Why do you apply for jobs that don’t disclose salary?

On October 18, 2021
Why do you apply for jobs that don’t disclose salary?

 Question

What about companies that don’t disclose salary on job postings? I’ve wasted huge amounts of time applying for jobs that fit me, only to find out after several interviews that the pay is not high enough! If you ask me, that’s false advertising. Do any companies list salaries in job ads?

Nick’s Reply

disclose salaryWhile employers demand to know all your salary information prior to an interview, they don’t disclose the salaries of jobs they post. They want you to apply blindly, hoping to snag you into rationalizing lower pay after you’ve invested hours filling out forms and interviewing. (This is the old “foot-in-the-door” sales method.)

Get ready to negotiate

I think there has never been a better time or a better job market for job seekers to exercise their negotiating leverage to get exceptional salaries — and to get the information they need before they apply. If you’re a good candidate for a job, now is the time to negotiate assertively for more money and other desirable terms of employment.

Few companies disclose salary in job postings

It turns out only about 12% of all job postings tell you what a job pays, according to an analysis done by Emsi Burning Glass and reported by SHRM. In today’s economy, that’s a recruiting scam of epic proportions. As a job seeker, you need to consider how much you sacrifice when you go blindly into a job interview.

While it’s up to each job seeker to decide what information they absolutely need before applying for a job, all should bear in mind that we are unequivocally in a job seeker’s market. Employers are literally dying — going out of business — because they can’t hire the workers they need. This puts you in a very powerful negotiating position.

Ask first, apply later

Do we need a law? Even with 11 million jobs vacant, only 12% of job postings include pay information. Are employers hiding salaries because they’re so low? Do we need a salary disclosure law?
My advice: Insist on knowing the salary for a job before you apply. I would not necessarily skip over an interesting posting because it doesn’t list salary. If the job is otherwise worth your time to apply, then it’s worth the extra time to contact the employer directly and ask what the salary range is.

If they won’t tell you, I’d seriously consider moving on — after explaining to them that you will not apply without knowing first what the job pays.

You can ignore my advice, but my prediction is that you’ll waste a lot of time and experience a lot of frustration. If you push back, however, you’ll get salary information some of the time — and those are the companies worth engaging with.

The job market lets you be bold

It’s such a job seeker’s market that a bold applicant can go another step and use the foot-in-the-door approach for their own benefit.

Once you know the salary, at the end of your first interview (assuming you’re still interested in an offer), ask what the last person in that job was paid and how much others on the team are paid. If you’ve already impressed an employer that can’t afford to lose another good candidate, you just might get the information and improve your negotiating position further.

I’ll repeat again: We are in a job-seeker’s market and you should not discount your negotiating leverage. Do it professionally and gently, but do it firmly: Don’t be afraid to make reasonable demands. There has never been a better time for the best talent to get the best salary deals.

How to Say It

If employers push back at your request for salary information, educate them. Here are some suggestions about how to say it:

  • “Why would I share my salary information if you won’t tell me what the job pays?”
  • “Do you really want to invest hours in interviews only to learn your job is not in my required pay range?”
  • “I know you prefer honest, candid job applicants. I prefer honest, candid employers. What’s the pay?”
  • “If I can’t demonstrate to you how I’m worth the salary we’ve discussed, then you shouldn’t hire me.”

These are pretty assertive examples. Tune the wording to suit your own style.

Everything has changed

Employers can get ahead of the curve by disclosing salaries with every job posting. I think they’re fools if they don’t. It’s time to drop the attitude that they don’t want to over-pay someone who might take a job for less, or that publishing salaries will give their competitors an edge.

Colorado now requires job postings to include pay information, according to SHRM. California and Maryland require the employer to disclose wage ranges when job applicants ask. More employers are including pay information on job postings, but their numbers are still paltry — under 20% in most sectors.

This means it’s up to job seekers. Everything has changed. As more employers realize what it means that 11 million jobs are vacant, we’re going to find the playing field is on a new level. Don’t sell yourself short. Seriously consider applying only for jobs for which you have pay information — even if you have to inquire to get it.

Did you know the salary of the last job you applied for? Have you ever asked what a job pays before you applied? At what point do you consider it crucial to know what the pay is? Would you walk away from a job whose salary you don’t know?

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Greedy employers cry “no one wants to work anymore”

On May 21, 2021
Greedy employers cry “no one wants to work anymore”

The Myth of Labor Shortages

Source: New York Times
By David Leonhardt

greedy employers

The idea that the United States suffers from a labor shortage is fast becoming conventional wisdom. But before you accept the idea, it’s worth taking a few minutes to think it through. Once you do, you may realize that the labor shortage is more myth than reality.

One of the few ways to have a true labor shortage in a capitalist economy is for workers to be demanding wages so high that businesses cannot stay afloat while paying those wages.

If anything, wages today are historically low. They have been growing slowly for decades for every income group other than the affluent. As a share of gross domestic product, worker compensation is lower than at any point in the second half of the 20th century. Two main causes are corporate consolidation and shrinking labor unions, which together have given employers more workplace power and employees less of it.

Corporate profits, on the other hand, have been rising rapidly and now make up a larger share of G.D.P. than in previous decades. As a result, most companies can afford to respond to a growing economy by raising wages and continuing to make profits, albeit perhaps not the unusually generous profits they have been enjoying.

 

Continue reading

Nick’s take on greedy employers

We discussed this recently: The labor shortage is really a pay shortage. David Leonhardt explains it better than anyone: Wages are historically low and corporate profits are huge. Employers on the whole can afford to raise wages without any real pain. It’s time to shut down the economic bullies crying that lazy labor is living off pandemic relief funds.

What’s your take? Is there really a labor shortage or is it about greedy employers? Are they unwilling to spend what it takes to keep their businesses profitable? Is this greed in action?

 

 

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Do we need a $15 minimum wage?

On January 25, 2021
Do we need a $15 minimum wage?

Question

$15 minimum wageMost of your readership seems to be in relatively high-salary jobs but I have a question about lower-level jobs. I hope you think it’s worth covering. I see the federal minimum wage is in the news again because the new administration is trying to push through an increase. You published a Q&A column almost exactly a year ago arguing for a national $15 minimum wage (Who really needs a $15 minimum wage?). People expressed very strong opinions. A lot has happened in the past year — COVID, the booming stock market, the change in administration, unemployment. Do you think attitudes about raising the minimum wage have changed? Has yours?

Nick’s Reply

I don’t like to veer away from the main purpose of Ask The Headhunter, which is to provide advice people can use to improve their job situation. But now and then an issue comes up that’s important for us to discuss and understand. The minimum wage is important to everyone because, no matter how much most readers here earn, we all encounter workers who do the lower-paying jobs that affect our lives every day. In fact, we rely on them.

I support a $15 minimum wage

In the January 15, 2019 column you mentioned, I advocated for a national $15/hour minimum wage. My view has not changed. I wrote:

“Fair-market compensation is an amount people need for shelter, food, transportation and other basics of life. That’s more than $70 a day where most people live… If your business can’t generate enough cash to pay a living wage, your business is going to fail for lack of workers. Shut it down now and get it over with.”

Some readers insisted that not all areas of the country should have their minimum wage set as high as $15, because housing costs are much lower in some places. But in an addendum to that column I showed why that line of reasoning is a straw man.

What happens if wages are legislated up?

Many business people have tried to make the case that they would bear the costs of mandatory higher wages, with the result that they would have to lay off workers. Or, they’d have to raise prices, which means they’d lose customers and potentially go out of business altogether. Any way we slice it, these businesses claim, the outcome would be fewer jobs.

As a dyed-in-the-wool capitalist I see this as a kind of creative destruction. When businesses shut down due to economic pressures, that’s not necessarily bad for the economy. It creates opportunities for better-run companies to replace them. As the tectonics of competition shift, workers move to new employers that create new and better job opportunities.

I’m not an economist, and I don’t run a restaurant that depends on $7.85 wages and wait staff that’s paid mostly with tips. I don’t pretend I can predict what a national $15 minimum wage will really mean. But I have opinions that I think are grounded in common business sense.

Nonetheless, my opinions don’t matter in the bigger picture. You, dear readers, are the bigger picture, so I want to discuss what you think. That’s the purpose of this week’s column.

The backdrop on the minimum wage

Let’s set the stage with a report from NBC News about what the nation seems to think about raising the minimum wage:

“Despite the bitter political polarization in the United States today, public opinion polls of voters in red and blue states both show strong support for a higher minimum wage. An August survey found that 72 percent of Americans — including 62 percent of Republicans and 87 percent of Democrats — said the minimum wage should be high enough to keep full-time workers above the poverty line.”

But the same survey emphasizes that higher wages will cost a lot of people their jobs:

“The nonpartisan Congressional Budget Office determined in a 2019 report that raising the hourly minimum wage incrementally to $15 by 2025 could shave, at the median, 1.3 million jobs from the labor force, but would also lift 1.3 million people out of poverty and contribute an additional $8 billion to the aggregate household income of these families.”

One final statistic: While unemployment has held steady, job growth has stalled. Even without a higher minimum wage, in December employers cut 140,000 jobs.

What do you think about a $15 minimum wage?

So, what do you think? Regardless of how much you make today, or whether you are employed or not, do you support a national minimum $15/hour wage? Either way, what do you think the impact would be?

If you were making wage policy, what would you do?

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Should I accept a job offer with a salary cut?

On February 24, 2020
Should I accept a job offer with a salary cut?

In the February 25, 2020 Ask The Headhunter Newsletter a reader asks whether it’s possible to recover after accepting a job offer with a salary cut.

Question

salary cutI’ve been unemployed for six weeks. Was earning around $120K. Have been offered a position at $85K and, quite frankly, I need the money. Even more important, I recognize that my self-esteem is too bound up in my career: I need to work for more than just the money. Am seriously considering accepting this lower offer, because I believe these folks cannot afford to pay more. Will my chances of negotiating another position at a higher salary be irrevocably damaged if I accept a salary cut? Advice, please, and thanks in advance.

Nick’s Reply

You’re facing an important decision, and you need to be sure you are balancing the key issues. How long can you afford to go without a job? If you accept this offer, how much time will you be able to devote to continuing your search for one that pays better? Will being under-employed versus unemployed affect your self-esteem?

(And consider this: Is it possible to get more money out of a company that “cannot afford to pay more?” We’ll get to that at the end.)

What’s your objective?

I could easily tell you not to give in yet, and that it would be smarter to continue your search until you find a job where the pay is more in line with what you’re accustomed to. Six weeks is not a long time to find the right job. But being able to pay the bills is just as big a consideration. You could borrow to meet expenses until you find something better — but how would that affect your motivation and effectiveness in interviews?

These are very personal questions that only you can answer, and I think they are more relevant at this point than the main question you’ve asked: Will a salary cut damage your ability to win a higher salary later? While it might seem penny-wise and pound foolish to focus on the short-term problem (paying the bills), there’s something to be said for surviving today so you can stay in the game.

It’s important to think about what your objective really is.

Why a salary cut?

In today’s business climate, radical corporate restructurings and the outsourcing of jobs to “consulting firms” seem to be killing wages and salaries. While economists consider it a minor footnote and blow it off, stagnant wage growth tells us something is very wrong. Seemingly low unemployment suggests pay should be going up — but it’s not. This is for another discussion, but it seems the U.S. Department of Labor may be misrepresenting the impacts of masses of uncounted people who are returning to the labor market. I could make the argument that there is no talent or labor shortage; that in fact, we’re in an unprecedented talent glut. That’s why employers think they can hire you even with a salary cut.

There are a lot of good people on the street. Some employers are capitalizing on this by hiring great workers cheap. But this is no more of an ethical problem than you accepting a low-paying job while continuing your job search — and then quitting for a job with more pay.

(Is it ever worth taking a salary cut, other than because you need the money? I see one possible benefit, if you look at it as a re-tooling investment. A lower-paying job might be the price you pay for an opportunity to gain a foothold in a new field or business, and to learn new skills.)

Are good salaries dead?

While some employers are buying talent at a discount, others are smarter. They don’t assume that because you took a pay cut at your last job, you’re now worth less. They see an opportunity to land a great new employee who might not have been available to them otherwise at any price. (See Dr. Dawn Graham’s insightful article: The Salary Negotiation Mistake That’s Costing You.)

I know one very rare HR manager whose policy is to offer candidates what they’re really worth. If they are truly under-paid, she helps get their compensation back on track, and earns the new hire’s loyalty. Good salaries are not dead. (See Why employers should make higher job offers.)

So, no, I don’t think your chances for more money will be irrevocably damaged — not unless you become complacent. You must continue your job search if you take this lower-paying job. If you stay in the $85K job too long, you could indeed hurt yourself long-term.

Encourage better job offers

As you continue to search while newly employed, you must learn how to negotiate from a position of strength — even if the employer says it “cannot afford to pay more.”

  • Never disclose what your current salary is. It’s none of their business. An employer will always use your current salary to negotiate against you. See We need to know your salary because —.
  • Ask the employer what the salary range is before you agree to interview. Don’t fall into the trap of interviewing for jobs that won’t pay enough. You’re likely to rationalize accepting another low salary simply because you invested so much time in it.
  • Assess the value you could add to any new job you’re considering. Can you do it faster, more efficiently, more profitably than the employer expects? Couch your salary expectations in terms of what you will bring to the employer’s bottom line. Be ready to explain it.
  • Choose higher-paying jobs and, for each one, prepare a mini business plan that demonstrates clearly why you’re worth the money.

What counts most in any job negotiation is what positive impact you’re offering to an employer’s bottom line. That’s what wins you more money. Focus on conveying that critical message to an employer, and you’ll always be able to negotiate for more money — with a current employer, or with a new one.

Have you accepted a job with a salary cut? Why? Were you able to regain your higher salary level? How? What should this reader do? Do you believe salary cuts are more likely in today’s job market?

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The real jobs shortage

On January 17, 2020
The real jobs shortage

 

Low unemployment isn’t worth much if the jobs barely pay

Source: Brookings Institution

jobs shortage

Each month, the Bureau of Labor Statistics releases its Employment Situation report (better known as the “jobs report”) to outline the latest state of the nation’s economy. And with it, of late, have been plenty of positive headlines. But those numbers don’t tell the whole story. Are these jobs any good? How much do they pay? Do workers make enough to live on? Here, the story is less rosy.

In a recent analysis, we found that 53 million workers ages 18 to 64—or 44% of all workers—earn barely enough to live on. Their median earnings are $10.22 per hour, and about $18,000 per year. Other research suggests that there are not enough decent-paying jobs for people without bachelor’s degrees. This matters—workers without bachelor’s degrees make up not just the majority of the low-wage workforce but the majority of the labor force as a whole, so the shortage of such jobs has wide-ranging consequences. Even with sunny job statistics, the nation’s economy is simply not working well for tens of millions of people.

 

Jobs Shortage: Nick’s take

While the feds and the media cheer “the great jobs numbers,” the dirty little secret is wages. Brookings scrapes the lipstick off the pig, and all that’s left is a pig. There’s no talent shortage; there’s a good-paying jobs shortage. Brookings focuses on the 44% of all workers who make barely enough to live on — and that’s troubling enough. What Brookings misses is more highly educated workers who are earning less than they used to.

Which one are you?

What’s your take?

Are you earning as much as you used to? What category in the Brookings report do you fall into? Are there really more good-paying jobs than there is talent to fill them? How many lower-paying jobs would you need to have at once, to earn what you once earned?

See also B.S. on the jobs numbers euphoria.


 

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Why aren’t you making more money?

On December 4, 2019
Why aren’t you making more money?

 

Trade war, weaker economy are among reasons

Source: USA Today

more money

By all rights, U.S. wage growth should be kicking into a higher gear amid falling unemployment and intensifying worker shortages…“Wage growth has hit a wall,” Joseph Song, senior economist at Bank of America Merrill Lynch, wrote in a report. Economists blame myriad factors, including President Donald Trump’s trade war with China and a slowing U.S. economy, weak productivity growth and meager inflation.

 

Nick’s take

I love this topic. Washington crows about low unemployment, but nobody in government seems to worry that your wage growth sucks. “Explanations” get tossed around like dry leaves whipped up by a forest fire: It’s the trade war, productivity, low inflation. I’ve got a simpler answer: Successful companies don’t share the wealth with their employees because it just feels better to keep the money. Job candidates need to push back harder. Can’t negotiate a higher salary? Ask for more money.

What do  you say?

  • Why are wages not going up meaningfully?
  • How can you get more money for your work?

 

 

 

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Do you want a job, or higher pay?

On November 13, 2019
Do you want a job, or higher pay?

pay

 

No sign of a recession, but wage growth is flatlining.

Source: The New York Times

pay

The first story: Jobs are plentiful and unemployment low. Most everyone who wants a job can find one…The second story: Wage growth is flatlining. For most of the last few years, pay to American workers has been rising at steadily increasing rates…But that rate of increase now seems to have leveled off or decreased. The year-over-year rate of growth in wages peaked at 3.4 percent in February and has receded to 3 percent in October, according to the latest numbers…

So most people can find a job and more people are working, but employers are not having to increase compensation much to recruit and retain people. This isn’t what economic models suggest should happen.

 

Nick’s take

Do you want a job, or higher pay? Because the U.S. Department of Labor says you can’t have both. News articles focus on big growth in new jobs but then can’t explain essentially flat pay in a market with high demand for labor. Meanwhile, companies are spending less and pocketing more: “compensation in private industry rose 3 percent in 2018, and only 2.7 percent in the 12 months ended in September.” Nothing’s changed. (See B.S. on the jobs numbers.)

What’s your take?

  • Are you making more money?
  • How much does your CEO make as a ratio compared to you?
  • Why don’t the Department of Labor numbers make sense?
  • When will job applicants wise up?

 

 

 

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B.S. on the jobs numbers euphoria

On July 9, 2018

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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Jobs plentiful! Pay is up! But, how are you doing?

On January 9, 2017

In the January 10, 2017 Ask The Headhunter Newsletter, we attempt a reality check — about jobs. Disclosure: I wrote a snarky column to start the New Year. But it’s not as snarky as the news.

Question

Nick, I know the newsletter has been on vacation over the holidays, but have you been reading the jobs news? Am I crazy, or do people really believe unemployment is down and pay is up? That there’s suddenly a job for anyone who wants it? That all our troubles are over? Man, sign me up for a new job for 2X what I was making when I had a job!

Nick’s Reply

jobsDuring my Christmas break, the news kept coming hot and heavy from the U.S. Department of Labor and associated pundits and experts: You should stop complaining about jobs and salaries. Everything’s great!

I’m sure you’re reading the same good news, but all I want to know is, does this reflect your experience with the job market and employers? Or is your head spinning?

Jobs: U.S. Department of Labor News

In the past few days, the DOL reported:

  • “Unemployment rates were significantly lower in November in 18 states and stable in 32 states and the District of Columbia…”
  • “The national unemployment rate was 4.6 percent in November, down from 4.9 percent in October, and 0.4 percentage point lower than in November 2015.”

Fewer people unemployed!

Bloomberg News

Recent Bloomberg reports tell us:

  • “The 4.7 percent jobless rate remains close to a nine-year low, even with a tick up last month.”
  • We’re seeing “enduring wage gains as labor market tightens.”

You’re getting paid more and employers are working harder to hire you!

  • “Worker pay rises at fastest pace since end of last recession.”
  • “Fiscal stimulus would stoke further gains as labor [is] scarce.”
  • “Average hourly earnings jumped by 2.9 percent in the 12 months through December, the most since the last recession ended in June 2009.”
  • “Workers in almost every category, from mining and construction to retail and education, saw paychecks rise from November.”

JPMorgan Economic News

Michael Feroli, JPMorgan’s chief economist, says:

  • “I expect to see continued acceleration in wages this year.”

And get this: Labor shortages may become more common. Employers are going to be begging you to take a job! I hope that makes you feel better if you’re facing a shortage of exactly the one job you need to pay your bills.

But then there are the gotchas from from the DOL reported by Bloomberg:

  • “More Americans joined the labor force but had not yet found jobs.”

Oops. And try this double-talk on for size:

  • “The number of people who were jobless and gave up looking for work declined to a three-month low…” but “One caveat: fewer people who were already in the labor force but unemployed were able to find jobs.”

Associated Press News

The Associated Press isn’t being left behind:

  • Since 2009, “the job market is in infinitely better shape. The unemployment rate is 4.7 percent. Jobs have been added for 75 straight months, the longest such streak on record.”
  • But, er, ah… “The proportion of Americans with jobs… dropped a full percentage point.”

Uh… apply the grammatical logic tool to that one and you get… More Americans are without jobs!

  • “Hiring has been solid yet still hasn’t kept up with population growth.”
  • “…many workers, especially less-educated men, have become discouraged about finding jobs with decent pay and have stopped looking.”

Yes, that means many, many Americans are screwed, but they’re probably not educated enough to parse those sentences to glean the economic reality. But when they try to pay for food next week, they’ll grab their pitchforks and torches.

Middle America

And don’t miss this troubling factoid: The “routine work” that pays middle-income wages is disappearing. But the good news is, those of you doing “higher- and lower-paying jobs” should have no trouble finding work! Tech jobs have “soared” 42%. Hotel and food service jobs have “jumped” 19%!

Apply the grammatical logic tool to that one and you get… Middle America can’t find a job!

  • More good news: “Over the past year, average hourly pay has risen 2.9 percent, the healthiest increase in seven years.”
  • But, uh, in a “robust economy” pay gains would be more like 3.5%.

There’s more, but your under-paid, under-fed or unemployed (or under-employed) brain probably couldn’t take it.

Let’s stop pretending

The jobs news is so contradictory that nobody knows — or will admit — what’s really going on. While the government, economists, banks and pundits spin a story that makes heads spin, I think the wisdom about all this is in the crowd. The people living, succeeding, failing, giving up, dropping out, scraping by and dying in this economy have a clearer picture of what’s really going on than what’s being reported.

How are you doing?

Early January of a New Year is a good time to sweep away the news and ask you — How are you doing in all this? I think we all want to know what’s really going on in our economy and job market.

  • Does this news reflect your experience?
  • Are you finding more jobs — real jobs — are begging to be filled?
  • Are you getting paid more money?
  • Are employers hiring you more quickly at higher salaries?
  • If you already have a job, has your boss increased your salary to avoid losing you?
  • What’s really going on with respect to jobs, employment and pay?

I don’t think we’ll sort this out, but we can do a more honest job of discussing the truth than the news pretends at!

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