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Your First Job: 20 pointers for new graduates

In the September 18, 2018 Ask The Headhunter Newsletter a new grad’s dad expresses concerns that employers aren’t rewarding highly credentialed new graduates fast enough.

Question

My son, who earned an advanced STEM degree, was hired by a firm which was highly impressed by his education, and emphasized how important it was to have someone with his qualifications joining their team.

But several months into the job, he realizes that the work he has been given could easily be done by someone with only a bachelor’s degree. He is upset that he is not being challenged, but my concerns are more prosaic and practical. If he doesn’t have the opportunity to use his ability to “hit home runs” for his employer, there’s really no reason for them to reward him handsomely, and he isn’t developing the skill set that could cause another employer to pirate him away, and reward him handsomely.

So, my question is, did the employer deliberately lie to my son to get someone with his qualifications to join them, or did they lie to themselves, like the owner of a diner I know who sought out a Paris-trained chef, when all he needed was a guy who didn’t burn the eggplant?

Nick’s Reply

You’re blessed to have a son with an accomplished academic background. But I’m afraid you’re suffering from the same malady a lot of Millennials seem to have. They expect to hit the ground on their first job “being challenged,” “tackling great opportunities,” “hitting home runs,” “getting rewarded handsomely,” and quickly “developing new skill sets that will just as quickly get them recruited away” from their first employer… and “getting rewarded even more handsomely.”

Right out of the gate.

Are schools suggesting to students that wild success will be their experience once they get a job? Or are schools failing to give their students a realistic idea about the roadblocks they’ll encounter? Maybe they’re not teaching them how to recognize roadblocks or how to deal with reality.

Expectations about new jobs

It’s altogether too easy to offer sanctimonious advice to young people about the realities of a first job. In fact, I discourage that because it’s the naivete of every new generation that frees it to create something new under the sun. I love watching young people pull off great feats because they don’t know what is supposed to be impossible — so they risk everything to attempt anything. I experienced that when I started my career in the nascent Silicon Valley. I expected great success while I stumbled over obstacles I didn’t expect to encounter.

But I think attitudes about success are another matter from expectations about jobs. When I get a chance to speak to groups of students and new graduates about jobs and careers, I try to give them an honest picture of the roadblocks they will encounter. It may seem harsh, but I think it’s the truth.

The underlying questions here are whether the realities of work are roadblocks — and what new grads can learn about how to deal with them. I’m offering no answers. Just some pointers that I hope inspire a fresh new generation of workers to develop healthy attitudes about success so they can pull off the impossible.

20 pointers for new graduates

Whatever you’ve been told by the school you attended, this is likely what new graduates will find at their first jobs. Be prepared.

  1. Your academic credentials get you hired, because you have little or no experience that an employer can judge you on.
  2. Once you’re hired, your credentials don’t matter.
  3. Once you’re hired, what matters is your ability and willingness to learn the job and business you’re in. Especially if it’s your first job, that takes all your time, devotion and hard work.
  4. When you graduated from college or grad school, you were at the top of your academic game. You were a star with great prospects.
  5. Once you start work, you’re on the ground floor, on the bottom rung, low person on the totem pole, the plebe, the newbie, the unskilled and clueless neophyte that needs to prove themselves all over again.
  6. A job is not school.
  7. School is where you pay to learn what you want. A job is where you get paid to do whatever your employer needs you to do.
  8. In school, the work you do accrues 100% to your knowledge. At a job, the work you do accrues 100% to your employer’s profits. Hopefully, some of that accrues to your acumen. Most of it won’t – because that’s not why you were hired.
  9. Employers don’t pay you to be challenged. They pay you mainly to do boring work.
  10. The job you’re doing could probably be done by someone smart with less education. But they hired you because they expect you’ll go farther than someone with less education – if you’re willing to work as hard at your new job as you did in college.
  11. Employers don’t hire you out of school because they want home runs. They hire you because they want someone to carry water, clean the bases and tidy the dugout. They don’t tell you that in school, because if they did you might not pay to get an education.
  12. Your employer has people that hit home runs – but damned if they’re going to hand you a bat right out of school because they hope you’ll hit .500.
  13. Your employer won’t put you in the game before you prove you can field 10,000 balls flawlessly. Pro athletes spend most of their time practicing.
  14. The challenge when you start the job is to do what you’re told by the people who are paying you. They will expect you to do that job a long time because they really don’t want to start all over again with someone else.
  15. You will be paid what they promised you – and it’ll likely be far from handsome.
  16. Your reward is not your salary. Your reward is being permitted to come back each day to keep doing your small part – not to swing for the bleachers.
  17. Practice will take years, a step at a time – and you don’t get special rewards for making it to the next step. See (10).
  18. You won’t be worth recruiting away for a long time. Trust me. We headhunters don’t get paid big fees to recruit newbies. There are millions of you. Hiring any one of you is free.
  19. You’ve heard the rule about how it takes 10,000 hours devoted to doing one thing before you become an expert. Do the math. Even if you get to spend half your work day practicing that one thing, it will take years to become the expert that another employer will recruit. (More likely, you’ll spend 90% of your time on busy work.)
  20. The good news is, if you focus on doing your job so your employer profits handsomely from it, your skills will grow and you will be successful.

Roadblocks or realities?

I don’t think the employer lied to your son or to itself. Rather, someone — His school? The world? — lied to your son when it suggested work is about being challenged, hitting home runs, getting rewarded and getting recruited for a million-dollar salary. That’s not what work is about.

Those things are what expertise and success are about, but first come the realities and the roadblocks. The things your son wants for himself he’ll earn through persistence, patience, dedication, apprenticeship and hard work. Likely one step at a time.

Don’t be confused about the owner of that diner. He will hire a Paris-trained chef when he can – because most kids fresh out of school will burn the eggplant, and that will quickly put a diner owner out of business.

Please tell your son to give his career a chance. There are roadblocks and there are realities. He cannot deal with them by pretending they don’t exist.

Am I being too harsh on ambitious new grads? Probably. I don’t mean to sound discouraging. But I’m afraid misconceptions abound about big bucks and quick success. What would you change in my 20 pointers? What would you add? More important, what are the best ways to overcome or avoid some of these roadblocks?

If you’re a seasoned professional, this is your chance to advise and mentor new graduates like this reader’s son. Please remember: You’ve been through it. Getting a career started is painful. Maybe we can impart some lessons while lessening the pain.

If you’re a new grad, what do you want to know about your first job?

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Employee quits, boss wants her to refund employment agency fee

In the September 11, 2018 Ask The Headhunter Newsletter an employee placed by an employment agency quit, and the employer wants the placement fee refunded.

Question

employment agencyAn employee quit without notice after five months. Her explanation was that she never wanted to stay at this job from the start. We paid a hefty agency fee for this person. She never signed any paperwork with the agency, and the contract stated that employment is “at will.”

Do we have the right to go after the employee to pay us back for not being truthful? Or do we have to go to the hiring agency to see if we can get our money back?

Nick’s Reply

An awful lot of readers are laughing at your story right now, rolling their eyes, and thinking, “Serves you right!”

Why would anyone laugh? Because the recruiting and hiring process usually blows up in the job seeker’s face — not the employer’s.

But I’m not here to laugh at you. The rise of intermediaries in the hiring process has introduced mass confusion, frustration and finger-pointing on every side — employers, agencies, employees. I’m afraid everyone is culpable.

You paid the employment agency, not the employee

I can’t believe you’re serious about recovering the fee you paid to the agency from the employee. I doubt you have a contract with the employee that provides such recourse. If there’s a contract at all, it’s between your company and the agency. Take it up with them.

If the agency does a good job for you in general, don’t blame them. Once you’ve got the hire for five months, whatever happens next is a management problem, not a placement problem. You chose to make — and keep — the hire.

But first consider the pickle you’ve put yourself in.

The problem with middle men

Employers expect someone else is going to handle recruiting and hiring for them, then are shocked when things go awry. Most agencies play fast and loose because they get paid to fill a job, not to deliver the best hire, and everyone suffers for it. Job seekers suspend their common sense when someone they don’t know dangles an “opportunity” in front of them. The introduction of middle men in hiring creates chaos, poor management and terrible decision making.

In this case, everything depends on the contract you have with the employment agency, and on whether there is a guarantee on the placement that provides for a refund.

The number of employment agencies — which go by all kinds of monikers — has exploded, with the result that employers often have no idea who they’re dealing with. (See They’re not headhunters.) It’s an unusual occurrence, but it’s possible the recruiter and your new hire were in cahoots and planned the “placement” to last only until the fee guarantee expired. Then they split the fee you paid and moved on to the next sucker company. I always explore this possibility when a new hire lasts just past the guarantee, which is usually between 30 and 90 days.

But I repeat: If your agency does good work in general, then they may not be the problem at all.

There are some measures you can take to avoid the most obvious problems with agencies.

Get a guarantee from employment agency

Always have a written contract with the recruiter that includes a pro-rated guarantee period. That is, if the new hire “falls off” for any reason — whether you fire them or they quit — make sure you can get back some or all of the fee you paid. Such guarantees usually run 30-90 days and will offer a refund or replace the employee. Good agencies will negotiate reasonable terms with you.

If the contract suggests the hire will be responsible for any refund to you, run. That’s unethical and unscrupulous, and possibly illegal.

Get a no-poach agreement

Your contract with the agency should prohibit poaching. That is, the agency cannot recruit the person it just placed with you — or any other employee at your firm — for a year or more after the last placement the agency made at your firm. This can be even more restrictive if it prohibits placing anyone who has left your firm in the past year or more. Some headhunters don’t like such clauses, but they promote healthy business relationships.

I would nose around. Did the agency that placed the employee with you recruit her out or place her elsewhere? Good agencies never do that.

Understand that “at will” employment cuts both ways

As I said above, it’s usually employees who complain about being terminated without any explanation in states where employment is “at will” by law. What’s your company doing to make sure it’s a good place to work?

Barring some kind of contractual obligation or regulation, you can no more prohibit someone from quitting a job than you can be prohibited from terminating them.

Check the agency’s references

Check the employment agency’s references as well as the specific recruiter’s references before you do business with them. I’ll estimate that 90% of pitches you get from recruiters will end when you ask them for references. Work only with recruiters whose skills and reputations you have confirmed, or don’t be surprised at the consequences.

What to do next

At the very least, I’d call the agency in for a face-to-face meeting to discuss what happened as well as the terms for next assignment. Assess whether you trust the recruiter. I would not necessarily blame the recruiter if they did everything else right.

If your relationship with the agency is at e-mail’s length because they’re not in your city, then consider the value of working only with local agencies.

But don’t expect any agency is going to refund your money after five months. Read the refund deal in your contract. Some of this falls on you, but I understand your frustration. New employees feel the same way when they quit a job for a new one — only to get fired suddenly a few months later without explanation.

If you learned too late that the employee didn’t really want the job from the start, I suggest you improve your recruiting and interviewing processes — and how you manage. Always remember that while you can fire at will, an employee can quit at will. (This depends on the laws in your state.) I’m not a lawyer but my guess is, if she did the work and you paid her for it, no one is obligated to continue the employment — you or her. It’s up to you to get to know your workers well.

You should check with a lawyer so you’ll know better next time, but chalk this one up to experience.

This is one reason why it’s worth cultivating your own pipeline for recruiting through your own trusted sources who will put their own reputations on the line when they recommend someone. If you’re going to use an agency, it’s best to meet a good one through your trusted sources before a lousy agency takes advantage of you.

If you’re an employer, what’s in the contracts you sign with employment agencies? How do you protect your company? If you’re a headhunter, recruiter or employment agency, how do you help ensure your client’s (the employer’s) satisfaction? If you’re the hire who was placed by the agency, would you consider refunding part or all of the recruiter’s fee if you decided to quit the job?

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Should I return my bonus if I quit my job?

In the August 28, 2018 Ask The Headhunter Newsletter a reader feels pangs of guilt about keeping a bonus.

Question

bonusWhen I was given my performance review they told me I was at the top end of my salary grade. Instead of a raise, I was given a 3% bonus that came on my last paycheck. Depending on the outcome of a recent job interview at another company, I might be resigning in a few days.

I feel guilty keeping a bonus that I got just before I quit! Had it been a raise, it would have been spaced out over a year. Should I offer to return the bonus when and if I tender my resignation?

The new job is in a field I have wanted to return to (consulting). I’m not counting any chickens before they hatch, but it looks good and the job offer could be as much as a $20,000 increase in my salary. I could stay here, but it would be foolish to pass up an opportunity to return to a field I love with such a dramatic pay increase and career advancement.

Should I return the bonus?

Nick’s Reply

You should use your own judgment, but based on what you’ve said, I see no reason to return a performance bonus. Here’s why:

  • A salary increase is prospective – it pays for future performance.
  • A bonus payment is retrospective – it’s a reward for past performance. That’s why it comes as a lump sum and is not recoverable by the employer, unless they made you sign something to the contrary.

It’ll be interesting to see if they ask you to return it. I’m assuming you didn’t sign any kind of claw-back agreement that would empower the company to take the money back — or you would have said so. As long as that’s accurate…

You earned the bonus

I would not return it. Of course, your employer may be upset about that, but that’s life and that’s business. Your employer chose to make it a bonus, not you. If they actually intended the bonus as some kind of compensation for your future work — or as an incentive to stay in your job — then they should have defined it that way and spread the payments over the next year. But it seems clear you earned the bonus for performance you already delivered.

The only other issue is, are you worried about burning the bridge? If you are, then act accordingly. But, in my opinion, if they expect the bonus returned, they’re being disingenuous. Keep in mind, these are people who don’t believe you deserve a raise. They’re the ones burning the bridge to you.

I’d keep the money without a guilty conscience and move on. (For more about raises, see They promised a raise but won’t deliver.)

Be very careful

Congratulations on the new opportunity. I hope you get the offer you expect. But please keep one very important thing in mind: You don’t have the new offer yet.

Do not take any action on your old job until you’re absolutely sure the new job is locked down. I regularly see employers rescind job offers right up to the start date. (See Job offer rescinded after I quit my old job.) Be very, very careful.

Use your best judgment. If you’re truly excited about the new opportunity, take it and don’t look back. And keep that bonus. I wish you the best.

Should this reader return the bonus? Would you? What other factors might play into your decision? What does it mean when an employer declines to give you a raise but gives you a bonus instead? (Hint: Does a bonus affect your benefits the same way a salary raise does?)

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The campaign to kill HR

In the August 21, 2018 Ask The Headhunter Newsletter we take a hard look at the death of HR at the hands of database firms that make money when you don’t find a job — and when employers don’t fill jobs. Can HR be saved?

hr

La mort de HR

A company’s best hope for finding and hiring great workers is its own managers, because they know the work best

HR (Human Resources) may be a close second — when HR actually goes out to look for and recruit workers.

But ZipRecruiter, Indeed, LinkedIn and a league of database companies have succeeded in killing HR’s recruiting role — and the initiative of hiring managers.

Stripped of the function that once gave HR bragging rights for a company’s most competitive advantage — hiring great workers — HR now serves as little more than the fire hose that overwhelms companies with millions of inappropriate incoming job applications, and as the spigot that pours billions of corporate dollars into the pockets of database jockeys who know nothing about matching real people to real jobs.

Killing HR in 30 seconds

This is what the wildly successful marketing campaign to kill HR looks like:

This commercial — and others like it — have literally killed recruiting because they have replaced it in employers’ minds with a substitute that has no nutritional value.

Here’s how an HR vice president with a Fortune 50 company put it to me when the online “recruiting” industry first launched its brainwashing campaign:

“Executives from the online job boards wine and dine our top executives so relentlessly that virtually every dime of our recruiting budget now goes directly to them. I can’t get a few bucks any more to take a candidate to dinner to actually recruit them!”

A massive marketing campaign driven by database jockeys has replaced people — workers, job seekers, the actual talent — with automated streams of keywords and database records. Employers have de-funded real recruiting to the point where the task no longer has anything to do with actively pursuing, seducing, cajoling, convincing the best people to join your company.

A powerful, long-running marketing campaign has successfully sold the idea that “recruiting” no longer requires talent to do it, like other jobs require talent. “Recruiting” is now the automated churning and turning of databases. (See Job boards say they fill most jobs. Employer says “LMAO!”)

How can a 30-second commercial kill an entire profession?

The insecurity of HR

The success of this campaign to automate recruiting and bury HR is due not only to its persistence, but to the acquiescence of the HR profession itself.

With few notable exceptions, HR executives and professional associations across the board have slit HR’s throat and outsourced HR’s key job to database jockeys who have wowed them with “high tech solutions.” The HR profession as a whole was never very secure in the C-suite, and never very bright, so it folded quickly when fast-talking salespeople embarrassed its leaders with big terms like “algorithm” and “database” and “intelligent agents” and “semantic processing” — terms so misapplied and misconstrued in the HR context that they are laughable.

Loathe to admit their ignorance, HR leaders feigned excitement while their “HR consultant” brethren fed them white papers about the newest “best practices” that should be “implemented in software” immediately. (See HR Technology: Terrorizing the candidates.)

So, HR arrived fully brainwashed into a new era and promptly ran the talent ship aground in the shoals of the job boards, taking big parts of the economy down with it.

The brainwashing of HR

TV commercials like the one above from ZipRecruiter pound four dangerous ideas into the heads of corporate leaders, HR executives and hiring managers.

  • Recruiting and hiring are nasty work nobody wants to do.
  • Recruiting and hiring are very difficult tasks.
  • Nobody is good at recruiting and hiring.
  • ZipRecruiter (and Indeed and LinkedIn and other database companies) will do it for you if you pay them.

The trouble is, none of that is true. Those are some of the most dangerous lies ever created by marketing copy writers.

Count the lies

Recruiting and hiring are mission-critical tasks best done by you and your company — face-to-face, not by diddling a keyboard to pay a middle man who pretends to do it for you. Recruiting and hiring are so critical to your company’s mission that leaving them to firms that have no skin in the game is not only irresponsible — it’s an insane fool’s errand.

So, is it insanity or foolishness that leads employers and their HR departments to buy what the database jockeys sell under the guise of “recruiting?”

Please watch the commercial above. It’s short — 30 seconds. Here’s what the guy says:

“Hiring was always always a huge challenge. Endless hours on job sites with not a lot to show for it. Then, I found ZipRecruiter. They figured out hiring. I post my job. They put it all over the web. And they send me the right people. Because their technology is smart. ZipRecruiter often sends me the right person in 24 hours.”

Count the lies.

1. “Hiring was always always a huge challenge.”

The truth: Hiring is your job; your number-one job. When ZipRecruiter characterizes hiring as something “huge” — something beyond you and your company — Zip disparages you and insults you. It also convinces you that the most important part of your job is a problem you should unload.

2. “Endless hours on job sites with not a lot to show for it.”

The truth: If you’re spending endless hours on job sites, diddling databases, and sorting keywords, then I guarantee you have nothing to show for it — because that’s not where hires come from.

But that’s what ZipRecruiter sells — databases and keywords!

Zip, Indeed, Glassdoor, LinkedIn and countless others of their ilk sell an excuse for not recruiting and hiring.

If you want something to show for your recruiting efforts, invest your time participating actively in your professional community, cultivating and meeting the movers and shakers and opinion makers who know all the best workers. Share valuable experiences with your peers and they will lead you to great people you can hire. No one ever wasted their time talking with peers.

3. “Then, I found ZipRecruiter. They figured out hiring.”

The truth: This is the biggest lie. ZipRecruiter and its ilk have not figured out hiring. They figured out their own business plan: how to make money.

The marketing trick is to convince you they are on your side, helping you do your job. But spend 10 seconds thinking about the business model behind these operations and you will see the blinding flash of the obvious:

  • These companies make money when you do not fill jobs.
  • They make money when you keep searching their databases looking for hires.

If ZipRecruiter had figured out hiring, its home page and its marketing would blare out audited metrics about employers’ success rates when they pay Zip for lists of job seekers. But that’s not what Zip has figured out, and it’s not what Zip is selling you or what you’re paying for.

Here’s what ZipRecruiter blares out on its website — this is what your company is paying for:

ZipRecruiter makes money when you keep paying for job applications — not when you fill jobs. I can find no metrics on Zip’s website and no evidence that ZipRecruiter has “figured out hiring.”

If you work in HR and this strikes you as an unreasonable criticism, call me when ZipRecruiter starts charging you only for the applicants you actually hire.

4. “I post my job. They put it all over the web.”

The truth: If you work in HR, or if you’re a hiring manager — you know, one of those people who pays ZipRecruiter to deliver millions of candidate applications — you can put your job posting all over the web yourself. While it’s true Zip does that, too, you don’t need it. The secret sauce of the web is that it’s designed so anyone can find anyone else easily.

Why would any HR manager with a brain want their job opening posted “all over the web?” What you get for that is 49,106,149 candidate applications. Is that what you really want? Because more is not better. Perhaps the single biggest talent problem HR faces today is overload. Having access to every resume on the planet — but no way to find actual people — has resulted in a kind of catatonia that HR executives disingenuously refer to as “the talent shortage.”

5. “And they send me the right people.”

The truth: ZipRecruiter makes no claims about how often it sends employers “the right people.” That’s left to the actor playing the restaurant owner in the commercial.

Let’s do a reality check. Not to pick on ZipRecruiter alone, let’s check another major “online recruiting service,” Jobvite.

In an April 4, 2018 press release Jobvite “announced that it has surpassed one million jobs filled, with 270,000 hires in 2017 alone.” Then it claims, “Nearly 54 million jobseekers [sic] visited a Jobvite-powered hiring website in the past year.”

We’re looking for success metrics. Do the math. 270,000/54 million is 0.5% — a one-half of one percent success rate for job seekers. While one might argue that there cannot possibly be a job for every job seeker, the more evident problem is that a robustly designed system should not indiscriminately snort 53,730,000 job seekers just so it can spit out a fraction of 1% into jobs.

Finding the best people to recruit is not a database problem.

Hiring is not a database problem.

Let’s do another reality check. ZipRecruiter claims it has “over 8 million jobs.” The U.S. Department of Labor reported on June 5, 2018 that there were only 6.7 million jobs available during the month of April. Ask any job seeker — they already know something is very wrong with all those job postings.

Let’s ask the restaurateur, just who are the “right people” for 1.3 million non-existent jobs?

6. “Because their technology is smart.”

The truth: The manager in the commercial closes his laptop after apparently posting a job.

How has ZipRecruiter solved his “huge challenge” of hiring so quickly? How has Zip made it so easy for him to find talent?

It’s frighteningly stupid. Zip has eliminated the very best filters in the hiring process. Zip has cut out all the humans with specialized training in Human Resources, Engineering, Finance, the restaurant business, and a multitude of other professional disciplines — all the humans who are qualified to judge the myriad qualities that make the best candidate special. None of them are needed in this business model. Zip has made it all easier by replacing expert judgment with recruiting technology so trivial it has generated a false talent shortage.

Yep, the truth is, all you folks in HR are superfluous. All your company needs is someone in Accounting to make an automatic payment to ZipRecruiter, Jobvite, and any of the other databases loaded with millions of job seekers. (See HR’s submission to ZipRecruiter.)

Ask any job seeker. They’ll tell you they feel like a drop of water in a fire hose turned on employers — one of the 49,106,149 applicants delivered in the sales pitch Zip makes to employers.

Except when Zip promises just the one right person, delivered the same day.

7. “ZipRecruiter often sends me the right person in 24 hours.”

The truth: ZipRecruiter doesn’t dare tell you just how often the woman in the video — who just waltzed into the restaurant — gets hired. (The marketing magic implies she gets hired instantly, the first time.)

Zip offers no success-rate metrics (audited or otherwise) about hiring or getting hired. The guy in the commercial does that.

ZipRecruiter CEO Ian Siegel has raised tens of millions of dollars in venture funding for his company (see recode), valuing it at close to $1 billion. While he offers no explanation on his website about how he finds jobs for people — or how he fills jobs for employers that pay him to deliver tens of millions of job applications — he says he wakes up every day thinking about it.

I think he wakes up each day counting the HR departments he has laid to rest while their recruiting budgets have been redirected to his coffers. I’d like to introduce him to the former HR executive who told me, “I can’t get a few bucks any more to take a candidate to dinner to actually recruit them!”

If Siegel and his ilk are to be recognized for anything, it’s for a business model that produces profits without results. They have designed marketing campaigns that have killed off HR and what was once known as recruiting.

They don’t make money when jobs are filled. They make money when you don’t fill jobs and don’t get hired. Their business model requires that you keep paying to search their databases.

If HR is going to be brought back to life, it has to remove its recruiting prosthetics, shake off the ZipRecruiters and Indeeds that are sucking its blood, and flex its hiring muscles again. A company’s best hope for finding and hiring great workers is its own managers and a healthy, robust HR department.

Your turn

I just showed you a TV commercial that I think undermines and insults HR professionals, hiring managers and business owners by trivializing one of the most critical tasks in any business — hiring. But ZipRecruiter is not alone. We’ve discussed the stunning failures of Glassdoor, Indeed, LinkedIn, Monster, CareerBuilder and TheLadders, among others.

Here’s another example of a commercial that kills HR — from Indeed. Can you find the holes in this “#1 job site” and explain to us how the commercial corrupts HR and undermines effective recruiting, hiring and job hunting? Or am I unreasonable and nuts?

Is HR really dead? Is real recruiting a dead art? Are these commercials a marketing plot to undermine the hiring process so database jockeys can profit from the resulting mess? Maybe you think our modern hiring systems are just fine. If you think some other bugaboo makes it unreasonably hard to hire and get hired, please tell us what it is.

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Career Switchers: An interview with Wharton’s Dawn Graham

In the August 14, 2018 Ask The Headhunter Newsletter a reader complains about the difficulties in changing careers — and about the costs. So we’re going to discuss career switchers in this special audio edition! Hope you enjoy it!

Question

career switchersI’ve been around the block a few times, that is, I’ve changed jobs. It was never easy, except for one job I got from a personal referral without even a job interview. But nothing prepared me for changing professions. I’ve all but concluded it’s impossible. Even if I could do it, now I question whether it’s worth it because of the haircut I’d have to take in pay.

I’m a successful IT executive. I always wanted to work in investment banking. Everyone told me I’d better get an MBA, so I did. Even the school — a big name — promoted its program as a “career changer.” After a huge tuition bill and three years working diligently at getting into the investment world, I realize career change is a game no one wants to play with you because they’re never going to see what you can do, only what you’ve done. Employers can’t get past the labels. I tried everything from job boards to headhunters to networking meetings to expensive career and life coaches. Can you tell me something I don’t know? Should I give up?

Nick’s Reply

I wouldn’t give up, and I hope you learn something you don’t know in this special audio edition of Ask The Headhunter.

I’m going to let my good buddy Dr. Dawn Graham, Director of Career Management for the MBA program for executives at The Wharton School, answer this one. A former headhunter, Dawn is also a clinical psychologist and she hosts a weekly radio show — “Career Talk” — where I’ve been a guest many times.

This is where the fun starts! In a recent program we turned the tables and I interviewed her about career switching — and we’re going to borrow some excerpts from that interview so we can do an audio edition of Ask The Headhunter this week. (Cool, eh?)

Career switchers

“If you’re like most Americans, you will spend around five years of your life engaged in some type of job search activity. You’ll hold about eleven different positions in the course of your career, and each job search might take you six months or longer. The new normal is not only to switch jobs but to change professions — which isn’t easy to accomplish.”

That’s from Graham’s new book, Switchers, which is a how-to guide for people like you who are pursuing career change. Graham notes that the average time a person spends in a job these days is 4.2 years, so job change of one type or another is quite common.

However, she offers the same caution you’ve heard from me here on Ask The Headhunter: Job change is not as easy as LinkedIn, ZipRecruiter and Indeed suggest it is.

switchers“In our one-click world of instant access, job seekers might expect the same ease in the job search process. Technology has become a seductress, luring candidates into endless hours of internet searches and countless online applications. These methods are barely effective for even the most qualified job applicants, and career changers who rely on them don’t stand a chance. Career Switchers tend to give up not because they lack the skills to excel in their desired profession, but because they don’t have the proper search strategies and knowledge.”

Audio Ask The Headhunter

Knowing I was going to tackle your question here, I waited until Dawn and I  discussed the topic on “Career Talk” so I could share some of the audio here with you. (This originally aired on Sirius XM Channel 132, Business Radio Powered by The Wharton School.)

A radio talk show goes quickly, so it’s not possible to get into a topic in great depth — but I thought we could have a little fun with an audio edition of Ask The Headhunter and help the reader who asked this week’s question. I hope you enjoy this little experiment — and that you chime in with your own advice!

Excerpt 1

Let’s start by discussing the two main kinds of career “switch” a person might attempt: the industry switch and the functional switch. Or both! The important insight is that the traditional hiring process has not shifted to make switching easier.

      Switching careers in today's employment market

Excerpt 2

Does the hiring manager think you’re too risky a hire?

      Are some switches more difficult than others?

Excerpt 3

Headhunters and hiring managers are usually averse to risk, so they go for the easy candidates; the ones who are a clear fit with lots of relevant experience. But you may have visions of a radically new career — and none of this seems fair.

      Managers hire the safe candidate

Excerpt 4

Understanding the hiring manager’s mindset will help you deal with the natural biases of hiring managers — and with the inevitable role of emotions in hiring. What are some fundamental laws of psychology that you need to know?

      Emotions & Bias: The psychology of hiring

Excerpt 5

What you think the employer wants, and what they really want, may be two totally different things. Can a candidate figure out what a manager really wants?

      What the hiring manager wants

Excerpt 6

No one wants to take a salary haircut when they change jobs. How realistic is that when changing careers?

      The cost of switching

Excerpt 7

Do you really need more education to get the job you want? More important, does the employer think the education you’re buying is going to make you a more desirable hire?

      The myth of education in career change

Do these excerpts give you some ideas about how to change your approach to switching careers? I hope they at least encourage you to not lose heart and to not stop trying — but to modify your approach a bit.

Career Switching

On the “Career Talk” program we just touched on a few important ideas about switching careers. In her book, Dawn Graham gets into loads of detail, methods and techniques for making career switches. It’s the kind of advice she delivers every day to Executive MBA students at Wharton to help them with their career goals. You’ll have to look long and far to find a column where I’ve endorsed a book — this is one of those rare times. Switchers: How smart professionals change careers and seize success (AMACOM, 2018) is a great tutorial from an accomplished expert I respect.

My goal here, with you, is to riff on what we just heard on the audio excerpts, and to launch some discussion on how to make career change happen. Do you find the issues Graham raises helpful? Is there really a distinction between job change and career change, and is one more challenging than the other?

Have you ever tried to switch careers, either at the industry or functional level — or both? Did it work? Do you recognize any of the issues Dawn and I discussed? Do you have any suggestions on how to expand these ideas to help others change careers? If you were a guest on that edition of “Career Talk,” what questions would you have asked Dawn? (Did you enjoy the audio? Want more in the future?)

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Should I disclose autism on my resume?

In the August 7, 2018 Ask The Headhunter Newsletter we discuss what employers need to know about your autism.

Question

My son is a college graduate on the autism spectrum. Should he hint at his disability on his resume? Interviewers are surprised when they first meet him, and the interview goes south.

autismNick’s Reply

This is a tough call. A good answer depends on being able to assess your son’s condition, which I obviously cannot do. But I can offer an example that might help you think about this in a useful way.

A resume “on the spectrum”

A young man approached me after a presentation I did recently and raised the same question. He quietly disclosed that he’s “on the spectrum.” Through conversation I quickly learned that this Millennial is articulate, friendly, smart, self-motivated, a bit nervous but focused. His social skills are good. While I could see evidence of autism, I also saw the kind of enthusiasm and acumen I’d want in a job candidate.

We discussed his work skills in some detail — he’s an accountant — and I learned enough that I’d  recommend him to an employer for a job interview. But you can imagine that if all an employer sees is his resume with a disclosure that he’s autistic, the employer might reject his resume out of hand. (That might be unfair and inappropriate — and possibly illegal — but it’s what happens every day.) And that’s the problem.

A resume — for anyone, not just for a person with a disability — is an insufficient representation of who they are and what they can do. It’s a poor “marketing tool” no matter how well it is written. (See Resume Blasphemy.) I’ll tell you what I say even to top executives with stellar credentials: Your resume cannot defend you.

Your resume cannot defend you

What do I mean by that? Every resume raises more questions and concerns than it can possibly answer. A manager reading a resume thinks thoughts and draws quick conclusions — on average, in just six seconds — that we cannot imagine or anticipate. So, it’s not prudent to trust that dopey document to get us a job interview.

If your son discloses that he’s autistic on his resume, we cannot predict the outcome. An employer might make the worst assumptions and ignore him altogether. Or, they may bring him in so they can check off a box on their Equal Opportunity report, without hiring him. Of course, it could also lead to a hire, if the employer genuinely believes in staffing diversity. It’s hard to guess, and you shouldn’t try.

What your son should do is maximize his chances of getting a job interview by getting referred and recommended by someone the employer trusts.

Personal referrals can recommend and defend you

My guess is there are jobs where your son would perform well, even if he requires some accommodation. (For more information about accommodations, read this report: Employees with Asperger Syndrome.) By getting referred to such employers through a personal connection, disclosure of his autism would be done in a frank but supportive way. In other words, the person making the referral can both endorse your son and defend him when questions about autism arise.

For example, “John is on the autism spectrum, but I can vouch that for the job you’re trying to fill, he’d be great. I give him my personal endorsement.”

That breaks down the wall like no resume can. It eliminates the surprise factor. Someone the employer trusts is disclosing the disability, but in a useful context that emphasizes John can do the work and would make a good employee. Whether a job applicant has a disability or not, this is what any good employer wants to know first and foremost. It’s what leads to job interviews and job offers.

Avoid surprises, avoid rejection

When something on a resume surprises an employer, it often leads to automatic rejection. Likewise, you don’t want an interviewer to be surprised. You want them to know exactly who they’re about to meet — someone that a trusted contact has endorsed and recommended.

For suggestions about how to work with personal referrals, see:

The Preemptive Reference

Referrals: How to gift someone a job (and why)

So my advice is, don’t rely on a resume that cannot possibly defend or advocate for your son. Only someone who can personally recommend him can or will do that. I know it’s hard work to line that up, but this is the exact same advice I teach to executives at the top business (MBA) schools including Wharton, Cornell, Northwestern, UCLA, Harvard and Rutgers. No one can afford to rely on a Word document to “get them in the door,” whether they’ve got autism or not.

Get past the obstacles

Please don’t assume that lining up a good personal recommendation is a daunting task. It requires work and effort, but it’s the critical first step toward landing a new job. You might find the suggestions in this article a good start: Ask The Headhunter In A Nutshell: The short course. It’s helped many people get past all kinds of obstacles.

Discrimination in hiring is illegal. If your son believes an employer has violated the law, he should consult a good employment attorney. But his goal should be to find an employer who’s goal is to hire good workers — and my goal is to offer advice that will help your son get past obstacles that might keep him away from employers who’d love to fill a job with a good applicant.

I wish your son the best.

If you have a disability, how do you manage your job search to avoid bias and rejection? How can this reader use personal referrals to get in the door?

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Job interviews are illegal. What now?

Ask The Headhunter is usually about Q&A, but we’re going to do something different this week. We’re going to eliminate job interviews.

job interviewsI could write this column forever and not run out of material because you give me tons of great questions about job hunting and hiring, and each week I give you advice. But I have no delusion that it’s the best advice because the best advice surfaces in the discussions we have every week about whatever topic we’re covering.

You test everything I tell you, and that’s why I love doing Ask The Headhunter. But I’m going to suggest that you boldly start testing employers and the entire employment system that governs job hunting and hiring.

Question the employment system

What we do here every week is no-holds-barred evaluation and critique of whatever column we’re discussing. I like to think that’s what you come here for — for the candid, honest, respectful dialogue. I don’t think any other online public forum dares to do this.

So it occurred to me, why can’t you test the assumptions and methods employers use to match people to jobs?

  • Why can’t you question the entire recruiting, interviewing and hiring process they subject you to?
  • Why do employers dictate how this is done?
  • Why are there no serious debates about the underpinnings of the employment system that employers and job seekers alike complain doesn’t deliver enough good matches — sometimes no matches at all?

That’s the Question of this edition: What should be done to dramatically change the employment system?

I want to hear about, and discuss, your ideas — because the employment system needs a major overhaul.

What if the employment system were illegal?

To motivate your thinking, I’ll propose a scenario: Resumes, job postings and job interviews are now illegal. They’re off limits.

The iconic emblems of our employment system have been vaporized by fiat. (Just like HR departments vaporize your job applications.) Employers and job seekers cannot use the machine any more — the machine that builds and sells shopping lists of your credentials and skills, that catalogs the “requirements” of jobs (as if jobs remain static once they are filled!), and that regulates the Top 10 Stupid Interview Questions that managers rely on to predict whether you can do a job.

In a world where vacant jobs supposedly outnumber unemployed people, where job seekers ghost the employers that used to ghost them (Rude Employers: Slam-Bam-Thank-You-Ma’m), and where none of 10,000 applicants have the necessary education, skills and experience to do an advertised job — we must figure out all over again, How should employers find and hire people?

Has Nick cracked up?

If this sounds like a fool’s errand, a waste of time, or a silly exercise that will change nothing, consider this example.

Several years ago I delivered the keynote at a conference of the National Resume Writers Association. (Yep — they hired a guy who says not to use resumes to give a speech to people who make their money writing resumes.)  In the middle of my talk, I gave over 200 professional resume writers this exercise:

“Break yourselves up into groups of five. You have ten minutes to figure this out. What if resumes were illegal starting today? What would you sell to your clients instead?”

A few in the audience were visibly upset that they were paying to hear a guy tell them resumes were bad. They thought their association president must have cracked up — or that I was cracked for suggesting they stop selling resumes!

The rest of the audience lit up and went to work. They came up with some great ideas.

My favorite: One team suggested a new business model for themselves. They’d organize coffee hours or cocktail parties for groups of their job-seeking clients with hiring managers “to get them out of their business environment and bring them together in a social environment to loosen up a little and talk about their work.”

This group figured people might pay for a service like that. Done right, I think people would.

If a hall full of resume writers can smash their business model, surely we can upend the employment system and come up with good ideas to replace it.

Would you like to audition?

I’ll give you another example of startling ingenuity applied to fixing the employment system. In a comment he posted to a recent column (Weird Tales of Job Offers: The new hire who disappeared), reader Tim Cunningham suggested nobody should take a job without a no-fault audition.

“An employer and employee should have a short opportunity to judge the fit of the new situation for both parties with minimal risk. Just make a one-week mutual audition a part of the job offer.”

That is, an employer shouldn’t hire anyone, and no one should quit (or give notice at) their old job to take a new one, until both have had a try-out. Imagine how profoundly that would change things.

Job interviews are illegal

This is your chance to burn down the house and design a new one. And don’t feel guilty about it. None other than Laszlo Bock, the head of Human Resources at Google, told the New York Times that his company ran a big data analysis:

“We looked at tens of thousands of interviews, and everyone who had done the interviews and what they scored the candidate, and how that person ultimately performed in their job. We found zero relationship. It’s a complete random mess…”

Job interviews really should be illegal because Bock says they’re worthless as predictors of job success. Google announced this in 2013, and HR is still paying LinkedIn, ZipRecruiter and Indeed to schedule — what do we call them? — job interviews?

So please have at it, folks. Job interviews (and resumes and job postings) are illegal. So, what now?

  • What’s the smartest thing to do to get paid for doing work?
  • What should a manager do to get work done?
  • Do people and work have to be “found?”
  • How should we decide whether it’s a good idea to work together — and that it’s going to pay off?
  • What’s the best way to assess a person’s fit to a job? Does that even really matter?
  • If, as Tim Cunningham suggests, we should do auditions, how would that work?
  • If, as the resume writers suggested, there’s a better way for employers and the talent to dispense with the formalities and get to know one another — what is it?

What should be done to dramatically change the employment system? All comers are welcome: Big ideas, little ideas, seemingly crazy ideas, and especially ideas that work better than the system that doesn’t.

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How should I ask for an overdue raise?

In the July 24, 2018 Ask The Headhunter Newsletter a high-performing reader is looking for a raise.

Question

raiseNext month I’ll have my three-year performance evaluation, and I feel that I am worth more than my current salary. How do I convey the message that my job is worth more and ask for more money?

As my company has grown, so have my responsibilities. I’ve really stepped up to the plate. I’ve earned recognition, but it’s not reflected in my pay. Through discussion with peers in the industry, I have learned that the average salary is much higher. Could you please advise me how to approach my boss during the evaluation, so I can convince him my request is justified? What should I say and not say? Thank you kindly in advance.

Nick’s Reply

There are entire books written about this topic, and compensation experts will offer negotiating strategies galore. But I’m going to refrain from a long lecture, because I think you can figure this out yourself if you keep some basic ideas in mind.

No more boring performance reviews

What you should not do is walk into a review meeting, show some salary surveys, and expect your employer to cough up more money “because that’s what other people who do my job are being paid.” You must justify what you’re asking for.

Perhaps more important, performance evaluations and reviews are the bastard children of Human Resources. They are increasingly ignored in most companies. This is actually good news for you. If you’re going to have an evaluation at all, it will likely be very canned and scripted — and the manager doing it will be bored and in a rush to get it over with.

That’s your chance to take control and turn it into a useful, meaningful and engaging planning session. No more boring reviews! Stand out by showing your boss that you are 100% focused on doing your job — to make him and the company more successful.

Earn a raise with a business plan

A salary renegotiation is pretty simple conceptually: It’s best done with a business plan. In other words, do an analysis of your role as though your job constitutes an independent business. Don’t talk about your qualities or about what others are being paid. Talk about your company’s business and what you add to the bottom line — and what you will add in the future.

  • How do you contribute to revenue?
  • What does it cost to have you do what you do? (This includes not only your compensation and benefits, but the cost of your tools, the cost of your team and support personnel who help you, and so on.)
  • What’s your history in terms of the profitability you bring to the company? (That’s right: Your contribution to revenue matters, but how you impact profits matters more. Even if you can’t calculate a specific number, you need to outline a defensible case that goes into the profit factors you influence.)
  • What are your profit projections for the next two to three years? That is, make some projections of how you will contribute to profit. You’ll need solid evidence to back these estimates up.

Every job is a business

A job is a business. Managers forget that — so explain it to yours. That’s the key to thinking about this in terms your management will understand and respect. As in any business plan, your goal is to demonstrate how an added investment will pay off. You must show a rising return on the company’s investment in you.

To learn more about how to approach any employer with a business plan, check these two books in the Fearless Job Hunting collection:

Book 6: The Interview – Be The Profitable Hire and Book 7: Win The Salary Games (long before you negotiate an offer).

See especially the sections “How can I demonstrate my value?” and “The Pool Man Strategy: How to ask for more money.”

The longer you’re working for the company, the more profit you should yield. A lot of this is number crunching, of course, and there’s seat-of-the-pants estimating involved.

Please read that last part again: There’s seat-of-the-pants estimating involved.

Negotiation is a dialogue

This will scare a lot of people off for fear their employer will challenge the estimates. That’s exactly what you want! A dialogue. A debate. A roll-up-your-sleeves talk about your job! That’s what your evaluation should be.

If your boss is worth working for, then your boss will see that you are worth a good raise because you’re thinking about the company’s bottom line and that you are prepared to discuss the future of your work intelligently.

It will help enormously for you to interview people in the company who factor into this plan — before you meet with your boss. In the process, you will not only build your case, you will also influence (and remind) other key players in the company about your worth. Then ask them to join the dialogue by putting in a good word for you with your boss!

How do you ask for a raise? Have you had a performance evaluation in the past year?

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Weird Tales of Job Offers: The new hire who disappeared

In the July 17, 2018 Ask The Headhunter Newsletter an employer tells about a disappearing employee and we share stories about job offers.

Question

I’ll bet you have some interesting job-offer stories. Here’s one I’d like to share.

job offersWe had a candidate go through the interview process and the offer cycle at our company. He took a position for a week, then returned to his other job. He never gave notice to his other employer, just took vacation time. After working the week, he didn’t return. It took a couple of days to track him down at his old work number. Is this common?

Nick’s Reply

I don’t think it’s very common simply because it’s the stuff bad reputations and terrible references are made of. Disappearing from a new job reveals a profound lack of self-confidence on the part of the candidate (not to mention integrity). This is a person who needs a safety net, and who will not invest himself in a new job enough to succeed. (Relationship counselors refer to this as “commitment phobia.”) He probably needs a back-door out of all the important choices he makes. In the end, the result is almost inevitable. People like this never find job offers that make them happy because they don’t commit. They keep going back to the devils they know rather than figure out how to move on with their lives. (See Should I just quit, or find a new job first?)

Don’t give this guy another thought. Move on to better candidates.

I do indeed have a lot of interesting stories about job offers. There is a mini-lesson in each of them. Let’s look at a couple of the characters I’ve encountered.

The guy who accepted lots of job offers all at the same time

He was a design engineer, and since engineers tend to keep odd hours and schedules, he was able to pull it off without much difficulty. I do give him credit for working very hard. He apparently was able to deliver the work required at each job. (Maybe this should tell us something about employment!) This man of multiple salaries accepted new job offers every few months without discarding all his old jobs.

He was able to jack up his salary enormously within a couple of years. While some job hunters don’t like to show their old pay stubs, he took great joy in it, and used proof of his current salary (one of them, any way) to gain small increases wherever he could. Lots of small increases add up!

He was quite proud of himself. I’ll never forget his smirk when I found him out. He suggested that I could earn multiple placement fees in short order by cooperating with him. I shared the story with many clients — along with his name.

The guy who used a job offer to extort a raise

He had two weeks to consider a job offer, and on day 14 asked for another week because he “wasn’t ready.” I got him an extension, but I could smell it coming.

A week later, he still wasn’t ready. I told him he had 24 hours to make a decision. My client wouldn’t wait any longer. Within the hour, he called back, frantic. “I accept the job! But I must start today!”

Turns out he had two problems. His intention all along was to use the new offer to leverage a raise, but he lacked the confidence. He was terrified to go dangle the new offer in front of his boss — thus the three wasted weeks. When I issued my ultimatum, he sheepishly approached his boss. During the “negotiation,” his boss had a security guard usher him out the door. (See Naïve young grad blows it for a discussion about using a new job offer to leverage a raise.)

His other problem: His wife threatened to leave him if he was out of work just one day. Thus his hurry. I followed his career for several years. I think few men have learned a lesson so well as he did.

I’ll let you draw your own lessons from these stories, whether you’re an employer, a job hunter, or a headhunter. But remember G.K. Chesterton’s words: “There is no man really clever who has not found that he is stupid.”

Got a good job-offer story? The weirder the better!

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B.S. on the jobs numbers euphoria

In the July 10, 2018 Ask The Headhunter Newsletter a reader asks whether the news about jobs creation isn’t a load of crap.

Question

jobsEvery 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?

Nick’s Reply

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:

Along with a lot of good news, the all-important wage numbers again disappointed, with average hourly earnings up just 2.7 percent year over year, one-tenth of a percentage point below expectations.
— 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:

The labor market remained healthy in November, adding jobs at a strong clip despite a shrinking pool of available workers. Still, there were some potentially troubling trends for employees, most notably persistently sluggish wage gains.

“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!”

“The June ’18 employment report showed a drop-off from May in both the rate of hiring as well as the wage increase year over year,” said Paychex president and CEO Martin Mucci. “We saw for the first time that the annual wage increase dropped below 2.5 percent, which is pretty surprising given the tight labor market. That seems to be the big question out there. Small businesses have a little bit of a harder time hiring workers in a tight labor market so you’d expect that to be going up.”
–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.

Typically, wages pick up at this point of an economic cycle because a low jobless rate forces companies to boost wages to find workers… Wage growth in Ohio and the U.S., tepid for the most part since the end of the Great Recession, is starting to show signs of getting weaker… It’s a trend that has baffled economists and others. “Everybody is really perplexed about why that is,” [said Frank Fiorille] vice president of compliance, risk and data analytics for Paychex].
–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:

“While the wage growth rate didn’t increase this month, having it hold steady is a good sign,” said Cathy Barrera, chief economist at ZipRecruiter, an online employment marketplace.

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.

If companies need more skills, can’t they just pay people more?
–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.

CEOs of America’s 350 largest firms made an average of $15.6 million in 2016…or 271 times more than a typical worker in 2016…While the CEO-to-worker compensation ratio of 271-to-1 is down from 299-to-1 in 2014 and 286-to-1 in 2015, it is still far higher than the 20-to-1 ratio in 1965 or the 59-to-1 ratio in 1989.
–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:

Another culprit is an increase in temporary or part-time work, an issue that’s come to a head in Italy, with businesses clashing with the new government over plans to restrict temporary contracts.

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.)

oecd

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:

bls

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?

The White House promised ’70 percent’ of the tax cut would go to workers. It didn’t… the Republican tax reform package that was supposed to raise wages and spur hiring has instead funded a record stock buyback and dividend spree, benefiting investors and company executives over workers.
–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?

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