In the July 10, 2018 Ask The Headhunter Newsletter a reader asks whether the news about jobs creation isn’t a load of crap.
Every month the Department of Labor issues the “jobs numbers” and the “unemployment numbers” and everyone goes gaga about how great things are. There are loads of jobs to apply for! There’s a shortage of talent, so that’s good tidings for us job seekers! You’d think simple market economics would mean higher salaries and job offers.
But it’s not true. I don’t see higher pay or even higher job offers, not at any meaningful level. Employers aren’t hiring any faster or acting more competitive. Taking two months to decide to make a job offer isn’t the sign of a tight labor market. And demanding my salary history so they can low-ball me on a job offer doesn’t look like companies are struggling to fill jobs.
What’s your take? Am I missing something or is the jobs euphoria in the news just B.S. cranked out by stoned experts?
The jobs euphoria is B.S.
Since last year I’ve been collecting samples of the reports you’re talking about, and there’s a dirty little secret that the pundits and politicians keep trying to bury in the news — but like a nasty case of the hiccups, it’s impossible to hide.
Politicians, the U.S. Department of Labor (DOL) and the media have been reporting on exciting gains in job creation. The U.S. created 213,000 new jobs in June (MarketWatch, July 6, 2018) and monthly jobs growth has been positive for the past several years. That seems to be a good sign, but for what and to whom?
According to the DOL’s Bureau of Labor Statistics (BLS) JOLTS report (Job Openings and Labor Turnover) issued June 5, there were 6.7 million jobs open in the U.S. at the end of April. On July 6 the BLS reported that 6.6 million people were unemployed. That means there are more jobs that need to be filled than there are unemployed people.
It’s a 5-alarm fire!
With every new report, economists say they’re flummoxed. With labor in such short supply, the surfeit of demand to fill vacant jobs suggests employers would bid up salaries and wages to get the workers they need — especially if they expect to lure people with jobs away from other employers.
By no stretch of the data is that happening. In a bluntly cynical July 5 Forbes article, Byron Auguste reports that “Three decades of stagnating wages—rising just 0.2% annually since the early 1970s, adjusted for inflation—means an economic five-alarm fire.”
While economists, analysts and politicians struggle to explain wage stagnation by blaming a “skills shortage” (improperly skilled workers are not worth higher wages) and a failure of workers to “re-educate” themselves, Auguste refers to the “skills gap narratives” as “the usual suspects” in the never-ending rationalizations about why companies aren’t paying salaries commensurate with market demand.
“The U.S. has arrived at an inflection point in our economy, technology and demography that demands a reality check on the sorry state of our labor market, and the – i.e., our – institutional practices that produce it,” writes Auguste.
Remember that phrase: institutional practices. We’ll come back to it. But first, I want to throw some spaghetti against the wall, and I hope you can help me read something useful in the patterns it makes.
Where’s the money?
Virtually every new report about “more jobs” includes an embarrassing parenthetical gotcha. It goes like this:
— CNBC, July 6, 2018: The five most important numbers from the June jobs report.
This hand-wringing about the wage numbers in the face of unprecedented jobs growth isn’t new. On December 8, 2017 USA Today reported:
“Some potentially troubling trends?” Oops! For months, little side notes like this have appeared in report after report (I think this is what the news media mean by “full disclosure”), then these afterthoughts get buried under the euphoria of politically stoned economists and pundits, and beneath the proclamations of “good times are here!”
–Accounting Today, July 3, 2018: Paychex sees wage and job growth slowdown at small businesses in June
Lousy wage increases are “pretty surprising,” eh? “So you’d expect [wages] to be going up,” eh? No kidding.
–The Columbus Dispatch, July 3, 2018: Bad sign for workers — wage growth getting weaker for many
Everybody is really perplexed!
ZipRecruiter says everything is cool!
Here’s my favorite. CNBC calls it exactly what it is in the title of this July 6, 2018 article: The jobs “conundrum” continues: “How are we not getting higher wages?” But then CNBC lets an economist from ZipRecruiter (economist or marketer?) spin it to keep perplexed job seekers searching for temp jobs that pay less than, well, an economist-cum-marketing-manager makes at ZipRecruiter:
Lousy wage growth is a good sign! ZipRecruiter couldn’t care less what wages are, as long as jobs remain unfilled and employers keep posting them, and job seekers keep clicking them. That’s how Zip and other job boards make money. It’s all good, folks!
Does it matter that there are more new jobs every month? Probably. Unless you’re a middle manager who just lost her job making $95,000 with good benefits, and now you’re looking down the barrel of a fly-by-night recruiter’s job posting for a contracting job that pays $23 an hour — and the guy ghosted you after you filled out 9 pages of online forms and sat for a nerve-racking video interview with an algorithm.
It’s a good sign there are loads of jobs out there for you to apply for on ZipRecruiter, dontcha think?
CEO jobs pay well!
Let’s put all this euphoria into some context. People are starting to ask questions about all that job growth.
–Forbes, July 5, 2018: Skills And Tomorrow’s Jobs Report: The Usual Suspects
Must be the skills shortage — it seems not enough blue-collar workers are getting the re-education they need to apply for a job that pays better in today’s new world. Like CEO.
–Economic Policy Institute, July 20, 2017: Top CEOs took home 271 times more than the typical worker in 2016
Oops. Where, indeed, is the money going in this booming economy?
Are consulting jobs sucking wages out of the economy?
Okay, I’ll stop. I’ve got loads more, but you get the point.
The euphoria is generated to keep you down on the farm. While economists and analysts blame pathetic wage increases on workers who are too lazy or too stupid or too complacent to re-educate themselves for today’s modern jobs, I’ve got another explanation. I think this is part of what Byron Auguste is referring to when he cites “the sorry state of our labor market” and points to the “institutional practices that produce it.”
Temporary, part-time, contracting jobs that companies are substituting for full-time, permanent jobs are sucking the wages out of our economy.
We’ve discussed it here before: Consulting: Welcome to the cluster-f*ck economy. Contracting gigs are one of the institutional problems that shift profits to CEOs, investors and employers and keep wages low. Why’s that so hard for economists to understand?
BenefitsPro spills the beans to the folks who manage corporate benefits programs in a July 6, 2018 article: Stagnant wage growth driving worker dissatisfaction:
Is supply-and-demand dead?
BenefitsPro includes a tasty graph whose blue lines put the U.S. on the same side of the world economic story as Italy. (Source: Organization fro Economic Cooperation and Development.)
Economists might have an Aha! moment if they study that graph side by side with this graph from the BLS, which is cited in a July 10, 2018 JOLTS news release:
How could “real average annual wages” be lower in 2017 than over the past 10 years when there are more jobs vacant than there are unemployed people? Is the relationship between supply and demand really dead?
Where does the money go?
Let’s go back to one of the precious quotes above, from The Columbus Dispatch:
“Typically, wages pick up at this point of an economic cycle because a low jobless rate forces companies to boost wages to find workers…”
Well… you’d think so, when corporate profits are up and employers are paying their CEOs 271 times more than the typical worker. You’d think so, when Congress passes tax breaks that are supposed to trickle down to everyone that works. So WTF is going on?
Let’s go back to the BLS. I love this little graph, based on BLS statistics and published by Bloomberg last April. It shows the employment cost index — what companies spend on compensation:
The accompanying text bemoans that “employment costs rose more than expected in the first quarter and a measure of private wages had the biggest annual gain since 2008.” What Bloomberg doesn’t note is that way over on the left side of that graph U.S. companies were sharing a whole lot more with their workers. What companies spend on compensation today is still way down from a 2003 high, and current compensation costs still have not “recovered” to even 2007 levels. (Yah, I can see — there was a recession around 2007-2008 but, hey, do I look like an economist?)
(The share of profits that companies spend on workers varies by industry. See my column on PBS NewsHour: Which industries are being too greedy to pay you fairly?)
When the economy is booming, profits are up, and companies are so awash in cash that they demand the freedom to invest it in elections — why is anyone at a loss to explain why we’re not seeing higher wages?
–NBC News, June 26, 2018: What did corporate America do with that tax break? Buy record amounts of its own stock
If you can’t re-tool your skill set to be a CEO, you could try one of those online investment courses, so you could make a living at your PC — as an investor!
What was your question?
When I can’t figure something out, sometimes I give myself room to rant. I cut out articles, data, graphs — and I spread them out on the floor, hoping I can puzzle them up into an answer that makes sense to me. Forgive me if I’ve ranted too long.
But if I threw one or two bits of information up on your screen that give you pause to think about this strange economy and job market in a new way, maybe it’s worth it.
Let’s go back to the question in this Q&A:
“You’d think simple market economics would mean higher salaries and job offers… Am I missing something or is the jobs euphoria in the news just B.S. cranked out by stoned experts?”
Wages and salaries are basically stagnant, and more people are admitting it. Employers are spending less on wages and salaries because they’re renting temporary workers from “consulting firms.” But the bucks are there. They’re just going to somewhere (and to someone) other than the labor pool.
So I think the euphoria about “jobs creation” is indeed B.S. because more new jobs during a labor shortage without higher wages is not good news — it tells us something is very wrong. It’s B.S. because what’s being created is a phantom industry of middle-men that suck value out of our economy. (See The Job Monopoly: How companies keep pay low.)
Where will it end?
How long can the economy — which is people, after all (and there are more workers than CEOs) — withstand this scenario?
I dunno. There’s an old saw about profits: Pigs get fat. Hogs get slaughtered.
Billionaire Nick Hanauer, a staunch advocate for higher minimum wages, says it best: “The pitchforks are coming.”
Do the “jobs creation” numbers and stagnant wage growth make sense to you? Are workers really so incorrectly skilled that it explains why they’re not getting the jobs employers say they’re dying to fill? I blame some of it on our “consulting economy.” If you study the spaghetti on the wall, what do you see? Is the jobs euphoria justified?
I’ve been subscribing to your blog for over 10 years. And while I don’t often get the time to actually read it, I do occasionally. And even more occasionally, I’ll share my thoughts with you and your readers.
Glad I read this one. Glad to see that, like Cecily and unlike Gwendolen in Oscar Wilde’s “The Importance of Being Earnest”, you see a spade and you call it a spade. I do think that your reader, in asking “whether the news about jobs creation isn’t a load of crap”, meant, I think, to ask if it’s perhaps a load of CARP… carp, you know, one of the many kinds of fish that, when caught and left to sit out untended, will sit and rot… and begin to stink. Just like what we are being asked by our government to believe about this economy.
Economists have been telling us for years that we are moving toward “a gig economy”, where there are fewer longterm jobs and a growing proportion of jobs that are short-term, contract jobs… i.e., jobs without fringe benefits, where healthcare remains a privilege of the fully employed, and the proportion of the workforce that IS actually fully employed on their employers’ payrolls is steadily declining… and Congress keeps trying to reduce what healthcare there is, for reasons that most of us are hardpressed to understand.
It all supports continuing the boom in corporate profits. You nailed it when you said that “companies are so awash in cash that they demand the freedom to invest in elections”. And indeed, with the Citizens United case, they got that freedom. Bigtime. Now, more than any other time in American history, democracy is falling victim to a declining regard for facts and truth, as megaspending overtakes our news media’s ability to keep us truly informed. Increasingly, those with the cash are calling the shots. And increasingly, those shots are serving to inoculate many of the rest of us against the truth, so that we continue to vote ever larger benefits to those who already own the vast majority of our national assets, who already are making the vastly disproportionate lion’s share of our national income, and whose interests are not those of the majority of us.
You said it well: “Welcome to the cluster-f*ck economy.” A clever spelling. I’m not sure if that’s pronounced “cluster-fuck” or “cluster-fasterisk”… perhaps the latter, signifying that the economic powers that have the mostest or continuing to offload risk as fast as they can onto those with the least and those in the middling classes. It’s the Italianization of the American economy. It’s the Greekification of our economy. It’s — dare we call a spade a spade? — the Trumpification of our economy.
Nick, thanks for the long article. And thanks for the insights. They are spot on.
And thanks for your comment, Dan. Those who suck the value and cash out of the system don’t do it to buy big boats. They do it to control the economy. And that’s not paranoia. What’s interesting to me (having licensed ATH columns to CMO.com for many years) is how marketing plays into this. That bit from the ZipRecruiter economist is very important — a blatant use of “government data” to induce job seekers to keep spinning the roulette wheel in a game where only the house wins on every spin.
This is very important for everyone to think hard about:
Job boards don’t want jobs and people to be matched. They make money only when jobs are not found and filled. They make money when everyone keeps spinning that wheel.
Yes and no about the job boards.
No, it doesn’t really matter to the job board if the job gets filled or not provided that the employer pays for posting the job. But it DOES matter to the employer if the job gets filled or not because they are the ones paying for having it up and if the job boards are making it so that they don’t get the job filled, they will eventually figure that out and go elsewhere, hence loss of profits for the job board.
One thing irksome about job boards is “dead jobs” where the job was posted 30 days ago, may or may not have been filled, but desperate jobseekers might apply anyway, hoping to get a job that was already filled two weeks ago but that the employer never bothered to take down. They really should have a “verification period” where the job board will ask the employer if the job is still vacant (kind of like the notification emails job boards like Indeed will send you if you mark a job as “Will look at later” and haven’t done anything on it for a while.) If the employer says no or doesn’t respond in a certain amount of time, they should then pull the job ad so that people don’t go applying to dead jobs.
@Mongoose: I’m going to disagree with you. It doesn’t matter to employers if the job gets filled. Here’s why.
1. Other than HR, usually no one in a position of power in a company knows jobs aren’t getting filled. And when they do find out, HR blames the labor force. “We advertise on the main job boards! We can prove that the right candidates aren’t applying! It’s clear they don’t exist! Everyone knows there’s a skills shortage! So it’s not our fault.” And the board of directors shrugs.
2. Wharton’s Peter Cappelli has pointed out that modern accounting systems have no way of accounting for the cost of a job being vacant. So even the CFO has no idea what’s wrong.
HR does not get measured on jobs filled. It gets measured on pushing paper. Or bits, today.
Wow, first time here, great blog.
Spot on. HR doesn’t care about recruiting.
The people who rise to the top of HR aren’t temperamentally suited to have recruiting as a function. I’d wager over 50% of HR leaders seem overwhelmed at best or at worst like the idea of humans in theory but not in practice. This creates a log jam of malaise and brands HR as unresponsive to the businesses needs.
TA really is a completely separate function. Part marketing, sales, vetting, and compensation. However, from what I’ve experienced TA gets hamstrung but the overarching mentality of HR. A lot more too it than this but lets just stick with it.
So recruiting agencies are engaged for FTE or contractors. So requirement goes Biz>HR>Agency. But wait there’s more!
If agencies don’t have the right people, they open the requirements up to offshore 3rd party agencies.
So on any given job, you have the original, the engaged agency recruiters (2-20 orgs depending on the corporation), and their offshore “partners” leading to the same job being posted by anywhere from 10-50+ orgs. Job openings are completely false.
@J: Bingo! The string of middlemen sucking value out of recruiting just keeps growing. But employers keep paying them without scoping out how they operate. (Or employers don’t care, don’t want to know.)
Glad you’re enjoying Ask The Headhunter!
Great article Nick!
Another one that’s right on the money. Reading this brought to mind an article I read in The Atlantic recently, “I Delivered Packages for Amazon and It Was a Nightmare” which throws some additional light on the issue of “gig economy” jobs. (What a joke so many of these are!) And while the overall picture is not exactly rosy, there are always companies that offer good jobs and are willing to pay competitive – even generous – wages for GREAT people.
That you are providing a voice to help people understand the steps they need to take to connect to these opportunities is really an invaluable service.
One common refrain of yours that’s worth repeating is that investing in the process of identifying a GREAT opportunity is HARD WORK. Yup. It is. And probably getting a little bit harder as time goes on with a huge pile of crap jobs (and unnecessary processes, technology applied to solve problems that don’t exist, HR administrators that detract value, and many other issues that you have outlined so clearly and so well)
BUT, despite all of this, there are still good jobs out there, that pay well, who are run by people who value fairness, and demand the best from the people who work for them.
Thanks for reminding people about this.
@Eric: Thanks for reminding everyone that there are good employers and jobs out there. They get short shrift here. Maybe it’s time for an article and discussion about what makes the good ones good.
That is something my organization recently promoted. Employers in my region are clamoring for employees but cannot find any. There are a few notable employers in the area that have no trouble at all obtaining and retaining staff so we invited them to speak before an audience of other employers to share their “secret.” It turns out they 1. pay fairly 2. offer good benefits 3. treat their employees with respect and have a high level of transparency and 4. are wellness oriented. I hope the other employers were listening with both ears.
[I assume yours was one of the firms that have no trouble obtaining/retaining employees or you would have jumped. It would be VERY interesting to hold a follow-up session with those same firms to see if anything really changed.] This thought process is rampant in business journal media today – in all strata of employment. I subscribe to several blogs including home remodeling/building and it is rampant here too (against the cries of “we can’t find any talented workers”. See: https://www.grandyassociates.com/connect-with-us/enewsletter/#marketing
And I’ll bet those successful employers also train and develop their new hires and employees.
@Nick: Now that you mention it, I don’t recall the training of staff being a talking point. If I recall correctly, they were all invested in LEAN practices, retained staff for long periods of time, and expected continuous improvement which I could infer as employee training but it was not said explicitly.
If we decide to repeat the event somewhere down the road, and I sit in on it, I’ll have to remember to ask what their philosophy is on training their employees and new hires. I know 2 of the 3 use ATS but I didn’t think to ask them to what extent.
@David: We work directly with employers to help them meet their staffing needs (advisory, generally not placements) so we should be able to get a feel for if this meeting had any real effect. If it did, I expect it will still take a while to catch on. Employers around here are finally starting to understand that they need to pay more so, at the least, wages are increasing.
“It turns out they 1. pay fairly 2. offer good benefits 3. treat their employees with respect and have a high level of transparency ”
Wow! What a secret! But they have probably listened to too many consultants to see the blinding flash of the obvious….
Last year, I was unemployed for 6 months before taking a job that paid 2/3 of what I had made previously. Of course, during the phone screen, I was pressed for my previous salary, likely as an attempt to disqualify me up front. I actually declined to say what I made, because it’s not like I had a leg to stand on anyways so I had to entertain “reasonable” offers.
From about mid May to mid August, I averaged about 1 in-person interview and several phone screens. For supposedly being an “employees market,” I saw the same old behavior that we’d come to expect during the Great Recession (and before) – employers taking weeks/months to decide (no urgency) who to hire, decisions that would make you wonder if there was an aspect of ageism/sexism/racism/etc. in their process, insistence on knowing salary history and no relaxation of “requirements” that we’d expect to see if their was an actual shortage of workers.
Luckily, I’m in a better place now. What I find ironic is that some of the “recruiters” (i.e. 3rd parties) that didn’t want anything to do with me last year were calling me almost to the point of harassment now that I got some meaningful work. I would confront them about why they are “conveniently” contacting me now and balking at my new salary requirements to which I do not get satisfactory answers.
About forty years ago I came across an article about athletes being “in the zone”. The author of Flow also used that term.
This writing was definitely in the zone.
For the sake of easy historical reference, let’s say that I entered the workforce circa 1970.
By 1980, I had a for-real management position running a modestly sized distribution center.
Being a very hands-on company, all managers were expected to be working managers. I was even reminded of this circa 1990 direct from the mouth of the VP of Ops.
Somewhere during that time period I formulated the concept of
Triumvirate Executive Management.
While historically triumvirates don’t do well (Rome didn’t last long), I had asked myself was it impossible to find three dedicated and competent people to effectively run a mid-sized to large corporation effectively, with the interests of the workers, the leaders, the stockholders, the community all in balance or at worst, creative democratic tension?
Of course, even as I write this, I can see Steve Martin in medieval garb shaking his head and saying “Naahh!”
When executive compensation began to cascade over the $100K mark, I reasoned that a company could save ten thousand a year by paying each of the three $30K annually.
Even in today’s dollars, 3 million a year is a lot less than 15 million a year, unless the new new math has kicked in somewhere.
That’s 12 million a year to update facilities and encourage skilled workers and competent managers to hang around.
Having been tossed out of my nearly $90K job ten years ago and forced to survive on less than $30K for six years in a survival job and less than $7K a year on unemployment for two years hasn’t been my idea of the American Dream.
As one of my earlier dissertations asserted: I’ll recover when I’m dead.
@X: You sound like you’ve already recovered in some very important ways, if not monetarily :-)
Not sure why you say this Nick? Several of my friends got job offers at triple to quadruple what they were making in 2016 & 2017!? I’m very excited for them! Depressed friends with no hope are now smiling and happy once more. They’re also having to work really hard but the payoff for some was getting promoted within 2 to 6 months already.
As for contract work- I LOVE them! Get in, get the job done, get paid based on results and get a great reference to other companies and departments to serve in the future! I’ve always enjoyed contract work. Glad they are HOT once more!
@Anthony: I don’t doubt it! What kind of work do you and your friends do?
“As for contract work- I LOVE them! Get in, get the job done, get paid based on results and get a great reference to other companies and departments to serve in the future!”
I think my experience mirrors the reality for a lot of non-IT contract workers. I was a 61 year old single woman when I was reorgnaized out o f ajob. After 10 months of trying to live on unemployment while paying for COBRA, I took a contract job that came near my old salary with less responsibility. As a contractor, I was left out of the communications loop on siginificant matters and treated like a non-entity –no department meetings, excluded from the holiday party, etc.–because I was “not an employee”. The manager only bothered with me when she needed something and the director barely acknowledged me. I had no paid holidays or leave; when I took a a week off for my mother’s death and funeral, only one peron acknowledged my loss.
The job was supposed to convert to permanent full-time but that never happened. I was told I would be working through the end of the year and would cover for everyone’s holiday vacations. When they decided to create a position for my duties, it was posted internally where I had no access. I found out when I was told to train the replacement. They hired a person from within who had no qualifications or experience for the work and apparently little interest in learning. I left with no notice when I got a permanent job. The replacement person had little training and the other permanent person was taking maternity leave soon. C’est la vie!
FYI, the CEO of this organization was making 650K before stock incentives and other goodies. The customer facing employees in the field were luck to make 40K.
For the rest of us who live in Kansas and not Oz, the answer is apparent. I’m not even making what I was twenty years ago – and the situation is even worse if you take inflation into account.
And it’s not as if I am some unskilled rube – I have a graduate degree in STEM, no less. Still can’t find a job that pays decently (meaning one that would be sufficient so I could actually have evenings and weekends to myself, instead of having to work a second, part-time job AND hustle on the side).
That’s the reality for far too many people: educated, skilled – and still can’t get ahead.
We are looking at an economy that is a monopsony.
@Lucille: I removed some of your other comments because they merely repeated the links you list here. Not your fault! This original comment got caught in the spam filter and by the time I released it you had apparently posted the others thinking this one was lost.
NOTE TO ALL: Check the “NOTE” at bottom of the Comment box. It says that if your comment doesn’t post, please drop me an e-mail and let me know, so I can check the spam box for it. As long as it’s legit, I’ll clear it to post. I check it regularly anyway, but you’re in control if what you post doesn’t appear! :-)
Thanks, Nick, for tackling this subject head-on. You’ve alluded to it in past articles, but it’s refreshing to finally hear someone in the recruiting field call a spade a spade. Lots of great sidebars to read in your provided hyperlinks.
Having long struggled to make sense of the monthly numbers spewed forth by the bureaucrats in D.C. (after all, take the “L” out of “BLS” and we’re left with quite a stink), I can’t help but wonder if these questionable “stats” are being used to camouflage the reality that we are presently on the bring of our next recession. One could argue that the flattening bond-yield curve suggests that we’re already there.
I’m just a sample of one, but if I were to believe all of the hype, my e-mail in-box and voicemail would be overflowing right now with messages from recruiters and employers begging me to contact them about “opportunities.” And that’s just not happening. I can attest that my sample size has a lower margin of error than both the U-3 and JOLTS numbers.
“The nine most terrifying words in the English language are: ‘I’m from the government and I’m here to help.” – Ronald Reagan
@Garp: I know quite a few people at BLS, including some who work on JOLTS. They’re good folks, trying to do a good job, and they readily acknowledge what their data and reports are, and what they are not. I think it’s a case of the diligent worker bees not having control over how their output is used and processed. If you look carefully at the text versions of the reports, I think you’ll find it hard to conclude those bees are doing anything underhanded.
What everyone else does with that data and reports is another matter entirely.
And the other problem is that BLS counts what it has always counted. It could start counting other stuff, too — so, why are they not instructed to?
Good point re the BLS and what data they count and don’t count. I don’t know for certain but only speculate that if they counted the other stuff (people who have been unemployed longer than the set amount of time, people who have dropped out of the labor market, people who are underemployed (working part time and want to be working full time), the actual labor participation rate (earlier this year L.T. mentioned that it was 62%, which means that despite the “excellent” numbers, 38% of population that could be/should be working isn’t even considered when it comes to crunching the numbers and the data) the reports would be much worse and no one wants to cause a panic. You’re right–they should be counting the other stuff.
@Marybeth: Regarding what is counted and what is not, please see my comment referring to the Shadowstats alternative measurement of unemployment here:
Shadowstats puts real unemployment for June 2018 at 21.5%, which is down from the 23% recorded in 2016. The people who are long-term unemployed or underemployed (and thus not counted) now comprise roughly 65% of the total.
Please also use care when using a phrase such as “people who have dropped out of the labor market,” which is similar to saying that somebody “isn’t looking for work.” I’m always looking, and I can only be considered to have “dropped out” if that means that I’ve “been dropped out from the calculations.” [I think this is a matter of using the active vs passive verbage.]
Nick, Thanks for drawing attention to this issue. You asked what might you have missed. This is one factor pointed out by Niel Munro who writes about immigration issues “White-collar salaries are stalling partly because roughly 1.5 million non-immigrant, lower-wage visa-workers have been quietly imported to take many white-collar jobs, sometimes directly from American employees.”. .Mr. Monro recently tweeted” College-grad salaries are growing slower than blue-collar wages in what seems to be a full-employment economy. Why? Maybe b/c there is a hidden workforce of 1.5 million+ foreign college-grad visa-workers eager to work low-wage jobs in hope of a green card.”
@Topcat: They’re hardly hidden. They have jobs. Who’s hiring them and creating a market for them, only to have them get arrested and deported for doing what they were hired to do?
I marvel at the “illegals” problem. What’s illegal starts with unsavory employers looking for slave labor and creating a black market for it. ICE needs to start there and lock up the illegal employers.
You can beat a black market. But don’t ever try to beat human hope — nothing kills it.
Nick, I think Topcat might be referring to the practice that is shown in this video, i.e. finding and taking advantage of loopholes, that result in depriving locals of jobs: https://www.youtube.com/watch?v=TCbFEgFajGU
I haven’t heard of those exploiting these loopholes being raided and people arrested and deported.
One thing to keep in mind with each and every Job Report…. It does not mean there was an equal increase across the job spectrum. Whether there are jobs suited for the reader depends on what industry he/she works in. For instance, most of the 213,000 jobs were in education and health services (54,000), Professional and business services (50,000), Manufacturing (36,000) and Leisure and hospitality (25,000).
For Lucille, who loves links:
I also think ones attitude/demeanor has a huge factor in ones individual success in life and work. The good jobs are not going to jump into your lap… and there will always be periods that are more challenging than others. Myself, I’d rather be happy in my job and who I work with…than to get paid more money and feel unsatisfied at my job…then it truly becomes a “Job” and not a career IMO. The key is how you approach each case…
Best wishes to everyone happiness and success in their careers.
@Peter: Great comment. As I was researching this column, I ran into one article that listed some of the jobs where wages have actually dropped quite a bit. Wish I’d saved it. What caught my eye on that list: Data Scientist jobs.
If we are indeed at full employment with a shortage of workers, then why are companies still using ATSs to “weed everyone out?” Because I continue to see the HR/recruiting world whine about being overwhelmed with applicants. Shouldn’t they be killing their ATSs by now since they technically don’t need them?
There was a funny observation over on one of the job forums where someone posted about how they went to a career advisor, and the advisor told her that (1) the job market is booming and (2) don’t waste your time applying online for a job because ATSs reject 90% of applicants. Another commenter pointed out the contradiction, if the job market is booming, why are the majority of applicants getting rejected? Hmmmmm…
A few weeks ago out of curiosity I took a look at the job listings for my field/location on StinkedIn (I dropped out of the job market last winter). The entire first page of results was nothing but the same jobs I’ve been seeing advertised (and to which I applied) for five years. The companies ran the gamut from big ones like IBM and Deloitte to smaller start-ups. I had concluded long go these jobs are all *fake*. I came across a video on YouTube explaining why companies post fake jobs (Nick, I sent you the link, I won’t share it here as the guy seems to be in direct competition with you :) ), the number one reason is to fool financial analysts and credit rating agencies into believing that the company is doing well and expanding so they’ll assign higher valuation figures and potentially higher price targets for their stocks. They use the “number of vacancies” datapoint as a part of their overall valuation study, and it’s a pretty easy point to manipulate (a company can’t easily manipulate their financial statements due to financial regulations). Of course, this gets reported back to the government who of course doesn’t question the “job creators” (I mention Deloitte above, they’re always writing reports for the government, I lost count of how many fake jobs I’ve seen them post over the past five years).
I think HR doesn’t kill their ATSes because they THINK they need them. What’s astonishing is that HR won’t admit ATSes don’t work! (If they did, there would be no shortage of workers. ALL workers are in the database. All HR has to do is get them hired! Duh… oh, do I see the problem now???)
I have a son-in-law and a son—both over 43–who are unemployed. My SIL has had two jobs in past two years that lasted only 7 mo or so. His skill set is in continuous improvement/lean strategy/project management. He COULD find more/better job offers if he was willing to relocate to where the work is—-but he ademantly refuses to consider that…so he is basically punishing his wife and young son for his own personal choice. It is pretty unlikely that he will get a job offering what he used to make before he walked away from his last long-term/full-time job because that company wanted him to relocate to the home office full time–vs working from home. The companies hiring locally want healthcare experience or financial—not in his background….and we know how specific companies are about not taking a risk and retraining…
My son has Masters in English and history of working in curriculum development/on-line education for educational software company, but all his skills are learned on-the-job—no tech certifications. I think he is in stronger job market or could work remotely, but he is going to have to upgrade his skills. He doesn’t see that yet unfortunately… He is lucky his wife is working and has good health insurance—just hope her job is stable.
I have tried to get my SIL to read your blog/website, but he doesn’t appreciate suggestions–even though he doesn’t seem to be doing a very good job of finding new employment…
I am frankly very afraid that they are likely never going to have a “decent” job in the next part of their lifecycle. Trump, the GOP, and yes–even the Democrats have basically joined a silent conspiracy to defraud the American people about the state of our economy. The history of the growth of corporate power over that of individual workers–in any aspect of the employment field–delineates the shift from rights of the workers to rights of the corporation. The new justice on the Supreme Court will likely nail shut any attempts to empower the individual–either in suing corporations for damages to the environment or consumers, will further reduce collective bargaining, and push more power toward the wealthy who control massive amounts of personal wealth and thus sit on the boards of corporations and fund Super PACs….
I hate to turn this political–but without an effective, unbiased democratic process we are all serfs…
“He COULD find more/better job offers if he was willing to relocate to where the work is—-but he ademantly refuses to consider that…so he is basically punishing his wife and young son for his own personal choice. ”
When you see stuff like this where “the jobs are,” I wouldn’t be so quick to blame him:
Wonderfully researched and thought out article. A super-condensed version as to why these problems exist could be summed up as:
intense and selfish desire for something, especially wealth or power.
And no one wants to give up theirs.
Thanks. I only wish I’d had more time to edit it down – it could be shorter and still make the points I wanted to make. Nice try on the editing! :-)
At first, I was excited to read new stories about how wages were going up and employers were hiring. Now I am wondering. I hear that the unemployment number do not include all the people who stopped looking for a job and so are skewed low. I personally know many people in their 50-60’s who have no job because of lay-offs and then not being able to find another comparable job. Some are working retail now. Of course, many can’t or won’t switch to a new profession but some are trying. A couple have gone into self-employment but not making good money there either.
I go to the grocery store in my large “booming” city in the USA, and I find so many thing no longer on the shelves. Is it that no one but me buys these cookies or are they cutting back because sales are not good over all? I go to our Whole Foods and the shelves are bare in some instances and stocked with one item all the way across the section in others. For example, the whole shelf is one brand of crackers, the same type, the same box, rather than the shelf holding 3 or 4 varieties or brands. My husband’s former employer brought in this hotshot CEO that drove the company into bankruptcy and now they were purchased by another company. They had no money and laid off a lot of employees. Yet, this CEO was making the huge bucks. The C-Suite was full of highly salaried people who did not know the customer base or the client needs and would not listen to long term employees. And the low level people now have no jobs, no insurance, no prospects.
@Kathy: I’ve noticed the empty shelves, as well. Especially when the products are the generic brand of the store. Very weird when they’re not even promoting their own product.
Ouch… now you’re both scaring me. Recently I was at our local Walmart. Couldn’t find what I wanted. Shelves were bare. So I drove 9 miles to the nearby “Super Walmart.” Again, bare shelves. I asked an employee who was scanning the codes on some shelves whether Walmart has cut back on the number of brands it sells for a particular item. “Yep. We carry less.” I kept rolling my cart around and realized many shelves were totally bare.
I stopped where I was, called my wife. “Do you own any Walmart stock? SELL IT.”
The ultimate scenario is an automated workforce led by wise senior management. But wait, can’t senior management be replaced with an AI system too?
“Temporary, part-time, contracting jobs that companies are substituting for full-time, permanent jobs are sucking the wages out of our economy.”
This is well documented:
The Fissured Workplace
by David Weil
And there is an army of oveseas recruiting process ousourcing (RPOs) firms calling up high-skilled high-educated workers around the world plying the same script aimed at wage-scalping them and conning them into joining a wage-scalping “staffing” company, to with:
That link to some graphic I guess was just to string of posts
SIL is in Sarasota FL area
NOT a job mecca for his skill set like DFW where we live snd where they already have many friends or other areas
Do job search on Indeed and compare what pops up
Hard enough to get real job even w/more viable posts…
Vikki, are you being dense on purpose? The image David posted was of and ad for a doll house-size shack (without a bathroom, even) in Los Angeles on sale for $659K. Is it really so hard to see his point: that hot markets tend to have a very high cost of life? Relocating cross-country is very expensive in and of itself, too.
As for the son and wife he is “punishing”, maybe they don’t to move either?
The monopsony issue is valid and generally under-appreciated. But I think a contributing factor to both the jobs market and the monopsony issue is rampant globalization. By analogy, the US real estate market benefits from (a) worried superrich families around the world wanting a safe place to stash their cash and flee should the political situation turn against them, and (b) pure investors looking to buy as much as possible here (China comes to mind). Many believe Chinese money is propping up the real estate market, and should a recession occur in China, this could dry up and greatly impact US real estate prices. What has this to do with jobs? Similarly, an unrestrained global market for jobs is going to drag down markets in advanced countries since these are magnets for the most credentialed job seekers worldwide. An interconnected world is already here, but the details of how these interconnections should work has not been well planned. Restraining entry to the US job market is very necessary, and in the future slow and careful policies need to be put in place that benefit and protect workers.
A tell tale sign of BS is that the # of job openings has be static for a long while. Coincidental or BS?
The government numbers are indeed B.S., as they exclude the long-term unemployed. The government changed the definition in 1994. A more significant number is the labor participation rate. Even better is the alternative unemployment rate published by John Williams’ Shadow Government Statistics website, which explains:
“The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.
“The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.”
Apologists for the government U3/U6 numbers argue: “Sure, the long-term unemployed aren’t counted, but change was made 24 years ago, and as long as U3 and U6 are calculated using a consistant methodology, they accurately reflect the ups and downs of unemployment.”
That might be partially true if there was a consistant relationship between U3, U6, and real, total unemployment (SGS). And in normal economic times, that seems to be the case. But those relationship were broken in 2008. This can be seen in the chart on the Shadowstats page. From 1994 to 2008, the three indices parallel each other pretty closely. From 2008 to 2010, the increase in SGS outpaced those of U3 and U6. More importantly, since 2010 the SGS number (real unemployment has remained above 21% (and as high as 23.5%) while U3 and U6 have declined to levels comparable to 2001. In short, the STRUCTURE of unemployment is significantly different now, with the long-term unemployed who are not counted in U6 (having been “defined out of existence”), now comprise roughly 65% of the total unemployed an underemployed. In more normal times, those not counted in the government indices were typically under 30% of the total.
While the SGS chart is interesting, I took the numbers and calculated and charted the following:
These calculations give a much clearer view of the structure of unemployment in these “new normal” times, as well as the relationship between real unemployment and the government’s B.S. numbers.
@Nick: I’ll send you the spreadsheet.
Thanks, Bill. I’ll look for it.
Nick, I REALLY want to see a reply from you for Anthony A.
I’m not Nick, but the answer to that is easy. The plural of anecdote is not data. That someone has success in consulting does not mean that most do.
Wage stagnation is a fact. My well educated kids are doing great, but that does not mean that most people aren’t.
Actually, ‘the plural of anecdote is not data’ is a misquote of the original: http://blog.danwin.com/don-t-forget-the-plural-of-anecdote-is-data/
“You may have heard the phrase the plural of anecdote is not data. It turns out that this is a misquote.
The original aphorism, by the political scientist Ray Wolfinger, was just the opposite: The plural of anecdote is data.
Wolfinger’s formulation makes sense: Data does not have a virgin birth. It comes to us from somewhere.”
Hmmm. I suggest that the answer to anecdote is data.
Surveys are not collections of tons of anecdotes. They are designed to collect appropriate information in a way which won’t distort the responses. So I contend that the reason the thing I said is more widely known is that it is a lot more accurate.
Anecdotes are going to be self-reported. And successful people like Anthony A are going to self report at a higher level than those who got awful, low paying jobs. Extremes always do. Even during the bubble when unemployment was very, very low you’d get people wailing about how hard it was to find work as if that was a universal.
I’ll take honest, well constructed surveys any time. That’s the stuff Nick based his column on.
@Scott: That’s a good reminder to us all. In this day of social media and easy publishing of our thoughts so everyone else can read them, it’s critical to remember that anecdotes are just that – single self-reported data points. They might be valid, but it’s dangerous to generalize from them and to draw conclusions. While surveys can be poorly constructed and invalid or unreliable, they’re still a step above a single story. Learn a lesson from a person’s story, but use a survey to ask more questions of your own.
I sometimes put too much stock in anecdotes, too – we all do. Thanks for the reminder.
@Cynthia: I didn’t reply to Anthony A. I asked him a question. I hope he responds so we can discuss further.
Old jokes can not remember source but still good for a laugh in these times “Statistics are like a bikini. What they reveal is suggestive, but what they conceal is vital. and “Some people use statistics as a drunk man uses lamp-posts—for support rather than for illumination”.
I live and work in NYC. There are plenty of jobs here on all rungs of the economic ladder. I got a Masters degree in my field in 2015. I have over 20 years of web development experience and currently do this at a university where I have worked since 2011 (7 years now). I worked in an almost identical, much more junior position at a similarly sized non-profit in 2002. Yet as an associate director I make less in at my current job in 2018 than I did in that junior position in 2002. Why?
It’s not lack of jobs in the market. I’m good at what I do and I work hard. As a technologist I keep my skills current – no thanks to my employer who completely eliminated the budget for staff development several years ago. The biggest raise the university has given to non-union staff (of which I am one) is 2% – for the majority of years it has been considerably less and in some years we’ve gotten no raises at all. Meanwhile, in all but one year, the portion of benefit costs employees have had to shoulder have completely canceled out these meager raises. So, WTF?
Here’s WTF. During this same time period the number of Vice President positions and higher at the university has more than doubled. All of those 6 and 7 figure salary positions have been getting minimum yearly increases of at least 10% (some as high as 30%). And the budget for consulting services has skyrocketed. But the salaries they are budgeting for permanent positions lower than Senior Director have been stagnant. Each of those things are totally separate budgets. The former is the capital budget while the latter is the recurrent budget. The university administration is not giving adequate increases to the average employee so they can give big raises to themselves while making it look like they are keeping costs under control.
For example, there is one position on my staff that had a salary of $65k in 2011 and has been vacated 4 times in the past 7 years. Each time the salary we’re permitted to offer new candidates resets back to $65k. Between 2011-2018 the consumer price index has increased nationally by over 12%. In NYC where I live and work it’s over 30%. That means in 2018 it takes $1.33 to buy what $1 would buy you in 2011. This job that had an annual salary of $65k in 2011 should be paying $84,500 in 2018 just to keep pace with the cost of living. This same scenario is playing itself out across all sectors of the economy at all types of companies, which is why changing jobs has become synonymous with a lateral career move.
There is no legitimate justification for any of it. It is the systemically sanctioned, artificial depression of incomes done to benefit a small minority of people at the top of the economy. It’s anybody’s guess how long they will be able to keep this up without the whole thing blowing up in their faces. At some point something has got to give.
Great column, Nick!
Supporting this, there was an article in the Times today about states investigating fast food franchises for no poach agreements, which prevent people from switching jobs within the franchise. You’ll be amused to know that the reason given was the great expense of training the burger flippers. Just like the excuse for IT workers. The no poaching rule has been thought to keep wages in this growing industry down.
And it is not surprising that wage stagnation is correlated with the decline of unions. Any worker voting for anti-union politicians is shooting him or herself in the foot.
Soon they will have robots flipping burgers: https://www.youtube.com/watch?v=MEfNsyBL6LI
@Borne: Wired just featured this story about a burger bot:
Why do you think the media, for the most part, focuses on the low unemployment #, instead of the more interesting labor participation rate? Are they afraid those facts would make the Dow Jones/NASDAC go down?
You should read or watch better media. The NY Times covers this plenty. Some months the unemployment rate goes up, but it is a good thing because people who were not looking for work start to.
Finance professionals know this stuff.
One issue that I’ve seen raised is that those who have been out of the work force for a while are on the average going to be less qualified than people working. The jobs they get when they join are going to be less well paid than average, which pulls down the average wage. But not by nearly enough to explain the problem Nick is talking about.
I’m out of the work force, and you’d have to hold a gun on me to get me to rejoin it. It makes no sense to include people like me among the unemployed.
@AmyE: Very good question. I think the answer is easy. The news media have fired most of the reporters and replaced them with bloggers who work for free. Er, um, for “exposure.” Check out Forbes. It’s 95% bloggers. I cancelled my subscription.
Fortune? Same problem. I cancelled my subscription.
My local newspaper? All it prints is press releases and the police blotter. It never reports what our town governments are doing. That would require reporters to attend public government meetings.
The late founder of USA Today wrote a brilliant editorial about this years ago, pointing out that news media now focus on content they get for free: Police blotter news, press releases, and weather.
The 3 best news publications today, I think, are Bloomberg Businessweek, The Washington Post and Time magazine. I’m happy to keep paying for them because they not only do long-form articles – they do original research and reporting. Other pubs mostly crib from competitors and spin the story a bit. I also like Wired a lot for the same reasons, though that’s not really a news mag — but it’s a mag I wouldn’t want to be without.
Blogging is not news. Rehash is not news.
So to answer your question, I think the media focus on the wrong stuff because the media doesn’t have real reporters any more. That should scare the living crap out of everyone.
Nick, nice piece. Reasonable. Also an A+ for eminently civil comments from a host of readers. (Or at least for the comments published that survived your scrutiny) Question: If your kind readers were each president-for-a-day of the U.S, with power to issue “executive orders”, what would be the first two (or three if the commenter’s feeling expansive) they’d issue to fix “wage stagnation”…and…the kicker… not be declared unconstitutional by a conservative-tilting U.S. Supreme Court?
@John: Thanks. I have deleted no comments except a handful of duplicates from Lucille, who did not realize the ATH spam catcher put them aside for me to review, so she kept repeating the posts. Not her fault. I’m very proud of the standard of conduct here, and of the quality of discussion. This is a great community!
Well done, Nick and commenters.
I’d like to repeat what folks said about monopsony- geographically and in industries, where there is concentration or near monopoly, they also exert monopsony force on employee wages. It’s the ideal situation (for the company) with only one big company running a service- they can charge as much as they like, and pay as little as they want. Neither buyers nor workers have any choice.
Of course, this drives the consolidation of companies and wage/wealth inequality. Just one more symptom of decay in the Republic when the wealthiest work only for their benefit and not the benefit of all. The actual quote was, “For years I thought that what was good for our country was good for General Motors, and vice versa.” That was from the 1950’s when rising tides did indeed lift all the boats.
I find it very interesting that I received the latest report on job openings from the BLS the same day I received your email. I completely agree about the compensation issue; many of the job interviews I’ve been on end up revealing that the firm’s paramount goal is to hire “cheap labor”. From the old project management saw: “What kind of solution do you want? Quick, good, cheap? Pick one.”
I suspect there is something else going on regarding the BLS statistics; and I have sent them a suggestion to try to bring some clarity. If the BLS were to stratify their report on job openings, hires and separations by jobs that needed advanced degrees, jobs that just needed associate degrees or trade school certifications, and jobs that did not require any post-high school education we would be able to separate the waitstaff and retail sales jobs from the plumbers/electricians; the PC help desk techs from the general surgeons. I have not received any word from the BLS that they are willing to do this and I strongly suspect that if this info were readily available it would have a catastrophic impact on the educational/industrial complex in our country. I suspect there are far fewer jobs for all the college and tech school grads than the broad statistics suggest.
The “college for all” push is a far bigger scam than most people realize, or are at least willing to admit. It’s not about education, or even career preparation – it’s about indoctrination, pure and simple. Witness the proliferation of all the baloney degrees in XYZ studies and the like.
I place this situation squarely on us – that’s right – we are ALL responsible. Do you vote? Do you contact your politicians? (My senators and representative are on my speed dial.). Is your self esteem so low that you will put up with bad treatment?
Wages are low because we accept them. The funny thing is that when I get called about a potential job, the offered compensation is laughable! Very quickly, the person on the other end of the line says I’m overpaid for what I do.
All of that said, I am not above sweeping floors if that’s what I have to do for work. One summer, things were going really slow (around the time of the recession) that I even applied to work in a grocery store – I soon got a new engineering job (I had tried a career change into health care that did not work out).
The thing is, I make these choices. I will not take a manager behaving badly. No one has to.
My parents had jobs, after WWII, that don’t exist anymore, due to technology. Those jobs disappeared over time, and the decline accelerated in the 1990’s. The recession took out layers of jobs again, with the explosion of computers. My parents’ jobs required general intelligence & logic, attention to detail, and a good work ethic. They earned (non-union) wages that produced a good standard of living. These days, tech changes so rapidly that of course (!), someone who has been out of work is not going to have the sharpest skill set. A higher labor participation rate is supposed to be good for the country. Nick, you make a good case that our country is bogged down by an intentionally dysfunctional system of job boards. How about something that would at encourage hiring of workers who are over age 50? Let them buy into Medicare. That would free employers from counting HEALTH INSURANCE as one reason to exclude older workers from being on their real candidate list. (…as we segue from fake job postings to fake interviews…)
Health insurance is an excuse, not a reason, why they’re not hiring “older workers.” Medicare isn’t available until 60-something, yet people in their 50s and even 40s are facing age discrimination.
“Technology!” is yet another excuse for bypassing older workers. Face it: the companies want younger workers who will work for peanuts.
IT is being used to reduce pay to workers, increase worker’s risks, reduce corporation’s risk, and increase corporate profits. Instead of being paid for 40 hours a week and receiving benefits as an employee, individuals are being paid as independent contractors by the task or by the piece with no minimum. Independent contractors receive no benefits but take on potential liabilities that would be assigned to their employer, not to them, if they were employees.
Everyday business risk of low demand is no longer absorbed by the employer but by the independent contractors. If there are no customers coming in, the workers are not called in. The independent contractor gets up to 29 hours a week, but is asked to be on call for 126 hours a week.
The gig economy hurts the people doing the gigs. It’s better than not having anything to do, but not that much better.
I have a PhD in Nuclear Engineering and I can not find a job two years after I graduated. Why? Mainly cause the nuclear industry has tanked. But I am also finding that despite the low unemployment, employers are still completely unwilling to invest in any training. They want a person who already has done that specific job. They post skills and knowledge that would take maybe a few weeks at most to train someone to do as requirements. I can not get interviews for jobs that I meet 90% of the requirements and 100% of the key requirements.
The next person who says “Why don’t you get a job outside of your field” I will beat.
To add insult to injury, there are the smarmy HR know-it-alls who want to pigeonhole people according to their degree, or whatever job they’ve had for the past umpteen years. Never mind “transferable skills” or looking at the broader picture. There is a disgusting unwillingness to hire anyone who’s not a “plug and play” employee. As potential employees we’re supposed to be flexible, constantly updating our skill sets, and be able to adapt to any situation…and we still get pigeonholed.
A Ph.D. in nuclear engineering is very impressive. I am certain that many people don’t understand what skills you possess that are transferable to a different job. I hope you become gainfully employed soon.
Another thing is that, during the Great Recession, the 2-3 years experience for “entry level” jobs were common. I’m hearing from some people that it’s STILL common. Can anyone verify or deny this? This would help also explain if the job numbers are real? If they are demanding all of this experience with no training for “entry level”, then clearly the economy isn’t that great.
Echoing Bill Freeto, many years ago Merrill Lynch hired me to re-train its recruiters (at the worldwide corporate offices) so they could recruit like headhunters do. During the sessions, we reviewed specific positions and how the recruiting was being done.
They needed people to manage hedge funds. The recruiters were instructed to find physicists for these jobs. I asked why. “Because physicists get the best training in mathematical modeling, and that’s what the job requires.”
Turned out many of the people in those jobs were, in fact, physicists. It was an aha experience for me about transferable skills.
Nick, please let me know if you ever need to find more physicists. I have a Ph.D. and I am awesome in mathematical modeling.
@Mathew: Deal :-)
@MollyG and @Kevin:
I think that having a good brain (in this case a really good brain) is readily “transferable” except perhaps in cases of transferring to other specialties that also require higher education. The question that comes to my mind isn’t what work a nuclear physicist isn’t qualified for, but what work, or what subject matter, grabs the nuclear physicist’s attention enough to make them pursue that as an alternative.
Eliyahu Goldratt was trained as a physicist (PHd level) but made his mark as possibly the most influential business guru of modern times–the father of the Theory of Constraints.
A world-renowned (90 year old) micro-biologist, Dr. Bruce Ames also comes to mind. He’s never been out of work (as far as I know), but I love this statement of his in the video linked below:
“So I said, I ought to get into nutrition. And I love getting into new fields, because I read broadly in science and can often make a contribution to a new field. So I’ve been doing that–every 10 to 15 years I seem to change my field.”
I have been watching this for years. Happy to see Nick go after the elephant in the room! To those who have suffered in this economy filled with Cr#P jobs read this Nick’s analysis carefully.
It’s time to tell employers “NO”. “I want a living wage. I want some real time off to actually LIVE. Oh, and if it’s okay can I have affordable benefits so I can stay healthy and stay alive?”
Only the employees of this Country can change things. Don’t accept slavery.
Be careful, that makes you sound like a Millennial. :)
Cathy Barrera, the Ziprecuiter economist, is the real deal. According to her LI profile, she is no longer with ZR.
This article and discussion thread makes me feel better about the horrid IT subsistence job I have and why I can’t seems to get employers to respond to the new, re-tooled (through hands-on, hard lessons doing the work) me. Even when referred by a current employee. Even when the company recruiter contacts me directly about a current opening they think I would fit.
I was thinking of spending thousands on more education and certs. These IT certs are very expensive — $15,000 for a month of sitting at a PC being instructed by a remote teacher who I see in a teeny window on the screen. So the first question is: which cert should I go for? Pick wrong, and you are screwed.
If I do scrape up the cash, get through the course, pass the exams and get the paper, I have no idea or guarantee that will be enough. Someone will move the cheese. Or the mouse (me) is too old or some other excuse. A friend of mine, out of work for over a year, got all the way to the point where he was told to expect an offer. Instead he got an email saying they decided to move the position offshore. Guess he should be glad he did not get ghosted. Pretty pathetic that the process has sunk to that level.
I totally agree with the premise that contract, temp work, etc. has not only moved the cheese but has gobbled it all up. IOW, devalued professional work that still takes time, money, blood, sweat and tears in order to obtain and improve skills.
Be careful about spending money on more education/certs.
I’m also an older worker and was considering a great IT course/certification that comprised of 12 months in class training, then six months internship/co-op.
I read about an individual who completed a similar IT course and did the best in the whole class. However, this person was also the eldest in the class, i.e. late thirties, and was the only one in the class who was unable to secure an internship with an employer.
I therefore decided not to waste my money and time.
It seems Barrera’s LinkedIn isn’t up to date. A Google search puts her at Zip in April. Odd that someone in such a position at Zip would not update another major social channel… maybe she doesn’t believe in it :-)
My advice about education and certs is to beware of “education marketing.” Ignore what the schools and the media say about the value of specific education. Go ask 2-3 of the companies you’d like to work for what certs and degrees THEY actually value. If you’re getting education for career reasons, that’s the only way to go. Talk to the company you hope will pay you (hire you) for that new education!
Over the years in differing sized companies, operating in lean and fat times, I lived, as a manager, with differing approaches to recruiting and seemingly development of the people who populated the companies.
Unfortunately it was easy to become cynical about it. I had a saying, mostly to myself and carefully to others that if a company’s literature (including websites) pontificates about “how important people were in said company…..run.
Talk’s cheap. But as Erik pointed out, there are good jobs, good bases for career development, good bosses and good companies, who consistently demonstrate (not make BS claims) they actually do care about finding and developing people. Because they know you are only as good as the people in your team.
That’s why hunting for jobs is hard work…you have to find these companies.
As someone pointed out attitude counts a lot with job success. But that door swings too ways. company attitude and actions count a lot for finding and developing good people.
When executive management views recruitment & people development as an HR administrative function, you get sterile processes that insulate managers who view likewise, while obstructing managers who need the time and support to properly network, recruit and train.
Show me metrics and I’ll show you behavior. Executives who manage by HR metrics, and don’t hold the hiring managers accountable,the outside world job hunters and employees are left to wade through the crappy reality of corporate hiring apathy.
It doesn’t have to be that way. For example, Once I had the energizing experience of being involved in a massive fast growth hiring experience in a high tech company. I mention high tech because in that world, product development is King. The desire to grow was real, competitive, and the process reflected it. Management from the top down were told, “hiring is your #1 priority. Treat it as you would your highest priority development project” .and this is what made it not a bunch more BS words, …Your performance reviews will be effected..meaning it will effect your compensation meaning bonuses and stock options”. A master spread sheet was developed, maintained by the Divisional VP, circulated daily, and first on the agenda in weekly status meetings. Transparency reined. the Directors could see how each were performing. I can assure you the whole attitude about recruiting changed overnight, and moved quickly. Department heads had to move their asses or it would cost you. Quibbling over pay, relo support etc were not an issue. HR’s contribution was to insure equity which was a good task (i.e. to make sure Managers would have to justify the $ they wanted to pay & not treat others unfairly)
In these status meetings you didn’t have an exec have a ho-hom sidebar on hiring metrics with the HR VP flavored with generic excuses..You had a scenario where the chair would swivel to the responsible hiring managers/Directors and ask them…where are YOU on the hiring goals? Are YOU on track? If not why not? What are you going to do about it. And you knew next week you’re all going to repeat the process, perhaps daily if you’re way off the mark.
When you see hiring handled as a priority project and responsibility, tied to accountability and compensation…the contrast is amazing.
When I hear stories of how companies do make good offers, with good growth opportunities, in a context of applicant and employee respect, I think I’m seeing a company where executive management does believe it’s important. Where actions speak. And those are companies to chase.
Managers in the other companies can do what’s right also, and do. But it’s soooooo much harder to fight your own company to do so.
“When executive management views recruitment & people development as an HR administrative function, you get sterile processes that insulate managers who view likewise, while obstructing managers who need the time and support to properly network, recruit and train.”
That’s a golden bit of insight!
The apparent disconnect between supply and demand is attributable to two interconnected delusions.
First and foremost is the so-called unemployment rate. These statistics are lies, plain and simple. Real unemployment is still very high, three or four times the official rate.
Second is the idea that older, long term unemployed have “given-up”. We have not given up on working, but most employers have given up on considering us for employment, it is an important distinction.
All that being said, it is easy to see that there is still a huge supply of potential workers sitting on the sidelines ready to take jobs as offered, so there is no real pressure for wage growth, just bored financial journalists looking for drama and click bait headlines.
You just wrote the truth. If only the news media had more reporters who dug for the truth.
This is a consolidated reply to two separate comments above:
Scott wrote at 6:23pm on July 10:
“…One issue that I’ve seen raised is that those who have been out of the work force for a while are on the average going to be less qualified than people working…”
AmyE 8:10pm on July 10:
“…These days, tech changes so rapidly that of course (!), someone who has been out of work is not going to have the sharpest skill set…”
I disagree that people who are unemployed are less qualified than those who are employed, though agree that that is the common “knowledge” or perception. I also disagree that people who are unemployed for longer than “normal” periods (but remember the “new normal”) don’t have up-to-date skills. That may have some applicability to those in IT, but not for the vast majority of employees who use that software. Even worse, the common “knowledge” is that people lose their skills. Bunk!
I ask anyone to think about this as it relates to themselves personally (especially the smug employed HR Directors of Talent Acquisition): if you were unemployed for over a year, what skills do you think you would lose? Please be specific. Do you really think that things move THAT fast that if you miss 1-2 years that your profession or industry has changed that much that all your previous experience and skills are irrelevant? I suspect not. You’ll still know how to use Excel at some level of proficiency (whether that was the level of the lazy dolts for whom Microsoft created the Ribbon of Death, or guru level).
Will you have lost your ability to think? To conduct research? To analyze a problem? To communicate with colleagues, customers, and vendors? Not on your life.
I’d actually argue that intelligent, creative people get smarter when they are unemployed because they are removed from the group-think, hive mind mentalities and corporate cultures that are the rule these days, thanks to the collectivist mindset of HR and far too many corporate “leaders.” Oh, and that’s another one. If you’re an effective leader, do you somehow lose that trait by being our of work for 1-2 years?
What the vast majority of us do at work is not like playing tennis (or any other sport), playing a musical instrument, being able to write legibly, or speaking a foreign language. In order to keep these skills at a given level, one truly must exercise them regularly, to the same degree as before.
But our ability to THINK does not atrophy and die just because we are removed from the mind-numbing world of Dilbert for a period that the business world sniffs at and looks down upon. Of course, this assumes that there are employers out there who truly do want there employees to THINK, and to do so effectively, critically, and creatively.
Here’s a little anecdote from US business history pertaining to E.H. Harriman:
“Once, when [Harriman] saw an officer at a desk littered with paper, he said: ‘I want to find him leaning back in his chair with his feet on the desk—thinking! thinking!’” [so much for the alleged virtue and skill of multitasking, eh?]
Another thing that is especially pernicious about the B.S. government “unemployment” numbers—and the fact that the vast majority of employers believe them—is that that puts the long-term unemployed in an especially bad light. After all, if we’re at peak employment and historically low rates of unemployment, then anyone who has been unemployed for a longer period OBVIOUSLY must be a loser, unqualified, unemployable. After all, according to the common “wisdom,” anyone who is employed is more qualified than somebody who isn’t—ipso facto.
@Bill Freeto: Nice job debunking a truly lame excuse from employers and recruiters. Wharton’s Peter Cappelli has again and again shared evidence that those claims are bogus. Today’s work force is no less skilled or talented than any earlier work force.
“The skills shortage” is a ruse manufactured by failed HR execs who start consultancies and publish white-paper (“best practices”) blather and sell it back to their old employers.
It’s time for a Congressional Committee to look deep into what’s the truth in the employment industry, because the B.S. is just too deep for most people to wade through. And it’s affecting our entire economy.
I agree with you about the perception, but while I said “on the average” that does not mean that there aren’t plenty of long term unemployed with tremendous skills.
I was doing a job fair, our company only, when a guy came up to me and told me that because he was long term unemployed no one was going to hire him. I told him that I understood that this was common, but we’d be interested if he had the right background. He didn’t even want to give me his resume. So people might be shooting themselves in the foot.
As for aging IT workers, well I was one. An employer has to balance the lack of knowledge of the latest and greatest language or app with the experience one gets from having seen it all before and not making rookie mistakes. Learning new things takes time, which is why college is for most people a full time job. With the lack of interest on the part of employers for training people on the latest and greatest, you have to expect they will fall behind.
@Bill: Thank you for stating the obvious about those of us with real experience as opposed to those who seem to just vomit up the same old, same old prejudices. :)
I’m a freelance advertising art director. When I started, about 20 years ago, agencies would hire me for a day rate, and those gigs often lasted months, sometimes a year or more. Now the industry is full of middlemen, and I can’t figure out where they came from or why agencies use them. They want to give me half of my rate, and they take the other half–yes, a full 50%. They embed themselves in some businesses, promise being to the employer that they’ll vet the hires and handle pay roll, so if you want to work for that company, you have to give up half your rate. On the flip side, they’re taking a creative who’s happy with half my rate, and billing the company full rate, as if that more junior person has my experience. They’re scabs.
Worse than that, I met a company who is siphoning off “below the line” pharma creative work from agencies. They have account people on staff, but bid out their projects to freelance creatives, and the jobs pay very little, 1/3 or 1/4 of what it should. When you’re bidding blind against each other it’s a race to the bottom. They’ve suctioned off real jobs from agencies, jobs that used to pay people benefits, and now those people have to bid against each for scraps of work. I did one project and decided it wasn’t worth my time.
sorry for the rant. I wish I knew how I could affect some change on this issue. I feel like it’s going to be 20 years before the gig economy gets fixed, but by that time, my career will be well over.
@KR: This is what I mean when I say middlemen are sucking the value out of the employment system. They pay ridiculously low rates to the actual workers and keep outlandish “overages.” Why do employers use them? Good question. I think a lot has to do with the fact that contract labor is logged differently on the books than regular employees.
Does anyone know what the true unemployment rate is? I read somewhere that right now it’s around 20% where it was 22% in 2016. Sorry, I don’t remember where. If this is true, that explains why the hiring system is broken – plain and simple. It also explains why employers don’t have to be “nice” to applicants.
@Kevin A: I mentioned the ShadowState alternative unemployment measurement in two separate comments above (the first time I provided links to the website, which I recommend reading). Search for my name using edit-find and you won’t miss the comments in question.
ShadowStats, not state.
Kevin, the US government compiles several measures: https://www.bls.gov/news.release/empsit.t15.htm but highlights the U3, which many feel paints an unduly rosy picture.
In addition some reputable NGOs such as ShadowStats: http://www.shadowstats.com/ publish their own figures.
@Kevin A – The real unemployment rate as of June 2018 was 21.5%, or depression (not recession) level. And, the modest June increase in the cultivated CPI does NOT reflect surging consumer price increases. There are 56 million Americans (46 million citizens and 10 million residents) of working age (25-65) now on the sidelines, not counted in the workforce having given up on finding a job.
I follow economic statistics. I must have masochistic tendencies. It is always this depressing.
Why is there not more public outcry about the true unemployment rate? If this is true, are we not in a depression? Why does this not receive more attention? Could it be that we are now more isolated from one another than before and are not aware? Remember, we are in the disinformation age. Fortunately I am married to a librarian who knows good information from bad.
I think it’s because few know the real/true unemployment rate.
They simply believe what the mainstream media tells them, i.e that everything is peachy regarding (un)employment.
I used to be a journalist. I worked in the industry from the 1980s through the 1st decade of the 21st century when I transitions into Internet development. I worked for some of the biggest broadcast networks and publishers in the country and saw massive change in the industry during that time. The issue is not the “mainstream media” – a pejorative and a cop out in my opinion. The problem is lazy media consumption following the GOP’s abolition of the fairness doctrine. In an age where information and media is literally everywhere, and propaganda now passes as journalism for the unquestioning, anyone who fails to educate themselves by seeking out multiple sources on a topic is wholly responsible for their lack of knowledge and misunderstanding of a subject. Nobody is going to spoon feed it to you. The flip side of freedom of the press in this climate is the responsibility of the public to know how to critically consume all the information that is available to them.
@Robin: Your comments regarding the changes in the media are valid and true. What passes for “media” today is often talking heads, commentary, and opinion. Depending upon your personal political persuasion, you can now select the media that validates and reinforces your worldview instead of challenging it. I find it more difficult (but not impossible) to find basic reporting of facts without all of the opinion. I’d prefer to form my own opinions from the correct facts, not be told what to think. Even watching three different media channels for news over the past couple of days showed me widely varying reports to the point where those who would not try to do their own research would wonder if those channels were reporting on the same story (they were).
As Nick has mentioned multiple times the job market is broken. Companies seem to be doing more work looking for employees and job candidates are doing more work trying to find jobs but the match never seems to happen. Something seriously wrong here.
A buddy of mine alerted me to a job at a local company that is employee owned. The position was filled in 3 hours.
Another company has little trouble finding new employees using this ancient technique used by the Native Americans known as training. I know it sounds a bit scary but it seems to work.
Is it just me or is management of American companies getting dumber?
:) All I have to say to this is YES.
@Anna Mouse: If a business is set up to make life better, and it strives to find excellent employees and vendors dedicated to giving customers the products, services, and customer experience they seek, then it is likely that such a company has a good employee recruitment and retention program.
It is when a company decides to be focused on maximizing profits by cutting costs, it is easy to cut out parts of a company and call it overhead. Instead of a focus on quality or bringing good things to life, it is a vehicle for making money. Good employees leave. Vendors don’t want to sell to them, and customers look elsewhere.
Then people wonder why they aren’t making money. I can tell you why. You need CUSTOMERS willing to pay for your offering, employees dedicated to providing it, and reliable vendors who give you what you need to make it all happen.
My brother in law is in management for an electronics component manufacturer – and he says European companies treat their employees better (I work for a European company.). We in the USA can learn from our overseas counterparts.
When liars figure, figures lie.
First, kudos to Nick and the commenters for outstanding analysis.
1. Consolidation in most industries leads to the realization of scale economies (ability to operate more efficiently, including the elimination of positions). Fewer available jobs means lower pay.
Some have described this phenomenon (correctly) as labor market monopsomy: fewer, larger employers means that employers have more leverage to keep wages low. Result: wage stagnation.
2. Growing reliance on technology relative to labor. As machines do more work, workers become less highly valued. Result: wage stagnation.
3. Globalization. As supply chains become international, many jobs are moved offshore to low-wage locations. This further depresses the negotiating power of U.S. workers. Result: wage stagnation.
4. Decline in unionization. Unions not only increased the wages of unionized workers, they also forced non-unionized companies to increase worker pay in order to compete for labor. As the percentage of unionized U.S. jobs has shrunk, U.S. wages have stagnated.
5. Unemployment statistics issued by the U.S. government do not include those who have been unemployed for more than a year. This category includes a lot of people. So the actual unemployment rate is considerably higher than the figures put out by the Bureau of Labor Statistics. Higher unemployment means that workers will accept lower wages. Result: wage stagnation. (The higher number of long-term unemployed is reflected in the relatively low U.S. labor participation rate.)
Nick, your writing is awesome. This article is raw, honest, and I can identify with it as I am 50, recently “downsized” and have been getting all kinds of offensively dishonest reasons why I was not selected for positions that the interviewer was initially supremely excited to talk with me about.
Reading your article has enlightened me greatly and validated not only the fact that my gut feelings are spot on, but also gives me the reassurance that I am not alone in the army of people disaffected by the manure that our puppet government feeds us abut this great and wonderful economy. I am a 25 year veteran of programming and I have been taking on cash jobs as a construction laborer to survive rather than taking the excrement that these employers call “offers”.
Half the pay, 60% of the vacation, and no benefits? I would rather be free and poor on food stamps and live under a bridge than sacrifice my entire life to be a financial slave with no free time or money to enjoy the 2 days a week I use to recharge for the next 5 days of condescending punishment.
Either make me a legitimate offer, or hire the H1B and force them to take your comical pittance. This is a partnership, not an offer for indentured servitude.
What kind of programming do you do? What geographic region are you interested in? In all honesty, one can program from anywhere. In my office we have a whole crew of software engineers – most of them over 50. In fact, I was hired at age 50, and I’m 53. (I’m a hardware engineer, but I also do software).
I might have some ideas.
@Will: Thanks, but I wish I had some magic dust to sprinkle. I started headhunting in Palo Alto in 1979. I watched the Valley go through cycles. Boom. Bust. Engineers would get huge offers on the spot, plus bonus, sometimes a BMW. They were buying houses in the nicest areas. Then we’d see the bust. Engineers lost their highly leveraged houses and their jobs and were living in their cars.
The recruiting and hiring practices changed accordingly. On the way down from the peaks, companies fired people without a goodbye, much less severance. Loyalty? Huh. On the way up, companies found themselves short on talent and would dangle all kinds of incentives. They’d beg engineers to come work for them.
This pattern continued until any idea of loyalty went down the toilet. It’s far worse now. Employers see workers as fungible assets. Replaceable parts. Pay has dropped. Many jobs aren’t jobs: They’re short-term gigs without benefits. Yet employers complain they can’t find the talent they need.
What gives? I think you’ve got the idea. Suffering through this is no fun, but someone has to have some standards. If only everyone could pull together and say NO. I’m no fan of unions because during my lifetime many unions became as corrupt as many of the companies they supposedly “fought” on behalf of workers. I’ve never been a joiner. I prefer the power of the individual. But now I think I see where cooperation among workers came from and how unions arose. So what’s the answer now? I really don’t know. The happiest people I know are people like you — they live by a code.
Something’s gotta give, and it will. Meanwhile, keep on truckin’. :-)
@Nick: My limited experience with Silicon Valley employers is of companies wanting you to jump through lots of hoops like a trained animal. I simply won’t put up with many of the shenanigans that such employers have resorted to, and neither will many experienced people.
For me, it is often a question of whether I do well on my current job or prepare for an interview for a job that I have not been offered. At this point I cut the potential employer loose.
Next week I am going on an out of town interview for a company that also has offices in my town. The pay would be much greater, but I will see where they are in reality. I probably will not accept a position if offered HOWEVER if they are serious enough about me to prepay a trip, I can work to maintain a working relationship with them for any future potential work with them.
It all began with a retained recruiter contacting me and spending a lot of time talking to me. Most recruiters hear “not interested” and move on. This one did not.
As a companion piece to this thread ..
A simple chart can speak thousands of words!
@Doug: I can’t thank you enough for posting that link. I’ve never heard of that publication, but it includes information I’ve been looking for.
Sorry I’m replying over a year later ..
Honestly, I just don’t come here often ..
Maybe once a month, if that ..
And I’m usually checking for the latest thread ..
I just happened to come upon this today and noticed for the first time I actually got a reply from someone ..
1+ year later, and not only has nothing changed, but we can accurately say things have gotten worse?
People wish to blame things on a fake pandemic, knock yourself out ..
This is a false-flag medical emergency event .. (see Dr. Jim Willie — The Golden Jackass)
My response is I am both happy (that you like my contribution), and sad (my situation has not changed from being a “discourage worker” since the summer of 2012) ..
We have really got to think “out-of-the-box” on solutions here ..
Frankly, I have nothing at the moment ..
I’m ALL ears!