survey of 42 forecasters was conducted before the election on Nov. 8.
Looking at just the fourth quarter of 2016 only, forecasters project GDP growth at 2.2%, down from the previous forecast of 2.3%
Trump wins presidential election – Lessons for Sales People
(from LinkedIn article by Tony J. Hughes), November 9, 2016
Know Your Audience and Focus Your Efforts
Every sales and marketing professional knows that you must segment your markets and understand your buyer personas. In the case of the election, and as an example, factory workers care about their jobs. But it’s a mistake to seek to convert those who will never vote for you. Nor should you ‘preach to the choir’. Focus on winning those who can be converted. Politicians can learn much from professional selling and here are some areas for them to consider:
- Focus on the customer [citizens] rather than the competition [political opponents]. It may be entertaining but attacking the other side is a poor strategy. If you argue with an idiot, observers find it difficult to distinguish between the combatants. Listen to understand rather than for your chance to speak. Listening with empathy is the most powerful form of influence. Make it all about understanding and serving your customers [citizens].
- Set a vision and agenda for an achievable future while solving problems and managing risk. Make the vision inspiring, and backed-up by competent execution. Avoid using fear as a weapon or to motivate because it loses its effectiveness very quickly.
- Create emotional connection to every point you make. Rather than lead with information and logic, recognize that people buy emotionally and then rationalize with data. Lead with ‘why’ rather than with ‘what’ or ‘how’.
- Positively differentiate with your values and by being transparent and straight-forward. Serve with purpose and make sure you are a ‘true believer’. If you have to change a policy or fail on a commitment, simply explain why, say sorry and be clear about what you will do next.
- Deliver on promises with competence in execution. Strategy without good execution is fantasy. Policy without good execution is a one-term government. Be a person of integrity in all you do but if you cannot implement for whatever reason, then front-up and call it for what it is. Then you can move on.
- Don’t try to sell to those who will not buy. Focus efforts on those who can be swayed. Be gracious and polite to those who are committed to the competition but don’t waste time there as it annoys them and frustrates you.
The new ADP/Moody’s National Employment Report: Over 58% of all new job growth in November, 2016 came from Small and Mid-size Companies!
November 30, 2016
Private sector employment increased by 216,000 jobs from October to November, (a 69,000 job increase from October’s 147,000) according to the November ADP National Employment Report®, which is produced by ADP® in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.
By Company Size
Small businesses: 37,000
1-19 employees 9,000
20-49 employees 28,000
Medium businesses: 89,000
50-499 employees 89,000
Large businesses: 90,000
500-999 employees 14,000
1,000+ employees 76,000
- Goods-producing <-11,000>
- Natural resources/mining <-4,000>
- Construction 2,000
- Manufacturing <-10,000>
- Service-providing 228,000
- Trade/transportation/utilities 69,000
- Information <-10,000>
- Financial activities 12,000
- Professional/business services 68,000
- Professional/technical services 18,000
- Management of companies/enterprises 4,000
- Administrative/support services 47,000
- Education/health services 43,000
- Health care/social assistance 25,000
- Education 18,000
- Leisure/hospitality 38,000
- Other services 8,000
Franchise Jobs 15,100
“For the month of November 2016 we saw very strong job growth that has almost doubled in gains over October 2016,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute. “This growth was seen in primarily consumer-driven industries like retail and, leisure and hospitality – across all company sizes. Overall, consumers are feeling confident and are driving the strong performance we currently see in the job market.”
Mark Zandi, chief economist of Moody’s Analytics, said, “Businesses hired aggressively in November and there is little evidence that the uncertainty surrounding the presidential election dampened hiring. In addition, because of the tightening labor market, retailers may be accelerating seasonal hiring to secure an adequate workforce to meet holiday demand, although total expected seasonal hiring may be no higher than last year’s”
(The December 2016 ADP National Employment Report will be released at 8:15 a.m. ET on January 5, 2017.)
Due to the important contribution that small businesses make to economic growth, employment data that is specific to businesses with 49 or fewer employees is reported each month in the ADP Small Business Report®, a subset of the ADP National Employment Report.
November 2016 Small Business Report Highlights
Total Small Business Employment: 37,000
|●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 – September 2016
On November 8th, the U.S. Bureau of Labor Statistics (BLS) reported that the number of job openings was little changed at 5,500,000 (up from last month’s 5,400,000) on the last business day of September, the U.S. Bureau of Labor Statistics reported today. Hires edged down to 5,100,000 and total separations was little changed at 4,900,000. Within separations, the quits rate was unchanged at 2.1% and the layoffs and discharges rate decreased to 1.0%. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by 4 geographic regions.
On the last business day of September, there were 5,500,000 job openings, little changed from August. The job openings rate was 3.7% in September. The number of job openings was little changed for total private and for government. Job openings was also little changed in all industries and regions.
The number of hires edged down to 5,100,000 in September (-187,000). The hires rate was 3.5%. The number of hires was little changed for total private and for government. Hires decreased in arts, entertainment, and recreation (-63,000) and was little changed in all other industries. The number of hires decreased in the Northeast region (-108,000) and was little changed in all other regions.
Total separations includes quits, layoffs and discharges, and other separations. Total separations is referred to as turnover. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. Other separations includes separations due to retirement, death, disability, and transfers to other locations of the same firm.
There were 4,900,000 total separations in September, little changed from August. The total separations rate in September was 3.4%. The number of total separations was essentially unchanged for total private and for government. Total separations increased in transportation, warehousing, and utilities (+50,000) and decreased in arts, entertainment, and recreation (-55,000). The number of total separations was little changed in all 4 regions.
The number of quits was little changed in September at 3,100,000. The quits rate was 2.1%. Over the month, the number of quits was little changed for total private, and increased for government (+36,000). Quits increased in transportation, warehousing, and utilities (+43,000), state and local government, excluding education (+25,000), information (+15,000), and state and local government education (+10,000). Quits decreased in other services (-37,000). The number of quits was little changed in all 4 regions.
There were 1,500,000 layoffs and discharges in September, a decrease of 218,000 from August. The layoffs and discharges rate decreased to 1.0%. The number of layoffs and discharges decreased for total private (-186,000) and for government (-31,000). The layoffs and discharges level decreased in health care and social assistance (-61,000), arts, entertainment, and recreation (-60,000), state and local government education (-23,000), and mining and logging (-5,000). The number of layoffs and discharges decreased in the South region (-105,000).
In September, the number of other separations was little changed for total nonfarm, total private, and government. Other separations decreased in mining and logging (-3,000). The number of other separations was little changed in all other industries and in all 4 regions.
Net Change in Employment
Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining. Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising. Over the 12 months ending in September, hires totaled 62,700,000 and separations totaled 60,100,000, yielding a net employment gain of 2,600,000. 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 October 2016 are scheduled to be released on Wednesday, December 7, 2016 at 10:00 am (EST).
As we recruiters know, that 5,500,000 number only represents 20% of the jobs currently available in the marketplace. The other 80% of job openings are unpublished and are filled through networking or word of mouth or by using a RECRUITER. So, those 5,500,000 published job openings now become a total of 27.500,000 published AND hidden job orders.
In November there were 7,400,000 unemployed workers. What was the main reason why those workers were unemployed? Two Words: Structural Unemployment. If we can’t figure out how to educate and/or reeducate those 7,400,000 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 Decreased 115,300 in November
November 30, 2016
*The November loss followed an October gain of 116,100
*Most States showed losses with only a few showing small gains
*The Professional occupations were all down while the Services/Production occupations were mixed
Online advertised vacancies decreased 115,300 to 4,723,000 in November, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series, released today. The October Supply/Demand rate stands at 1.61 unemployed for each advertised vacancy with a total of 2,900,000 more unemployed workers than the number of advertised vacancies. The number of unemployed was approximately 7,800,000 in October.
“With a pattern of monthly gains followed by losses, online demand has shown little movement in the second half of 2016,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “The current data clearly indicate that 2016 will end with a large loss for the year.”
The Professional occupational category saw large losses in Management (−16.6), Business/Finance (−15.1), Computer/Math (−27.7) and Health (−21.2). The Services/Production category saw small gains in several occupational groups but large losses in Sales (−24.3) and Office/Admin (−21.5).
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 2016 Conference Board Help Wanted OnLine® (HWOL) Data Series will be released at 10:00 AM ET on Wednesday, January 4, 2016).
In November, 2016 the regular unemployment number dropped three tenths to 4.6%, and the broader U-6 measure fell to 9.3%, over twice as high as the regular unemployment figure.
The above 9.3% 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 13 years:
November 2015 9.9%
November 2014 11.4%
November 2013 13.1%
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 2nd, 2016, the BLS published the most recent unemployment rate for November 2016 of 4.6% (actually it is 4.640%, down by .236% from 4.876% in October, 2016.
The unemployment rate was determined by dividing the unemployed of 7.400,000 (—down from the month before by 387,000—since November, 2015 this number has decreased by 524,000) by the total civilian labor force of 159,486,000 (down by 226,000 from October, 2016). Since November 2015, our total civilian labor force has increased by 2,119,000 workers.
(The continuing ‘Strange BLS Math’ saga): The BLS continues to increase the total Civilian Noninstitutional Population—this time up to 254,540,000. This is an increase of 219,000 from last month’s increase of 230,000. In one year’s time, this population has increased by 2,793,000. The Civilian Noninstitutional Population has increased each month by…)
|Up from October 2016||by||219,000|
|Up from September 2016||by||230,000|
|Up from August 2016||by||237,000|
|Up from July 2016||by||234,000|
|Up from June 2016||by||223,000|
|Up from May 2016||by||223,000|
|Up from April 2016||by||205,000|
|Up from March 2016||by||201,000|
|Up from February 2016||by||191,000|
|Up from January 2016||by||180,000|
|Up from December 2015||by||461,000|
|Up from November 2015||by||189,000|
|Up from October 2015||by||206,000|
|Up from September 2015||by||216,000|
|Up from August 2015||by||229,000|
|Up from July 2015||by||220,000|
|Up from June 2015||by||213,000|
|Up from May 2015||by||208,000|
|Up from April 2015||by||189,000|
|Up from March 2015||by||186,000|
|Up from February 2015||by||191,000|
|Up from January 2015||by||176,000|
|Up from December 2014||by||696,000|
|Up from November 2014||by||143,000|
|Up from October 2014||by||187,000|
|Up from September 2014||by||211,000|
|Up from August 2014||by||217,000|
|Up from July 2014||by||206,000|
|Up from June 2014||by||209,000|
|Up from May 2014||by||192,000|
|Up from April 2014||by||183,000|
|Up from March 2014||by||181,000|
|Up from February 2014||by||173,000|
|Up from January 2014||by||170,000|
|Up from December 2013||by||170,000|
|Up from November 2013||by||178,000|
|Up from October 2013||by||186,000|
|Up from September 2013||by||213,000|
|Up from August 2013||by||209,000|
|Up from July 2013||by||203,000|
|Up from June 2013||by||204,000|
|Up from May 2013||by||189,000|
|Up from April 2013||by||188,000|
|Up from March 2013||by||180,000|
|Up from February 2013||by||167,000|
|Up from January 2013||by||165,000|
|Up from December 2012||by||313,000|
|Up from November 2012||by||176,000|
|Up from October 2012||by||191,000|
|Up from September 2012||by||211,000|
|Up from August 2012||by||206,000|
|Up from July 2012||by||212,000|
|Up from June 2012||by||199,000|
|Up from May 2012||by||189,000|
|Up from April 2012||by||182,000|
|Up from March 2012||by||180,000|
|Up from February 2012||by||169,000|
|Up from January 2012||by||335,000|
|Up from December 2011||by||2,020,000|
And this month the BLS has decreased the Civilian Labor Force to 159,486,000 (down from October by 226,000).
Subtract the second number (‘civilian labor force’) from the first number (‘civilian noninstitutional population’) and you get 95,054,000 ‘Not in Labor Force’ (not 95,055,000 printed in the report)—up by 445,000 from last month’s 94,609,000. The government tells us that most of these NILFs got discouraged and just gave up looking for a job. My monthly recurring question is: “If that is the case, how do they survive when they don’t earn any money because they don’t have a job? Are they ALL relying on the government to support them??”
This month our Employment Participation Rate—the population 16 years and older working or seeking work—dropped .1% to 62.7%. This is .3% above the historically low rate of 62.4% recorded in September 2015—and, before that, the rate recorded in October 1977—9 months into Jimmy Carter’s presidency—38 years ago!
Final take on these numbers: Fewer people looking for work will always bring down the unemployment rate.
Anyway, back to the point I am trying to make. On the surface, these new unemployment rates are scary, but let’s look a little deeper and consider some other numbers.
The unemployment rate includes all types of workers—construction workers, government workers, etc. We recruiters, on the other hand, mainly place management, professional and related types of workers. That unemployment rate in November was 2.3% (this rate was .2% below last month’s 2.5%). Or, you can look at it another way. We usually place people who have college degrees. That unemployment rate in November was 2.3%* (this rate was .3% below last month’s 2.6%). (*Historical Note: The college degreed unemployment rate of 2.3% is the LOWEST in 8½ years; since May 2008!)
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 November 29th, the US Bureau of Economic Analysis (BEA) announced the real gross domestic product (GDP) — the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes — increased at an annual rate of 3.2% in the third quarter of 2016 according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.4%.
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 2.9%. With the second estimate for the third quarter, the general picture of economic growth remains the same; the increase in personal consumption expenditures was larger than previously estimated. The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, and federal government spending, that were partly offset by negative contributions from residential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased. The acceleration in real GDP in the third quarter primarily reflected an upturn in private inventory investment, an acceleration in exports, an upturn in federal government spending, and smaller decreases in state and local government spending and residential fixed investment, that were partly offset by a deceleration in PCE, an acceleration in imports, and a deceleration in nonresidential fixed investment.
*The economy needs to expand at about +3% to keep the unemployment rate from rising.
(The “third” estimate for the 3rd Quarter 2016 GDP will be released on December 22nd, 2016).
IT IS IMPOSSIBLE FOR UNEMPLOYMENT EVER TO BE ZERO
‘Unemployment’ is an emotional ‘trigger’ word…a ‘third rail’, if you will. It conjures up negative thoughts. But it is important to realize that, while we want everyone who wants a job to have the opportunity to work, unemployment can never be zero and, in fact, can be disruptive to an economy if it gets too close to zero. Very low unemployment can actually hurt the economy by creating an upward pressure on wages which invariably leads to higher production costs and prices. This can lead to inflation. The lowest the unemployment rate has been in the US was 2.5%. That was in May and June 1953 when the economy overheated due to the Korean War. When this bubble burst, it kicked off the Recession of 1953. A healthy economy will always include some percentage of unemployment.
There are five main sources of unemployment:
- Cyclical (or demand-deficient) unemployment – This type of unemployment fluctuates with the business cycle. It rises during a recession and falls during the subsequent recovery. Workers who are most affected by this type of unemployment are laid off during a recession when production volumes fall and companies use lay-offs as the easiest way to reduce costs. These workers are usually rehired, some months later, when the economy improves.
- Frictional unemployment – This comes from the normal turnover in the labor force. This is where new workers are entering the workforce and older workers are retiring and leaving vacancies to be filled by the new workers or those re-entering the workforce. This category includes workers who are between jobs.
- Structural unemployment – This happens when the skills possessed by the unemployed worker don’t match the requirements of the opening—whether those be in characteristics and skills or in location. This can come from new technology or foreign competition (e.g., foreign outsourcing). This type of unemployment usually lasts longer than frictional unemployment because retraining, and sometimes relocation, is involved. Occasionally jobs in this category can just disappear overseas.
- Seasonal unemployment – This happens when the workforce is affected by the climate or time of year. Construction workers and agricultural workers aren’t needed as much during the winter season because of the inclement weather. On the other hand, retail workers experience an increase in hiring shortly before, and during, the holiday season, but can be laid off shortly thereafter.
- Surplus unemployment – This is caused by minimum wage laws and unions. When wages are set at a higher level, unemployment can often result. Why? To keep within the same payroll budget, the company must let go of some workers to pay the remaining workers a higher salary.
Other factors influencing the unemployment rate:
- Length of unemployment – Some studies indicate that an important factor influencing a workers decision to accept a new job is directly related to the length of the unemployment benefit they are receiving. Currently, in 2015, workers in most states are eligible for up to 26 weeks of benefits from the regular state-funded unemployment compensation program, although eight states provide fewer weeks and two provide more. No additional weeks of federal benefits are available in any state: the temporary Emergency Unemployment Compensation (EUC) program expired at the end of 2013, and no state currently qualifies to offer more weeks under the permanent Extended Benefits (EB) program. Studies suggest that additional weeks of benefits reduce the incentive of the unemployed to seek and accept less desirable jobs.
- Changes in GDP – Since hiring workers takes time, the improvement in the unemployment rate usually lags behind the improvement in the GDP.
WHERE RECRUITERS PLACE
Now back to the issue at hand, namely the recruiting, and placing, of professionals and those with college degrees.
If you take a look at the past few years of unemployment in the November “management, professional and related” types of worker category, you will find the following rates:
November 2015 2.1%
November 2014 2.8%
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 2015 2.5%
November 2014 3.2%
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%
The November 2016 rates for these two categories, 2.3% and 2.3%, respectively, are trending lower again this month and are still close to the halcyon numbers we attained in the 2005, 2006 and 2007 time frames. But regardless, these unemployment numbers usually include a good number of job hoppers, job shoppers and rejects. We, on the other hand, are engaged by our client companies to find those candidates who are happy, well-appreciated, making good money and currently working and we entice them to move for even better opportunities—especially where new technologies are expanding. This will never change. And that is why, no matter the unemployment rate, we still need to market to find the best possible job orders and we still need to recruit to find the best possible candidates.
Below are the numbers for the over 25 year olds:
Less than H.S. diploma – Unemployment Rate
H.S. Grad; no college – Unemployment Rate
Some College; or AA/AS – Unemployment Rate
BS/BS + – Unemployment Rate
Management, Professional & Related – Unemployment Rate
For a total Management, Professional & Related workforce of…(,000)
Management, Business and Financial Operations – Unemployment Rate
Professional & Related – Unemployment Rate
Sales & Related – Unemployment Rate