Bob Marshall’s September 2014 BLS Analysis for Recruiters; 10/3/14
September BLS Preface
Bob Marshall – Training/Coaching Updates:
US Recruiters Network (USRN) presentations are complete!
I just returned to Atlanta last night from my two days in Minneapolis as the keynote speaker at the US Recruiters Network (USRN) National Convention. My three presentations over the two days were: “How to Teach a Recruiter to Bill $1,010,349.50 in One Year”, “How to Inject Urgency into the Hiring Process” & “Your Desk as a Manufacturing Plant”.
It was obvious to me during my short time with the USRN members their love of their organization and their love for the founder, industry icon Bob Rystrom. To learn more about USRN you can visit them at: www.us-recruiters.com.
The Newport Group, National Convention 2014, Las Vegas, NV, October 10, 2014
I will be the keynote speaker at The Newport Group National Convention at the New York, New York Hotel/Casino in Las Vegas, NV on Friday, October 10, 2014.
I will present twice on Friday morning. My first presentation will be, “Robocruiter and the Total Account Executive”. My second presentation will be, “How to Inject Urgency into the Hiring Process”. In the afternoon, I will discuss management topics with the TNG management team.
F-O-R-T-U-N-E Personnel Consultants, 2014 FPC Owners Conference, Charleston, SC, November 7, 2014
I will be the keynote speaker at the F-O-R-T-U-N-E 2014 Owners Conference at The Belmond Charleston Place in Charleston, SC on Friday, November 7, 2014.
The title of my presentation will be chosen when we have a pre-conference meeting on October 22, 2014.
**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: firstname.lastname@example.org.
Many of you continue to correspond with me about these monthly BLS analyses and have asked if it is OK to use them in your presentations. The answer is, of course, yes! That is why I spend the time to assemble this information. I would encourage any of you who have that desire to weave any of the information I have printed below into your presentations. I write these analyses for the benefit of our recruitment industry in general and for the members of my distribution list in particular. So use this info as you deem appropriate.
I also write these monthly BLS analyses to not only counterbalance the negative/incorrect press reporting of our general economic state but, more than that, to remind all of my recruitment readers that, at the level we work, there is no unemployment and so we must recruit to find the candidates our client companies so desperately need!
So, to my recruiter colleagues, get out there and do what your name implies…RECRUIT! When your client companies have unique and difficult positions to fill, they need you. When they are being picky, they need you. When they are longing for more production from fewer employees, they need you. Go fill those needs. These should be the halcyon days in the recruitment arena!
Finally, always remember that we are not in an HR business, but in a ‘circumventing the time factor in the hiring sequence’ business—and adding value to our client companies.
Small businesses looking up, majority planning to hire, survey says
Daily News, September 22, 2014
Small businesses expect to have a profitable 2nd half of the year, according to the SurePayroll Small Business Scorecard survey for September. The survey found 81% of small business owners expect to be profitable in the 2nd half of the year, up from 77% in June. Optimism among small business owners rose to 73%, its 2nd highest point in 2014; it reached 75% in May.
50% said they would make investments in their business in the 4th quarter, up from 44% at this time last year. Of those planning to make new investment, 52% said they would do so by adding new staff.
However, hiring edged down 0.1% from August and 0.7% year over year.
“The businesses that we work with are your mom and pop shops, your really tight-knit operations with just 2 or 3 employees, and a really high number of them have worked their way into profitability,” said SurePayroll General Manager Andy Roe on the hiring increase. “It’s tremendous and the excitement is really back in the air for small businesses heading into the year-end stretch. We’ll look to see more investment from business owners in staff, marketing and technology, as well as new equipment and even office space for some.”
SurePayroll’s Scorecard compiles data from more than 40,000 small businesses and exclusively reflects the trends affecting businesses with 1 to 10 employees. The average business reflected has 6 employees. SurePayroll Inc. provides online payroll services to small businesses. It is a subsidiary of Paychex Inc.
The Most In-Demand (And Aging) Engineering Jobs
Joshua Wright, Forbes, September 12, 2014
Not pre-med. Not business. Not computer science. The most popular college major choice for high school seniors surveyed by CareerBuilder—the majority of whom already have a career in mind—is engineering.
We can debate how many of these students will stick with engineering when they get their first homework assignments in college. But let’s assume most of them don’t move to less rigorous majors. Which engineering field should they choose? What are the most in-demand engineering jobs in the U.S. based on job growth, hires, and job posting activity? And which ones have the oldest workforces that will need to be replaced sometime in the next 5 to 10 years?
To answer these questions, we looked at labor market data and job postings analytics from EMSI for all 18 engineering occupations classified by the Bureau of Labor Statistics and all 8 engineering technicians occupations (which are primarily middle-skill positions). Both categories, despite the difference in educational requirements and median pay, are adding a bunch of jobs post-recession and are key STEM occupation groups. But they tell a different story when comparing job postings from employers and hiring that’s taken place.
First, a few big-picture data trends:
The U.S. has approximately 1,600,000 engineering jobs that pay $42 per hour in median wages. Civil engineers account for the most jobs of any engineering field (274,000 in 2014), followed closely by mechanical engineers (264,000) and industrial engineers (229,000). Those 3 engineering jobs, plus electrical engineers and electronics engineers, make up two-thirds of the American engineering workforce.
Job growth from 2010 to 2014 has been in the double digits in 4 occupations: petroleum engineers (30%), mining and geological engineers (12%), biomedical engineers (10%), and industrial engineers (10%). But every engineering occupation has added jobs, the most coming among mechanical engineers (21,500 new jobs since 2010). As a whole, engineering jobs have grown 7%.
The most-concentrated metropolitan area for engineers (among the 125 largest MSAs) is Huntsville, Alabama, which is home to a NASA flight center and other aerospace and military establishments. Huntsville has 5.1 times more engineers per capita than the national average. Next are San Jose (3.5 times the national average), Palm-Bay-Melbourne-Titusville, Florida (2.9), and Detroit (2.75). In general, the South (Huntsville; Augusta, Georgia; Greenville, South Carolina) and the Rust Belt (Detroit, Dayton, etc.) are the densest areas for engineers.
The output of engineering graduates was at a standstill in the early 2000s. But since ’07, completions nationwide have shot up 33%, from 108,000 to 144,000.
Just over 20% of 2013 engineering grads were non-resident aliens, according to the National Center for Education Statistics, with the majority (113,620, or 79%) U.S. citizens. And about 80% were men.
Occupations with older workforces are potential targets for labor shortages. Not all workers 65 and above will retire at the same time, so the doom-and-gloom scenarios that get tossed around likely won’t become reality. Yet if the demand for workers continues and if a good-sized segment of that workforce is poised to retire, skills gaps are likely to become a real issue—especially at senior or management-level positions that are hard to recruit for. We’ve documented this trend in the skilled trades, and it’s just as relevant in engineering.
Two of the fastest-growing engineering fields also staff two of the largest proportions of older workers: industrial engineers and petroleum engineers. In both, 25% of currently employed workers are 55 years or older. Industrial engineers are vital to many manufacturing firms that struggle to find the right technically oriented talent, so the aging workforce is a threat. Petroleum engineering, meanwhile, has had a noticeable undersupply of graduates coming into the marketplace in the last few years, with just 1,600 completions in 2013 compared to EMSI’s yearly job openings estimate of 3,500.
The engineering occupation with the oldest workforce is also one of the smallest in terms of jobs: marine engineers and naval architects. Only 8,000 of these jobs are in the U.S., but 29% are 55 years or older. The youngest occupations, on the other side, are computer hardware engineers and agricultural engineers; just 12% of the current workforce in each is 55 or over.
Job Postings vs. Hires
We’ve given the lay of the land for engineers with traditional labor market data, an essential step for any workforce analysis. But EMSI’s new job posting analytics gives an additional context and perspective into the demand and hiring activity for engineers.
For instance, one thing we can quickly see is that de-duplicated online job postings exceeded average hiring on a monthly basis for all engineers from January 2012 to July 2014. This is an indication, perhaps, that the pool of skilled talent nationally isn’t keeping up with employer demand. The best example of this is industrial engineers, an occupation with three times more unique monthly postings (24,740) than average monthly hires (7,737) since the start of 2012. These excess postings could represent real vacancies.
Conversely, hiring is outpacing posting for civil engineers (13,657 monthly hires to 6,025 postings), as well as engineers, all other and nuclear engineers. These and other engineering occupations could be under-represented in online job postings, meaning that employers find alternative ways to recruit for these positions.
The Bottom Line
Considering all of this data, civil engineers and few smaller specialty fields (petroleum engineers, biomedical engineers, and nuclear engineers) are no doubt in-demand nationally. Hiring and job growth is strong for civil engineering, and petroleum engineering combines the highest wages, fastest growth, oldest workforce, and smallest supply of graduates.
For colleges and workforce professionals who want to get the most clarity on skills gaps and employer demand, we recommend exploring regional data and engaging local employers. Read more about that in our analysis for JP Morgan Chase’s New Skills at Work initiative.
How are things different for engineering technicians? First, far fewer engineering technicians are in the labor market (an estimated 450,000 in 2014) than engineers (1.6 million). They also have considerably smaller median wages ($26 per hour vs. $42 per hour).
Still, engineering technician jobs shouldn’t be dismissed. Each of these occupations—including the largest: electrical engineering technicians—have a lower barrier to entry than standard engineering jobs since they typically require an associate’s degree. This makes these STEM-related training areas very important for community and technical colleges. And several of these jobs are growing at a rapid clip, led by mechanical engineering technicians and environmental engineering technicians (both up 9% from 2010 to 2014). Collectively, engineering technician jobs have jumped 4%.
The growth of engineering technicians has been strongest in Detroit (27% since 2010), but Houston, Seattle, and Portland have also seen double-digit employment growth. Most of the Rust Belt, as the green on the map below indicates, is experiencing job growth after severe layoffs during the recession.
Overall, engineering technicians have a younger workforce than traditional engineers. While about a third of engineering techs are 45-54, there are fewer 55-and-older workers in these mid-skill fields (21% compared to 23% for engineers). For context, 19% of all traditional salaried employees in the U.S. are 55-plus.
Aerospace engineering technicians have the oldest workforce of all technician positions (23% are 55 and older). Electrical engineering technicians, industrial engineering technicians, and mechanical engineering technicians (as well as technicians, all other) are at 22%.
Job Postings vs. Hires
In contrast to engineers, there have been more hires than postings for engineering technicians. Just about twice as many, in fact, from January 2012 to July 2014. This makes sense given that employers are less likely to scour the internet for available technicians than they are for highly skilled engineers.
Like civil engineers, civil engineering technicians are under-represented in job postings compared to hires. There were five hires for every unique job postings over our time frame. Engineering technicians, all other, had an even bigger hires-to-postings ratio.
The number of employed civil engineering techs in the workforce dropped slightly from 2010 to 2014 (from 72,500 to 71,700). But employers have been more active in posting for these jobs (unique postings were up 50% from January 2012 to July 2014), while posting intensity—a ratio of total postings to de-duplicated postings—is lower (3-to-1) than all engineering technician occupations (4-to-1).
We also examined job posting analytics for Detroit, since it’s such a huge growth area for engineering technicians. Hires eclipsed job postings by a 3-to-1 ratio from January 2012 to July 2014. The majority of top companies posting for technician positions in Detroit are staffing companies—further evidence of the link between manufacturing and temp employment.
The Bottom Line
Hot engineering technician jobs tend to follow the patterns of their related engineering fields: Mechanical engineering technicians are growing just like mechanical engineers, and the same goes for civil engineering technicians and civil engineers. For both engineers and engineering techs, the demand from employers appears to be strong. But the demand for all engineering occupations isn’t the same, just like some regions need these types of the workers more than others.
Resume Myths That Will Keep You Unemployed
Glassdoor, September 5, 2014
When it comes to resumes, most job seekers think they need a cover letter, to fill in any work gaps and include all of their employment history, even if it’s a part-time job during college. Unfortunately all of those moves and more will mean your resume ends up on the rejection heap.
“There are quite a few mistakes with resumes,” says Paul McDonald, senior executive director with Robert Half. “The resume myths sometimes outweigh the facts.”
From thinking your resume will get you the job to sending a separate cover letter, here’s a look at seven resume myths recruiters and career experts see far too often.
Myth No. 1: A good resume will land you the job
A popular misconception among job seekers is that the resume is what gets you the job, when the truth is it’s how you do on the interview, says McDonald. “The resume should outline your accomplishments…and in the interview you expand on those points and show how they fit within the organization,” he says.
Myth No. 2: Cover letters still matter
Ask pretty much anyone over the age of 40 and most will say you need to send a separate cover letter when applying for a job, but the reality is that your email acts as the cover letter, says David Boggs, practice leader at WK Advisors, a division of executive search firm Witt/Kieffer.
“Not only is there no need for a separate cover letter, you may actually be confusing potential employers with too many documents,” says Boggs. He says when applying for a position or reaching out to a recruiter make sure your email is tailored for the specific person or company. After all blasting off a generic email isn’t going to help your prospects.
Myth 3: It’s ok to use the same resume over and over
Many job seekers will boast about sending out thirty resume in one day but then end up wondering why they got zero calls. The reason in most cases is job seekers are using the same resume for multiple job opportunities, which Joel Garfinkle, author of Getting Ahead: Three Steps to Take Your Career to the Next Level, says is a big no no. He says it’s better to customize your resume to each job you are applying for. “The more you customize your resume to the opportunity, the greater you stand out compared to your competition,” he says.
Myth 4: Never have gaps in your resume
The economic downturn of a few years ago resulted in many unemployed people who after a couple of years of not working have to deal with gaps in their work history. While the first inclination is try to explain away the gaps, McDonald says it’s better to save that for your initial email or during the interview. “Don’t put in your resume for an 18 month gap that you traveled abroad, sought employment and suffered the downturn,” he says. “Fill in the gaps when you are in front of the individual.”
Myth 5: You should give everyone and anyone your resume
You may think the shotgun approach is the best way to find a job, but focusing on a few companies and/or jobs is a much better way to go about it, says Boggs.
“Take the vision of what you ideally want to be doing and identify the 5-10 companies that you’re seriously interested in,” he says. “Then pursue them like it’s your job.”
Myth No. 6: Resumes should include all your work history
Hiring managers and recruiters have short attention spans and have no desire to read a multiple page resume that includes every job the person ever had. Instead, Garfinkles say less is more when it comes to your resume.
“Your entire resume should be only the information that is relevant for the position,” says Garfinkle. “If it’s not relevant remove it.” Job seekers may think their entire job history will get them the job but hiring managers are only having them in based on the information in the resume that pertains to the current job opening, he says.
Myth No. 7: Social media is the best way to network
Social media sites like LinkedIn and Facebook have made it much easier to reach people around the country, if not the world. But when it comes to networking to get a job, nothing replaces face-to-face meetings, says Boggs.
He says job seekers should take advantage of professional associations and other networking events that will put them in front of people that can help them get a job. That doesn’t mean you shouldn’t ignore social media. In fact, Boggs says you need to be on more than LinkedIn if you want to get noticed by recruiters. “Know that recruiters are looking at all social platforms to get a sense of your skills – not just LinkedIn,” he says. “Make sure you’re posting industry trends and interesting stories relating to your area of expertise to Facebook, Twitter and even Instagram.”
The new ADP/Moody’s National Employment Report: 64% of all new job growth in September 2014 came from Small and Mid-size Companies
October 1, 2014
Private sector employment increased by 213,000 jobs from August to September (up from the increase of 204,000 jobs last month), according to the September 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: 88,000
1-19 employees 48,000
20-49 employees 39,000
Medium businesses: 48,000
50-499 employees 48,000
Large businesses: 77,000
500-999 employees 5,000
1,000+ employees 73,000
Goods producing 58,000
Service providing 155,000
Financial activities 5,000
Professional/business services 29,000
Goods-producing employment rose by 58,000 jobs in September, up from 42,000 jobs gained in August. The construction industry added 20,000 jobs over the month, below last month’s gain of 23,000. Meanwhile, manufacturing added 35,000 jobs in September, the highest total in that sector since May 2010.
Service-providing employment rose by 155,000 jobs in September, down from 160,000 (revised downward from 164,000) in August. The report indicates that professional/business services contributed 29,000 jobs in September, down from 37,000 (revised downward from 51,000) in August. Expansion in trade/transportation/utilities grew by 38,000, up from August’s 30,000 (revised upward from 28,000). The 5,000 new jobs added in financial activities was down slightly from last month’s number.
“September’s jobs added number marks the sixth straight month of employment gains above 200,000,” said Carlos Rodriguez, president and chief executive officer of ADP. “It’s a positive sign for the economy to see the 200,000-plus trend continue.”
Mark Zandi, chief economist of Moody’s Analytics, said, “Job gains remain strong and steady. The pace of job growth has been remarkably similar for the past several years. Especially encouraging most recently is the increasingly broad base nature of those gains. Nearly all industries and companies of all sizes are adding consistently to payrolls.”
(The October 2014 ADP National Employment Report will be released at 8:15 a.m. ET on November 5, 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 each month in the ADP Small Business Report®, a subset of the ADP National Employment Report.
September 2014 Small Business Report Highlights
Total Small Business Employment: 88,000
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 September 9th, the BLS reported that there were 4,700,000 job openings on the last business day of July, unchanged from the 4,700,000 in June. The 4,700,000 reflects published openings comprised of jobs that are advertised either online or in print format.
The hires rate of 3.5% (3.5% last month) and the separations rate of 3.3% (3.3% last month) were essentially unchanged in July. Within separations, the quits rate (1.8%) and the layoffs and discharges rate (1.2%) were also 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 July 2014, hires totaled 56,000,000 and separations totaled 53,500,000, yielding a net employment gain of 2,500,000. 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 August 2014 are scheduled to be released on Tuesday, October 7, 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 September there were 9,262,000 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 9,262,000 unemployed, then they will keep reappearing each month as a BLS unemployment statistic—as they have. In the meantime, our recruitment marketplace flourishes!
Online Labor Demand Falls 137,200 in September
October 1, 2014
- September posts a decline, following strong August gain.
- The STEM related categories continue to gain while other occupational groups show losses.
Online advertised vacancies declined 137,200 to 5,072,000 in September, according to The Conference Board Help Wanted OnLine® (HWOL) Data Series released October 1, 2014. The August Supply/Demand rate stands at 1.84 unemployed for each advertised vacancy with a total of 4,400,000 more unemployed workers than the number of advertised vacancies. The number of unemployed was 9,600,000 in August.
“The September loss offsets most of August’s gain, resulting in only modest overall growth for 2014,” said Gad Levanon, Director of Macroeconomics and Labor Markets at The Conference Board. “Following a strong second quarter, the third quarter has ended basically flat.”
In September, the STEM-related occupations showed strength in Computer and Math (9,600), Architecture and Engineering (3,400), and Healthcare Practitioners (12,200), while other categories showed losses, including Office and Administrative (-40,600), Sales (-32,500), and Transportation (-22,900).
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 October 2014 Conference Board Help Wanted OnLine® (HWOL) Data Series will be released at 10:00 am ET on Wednesday, November 5th, 2014).
In September, 2014 the regular unemployment number was 5.9%, but the broader U-6 measure was 11.8%, exactly twice as high as the regular unemployment figure.
The above 11.8% 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 September U-6 numbers for the past 11 years:
September 2013 13.6%
September 2012 14.7%
September 2011 16.4%
September 2010 17.1%
September 2009 17.0%
September 2008 11.2%
September 2007 8.4%
September 2006 8.0%
September 2005 9.0%
September 2004 9.4%
September 2003 10.4%
The September 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 October 3rd, 2014, the BLS published the most recent unemployment rate for September, 2014 of 5.9% (actually it is 5.942, down by .208% from 6.150% in August, 2014).
The unemployment rate was determined by dividing the unemployed of 9,262,000 (—down from the month before by 329,000—since September, 2013 this number has decreased by 1,941,000) by the total civilian labor force of 155,862,000 (down by 97,000 from August, 2014). Since September 2013, our total civilian labor force has increased by 389,000 workers.
(The continuing ‘Strange BLS Math’ saga): The BLS continues to increase the total Civilian Noninstitutional Population—this time up to 248,446,000. This is an increase of 217,000 from last month’s increase. In one year’s time this population has increased by 2,278,000. The Civilian Noninstitutional Population has increased each month…
|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 155,862,000 (down from August by 97,000).
Subtract the second number (‘civilian labor force’) from the first number (‘civilian noninstitutional population’) and you get 92,584,000 ‘Not in Labor Force’—up from last month’s 92,269,000. Since September, 2013, 1,889,000 US workers have vanished! Where did those 1,889,000 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—fell again to a new record low of 62.7%. This is the lowest participation rate since February, 1978—one year into President Jimmy 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 September was 2.8% (this rate dropped dramatically .6% 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 September was 2.9% (this rate also dropped impressively .3% from last month’s 3.2%).
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 September 26th, the Bureau of Economic Analysis announced the 2nd quarter, “third” 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 4.6% in the second quarter of 2014 (that is, from the first quarter of 2014 to the second quarter of 2014), according to the “third” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 2.1%.
This GDP estimate is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was 4.2%. With the third estimate for the second quarter, the general picture of economic growth remains the same; increases in nonresidential fixed investment and in exports were larger than previously estimated.
The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, state and local government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
*The economy needs to expand at about 3% to keep the unemployment rate from rising.
(The “advance” estimate for the third quarter 2014 will be released on October 30th, 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 September “management, professional and related” types of worker category, you will find the following rates:
September 2013 3.5%
September 2012 3.9%
September 2011 4.4%
September 2010 4.4%
September 2009 5.2%
September 2008 2.8%
September 2007 2.1%
September 2006 2.1%
September 2005 2.3%
September 2004 2.5%
September 2003 3.2%
September 2002 3.3%
Here are the rates, during those same time periods, for “college-degreed” workers:
September 2013 3.7%
September 2012 4.0%
September 2011 4.2%
September 2010 4.5%
September 2009 4.8%
September 2008 2.6%
September 2007 2.0%
September 2006 2.0%
September 2005 2.3%
September 2004 2.6%
September 2003 3.2%
September 2002 2.9%
So, while September’s 2014 rates for these two categories, 2.8% and 2.9%, 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