The Changing Employment Landscape
Employment, as you know it, may be over.
Unless you’ve been living under a rock, you know that unemployment is high. If you look at Bureau of Labor Statistics (BLS) data, we’re missing about 8.5 million jobs. That’s one job for every person in the state of New Jersey. And while BLS has reported a decrease in the overall level of unemployment, there’s something they aren’t telling you.
The unemployment rate is defined as the percentage of the active labor force that lacks a job. Note the words active labor force. The active labor force is defined as people who are actively seeking work. If you stop looking for a job, you’re no longer part of the active labor force, and you become what is defined as discouraged or marginally attached to the labor force. Thus, you’re not counted in the unemployment rate.
What this means in the short term is that as the economy recovers, the unemployment rate is unlikely to change as people will perceive that there should be more jobs as the economy recovers – and they’ll be right. However, there will also be more people looking for those jobs, so the rate of employment may remain the same.
The fact is we’re not undergoing a jobless recovery. Jobs are being created. What we’re seeing is an overall restructuring of the labor market, caused in part by the economy, in part by future demand, and in part because we get better and better at making things.
Manufacturing in this country continues to improve. Productivity numbers across all industries have skyrocketed over the last 10 months as companies are able to do much more with much less.
Also, we’re seeing a general paradigm shift in the way companies use labor. Companies are holding out on hiring until they’re convinced of better times. They’re using what they have until they run out of capacity, and then push a little more. The BLS is showing increases in worker hours in the last quarter.
When they’ve drained every bit of capacity from what they have, companies are hiring contractors rather than employees. So if you’re unemployed, here’s your first bit of hope: open yourself to a contract position. Contract staffing has been on the upswing since October 2009.
Here’s the catch –for the foreseeable future, we’re going to see heavier use of contractors and contingent labor. The depth and length of this recession has caused companies to look at better ways to manage costs, and labor is generally the largest one. Keeping labor costs as variable costs (à la contract staffing) enables them to maintain and even increase their flexibility and overall competitiveness.
Technology is going to play a big part of this. In fact, company spending on equipment and software is up 21.9% quarter to quarter. The projects created by this spending require resources. Eventually this will lead to even more jobs being created. In the end, all hope is not lost. It’s just that employment and work have become and will be different as we go forward in this slow growth economy. It will require you and all of us to think about how we hire, how we define careers, and how we manage our human capital needs in a completely different way. Yes, this is a function of a slow growth recovery, but I would submit to you that as long as the word growth is in the description – whether 3% growth or 1% growth, it’s a good thing. It’s much better than the alternative.
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