Current figures seem promising. Per the U.S. Bureau of Labor & Statistics (BLS), nonfarm payroll employment rose by 227,000 in February 2012. The official number of unemployed persons, at 12.8 million, was essentially unchanged in February. The unemployment rate held at 8.3 percent, 0.8 percentage point below the August 2011 rate. The number of long-term unemployed (those jobless for 27 weeks and over) was little changed at 5.4 million in February. These individuals accounted for 42.6 percent of the unemployed. Keep the rate at 8%, some say, and US citizens will forget the 10% + of last year! This is good for upcoming electoral debates…
Alternate Unemployment figures
The reality might be very different, as recognized by many independent analysts. What official numbers never show are the long-term discouraged workers – those who gave up looking for a job. Per John William of SGS (Shadow Government Statistics - shadowstats.com), the seasonally-adjusted Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for those long-term discouraged workers, who were defined out of official existence in 1994. When that estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers, the real number of unemployed shows a much, much higher picture (see below).
What is the REAL unemployment rate then?
You determine the real unemployment rate through a simple calculation: divide the total amount of people out of work (but seeking employment), by the total amount of people that are employed and in the work force. Logically this does not seem complicated. But there is a problem:
Every week government officials try to obtain the most accurate numbers of people that are in the workforce and those that are unemployed and still looking for work. But how about those who gave up looking for a job? Per the DOL, a worker must be actively looking for a job to be considered in the labor force and to be counted as unemployed. Workers that are discouraged and not actively seeking a job are NOT counted as unemployed.
According to lubbockonline.com, this issue strongly questions the calculation for the real unemployment rate. Some estimates are that at least 1.2 million people dropped off the list – those that may be discouraged, but regardless, have stopped actively looking for jobs. While the current Administration proudly stated that 243,000 jobs had been created just in last January, no mention has been made by Obama or the White House that 1.2 million people gave up looking for work in January. These 1.2 million people were removed from the group of persons who are reported to be unemployed, dropping the pretend unemployment number to 8.3%.
The reality is that 4.7 million jobs have simply disappeared from the United States of America since Obama became President.Added to the 12.7 million, the total of unemployed is 17.4 million without work or about 11%. When one adds in the 10.5 million who are working part time but would like to be working full time, we have 28 million who are unemployed or underemployed. This is an unemployment rate of 17%. If one then adds the 2% of our population who are in jails or prisons, the actual unemployment rate is at or about 19%!
Predicting the future of employment – and what it means for you as an employer
For every available job there are today almost 5 people looking for one. Nearly half of all the unemployed (45.9%) have been out of work for longer than six months. In fact, most of the 6 millions of long-term unemployed Americans have been out of work for one year or more. This is the highest long-term unemployment rate since World War II. In my book “No-Fail Hiring” I clearly demonstrate how a tougher, more volatile job market will impact your search for productive, loyal and dedicated staff. My predictions are the following:
Prediction no.1: The Federal Government has started making hiring much more challenging – under the cover of offering huge incentives to companies for hiring the long-term unemployed. Expect new regulations which will make it much harder for you to dehire. As the Federal and State governments fail to contribute to the improvement of the job market, one easier way will indeed be to regulate it with drastic measures. The strategy is simple: start by making hiring easier (through measures such as tax credits or even bonuses for hiring) and then make it impossible to fire those you have hired.
Prediction no.2: Too many applicants are now competing for those scarce positions. But do not fall into the trap of thinking this pool of abundance is good news for you. Many applicants will over-rate their skills and personality in order to get the job, making it a serious challenge for you to properly select the best. Remember: a single bad hire can cost between $60,000 and $120,000. The continuing economic struggle will lead more people to put their attention on money as the main motivator to get a new job. This is the worst thing that can happen to you as a leader. Money never buys real loyalty, less honesty.
Prediction no.3: Honesty is going to be more than ever the major issue in pre-selecting applicants. The fact that dishonest employees can cost your company thousands or even millions of dollars is probably not unknown to you. But we believe this issue is going to become a much more serious concern. Besides observing a decreasing level of morale in the society, evidence of dishonest applicants lying in their search for the perfect job is quite alarming.
Prediction no.4: The real upcoming shortage is going to be more about quality, rather than quantity. Expect a tougher war for talent where skilled applicants feel almighty and experienced employees can leverage their real value for higher compensations with your competitors. The REAL shortage is going to be a lack of soft-skilled people of all ages. It is more challenging to develop soft skills than technical ones. Have you ever tried to improve an employee’s willingness and commitment (without having to use the money bait), no matter how competent he/she was? Not easy…
The opportunity
In face of this “not-so-optimistic” view of the future in the job market, what is your real challenge going to be? Mainly, you will need to work smarter at ATTRACTING qualified players – not just finding them! The good news is that we believe the current radical changes in the job market will be playing to the advantage of smart employers. The employment market used to be more active among already employed people, with over 85% of openings filled by people already employed. We believe this is dramatically changing.
Current employees who are secretly looking for another job are now competing with many available applicants who may have the same or higher qualifications. Many of those who lost their job for reasons independent from personal performance may be more flexible on the pay side; they may also present better soft skills such as: better work ethics, willingness to work hard and to learn, etc.
The best strategic mindset for business owners is to attract and detect qualified players who are willing to work rather than “enjoy” their unemployment benefits and who are ready to take on new challenges – sometimes at a starting lower pay. People who need a job have a level of necessity (to survive economically and socially) which can be judiciously used to pump up the energy and drive level in the business. You can and should take advantage of the upcoming competition between those unemployed solely due to the economic downturn and those who have a job. Do not assume that the latter are more qualified. What is certain is that they are more expensive.
Patrick Valtin,
Author of “No Fail Hiring.”
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