May Job Numbers, Structural or Structurally Selective?

3 Jun

I’m sure you’ve had plenty of time to digest this morning’s headline numbers, but there’s a few interesting things going on under the hood that are worth digging into. My favorite go to blog, Calculated Risk (http://www.calculatedriskblog.com/2011/06/employment-summary-part-time-workers.html) breaks down what’s going on quite nicely. The troubling trends are in the long term unemployed category, those who have been unemployed 27 weeks or more increased by 361k to 6.2m, not counting those who are no longer counted under traditional and the Federal EUC programs.

A small silver lining in the duration of unemployment category is that those who were unemployed less than 5 weeks decreased by 27k to 2.664 million, those unemployed 5-14 weeks decreased 15k to 2.892 million and those unemployed 15 to 26 weeks decreased 22k to 1.984 million.

Unemployment Duration: 2001 - May 2011 (Source, BLS) -- Click on image for larger/clearer view

People have asked me what I make of the 6.166 NSA million (45% of the unemployed population) and I have some pretty interesting theories regarding this – I’ve been working on an article called Structural Or Structurally Selective of which the main premise is that for those who have been out of work for long periods of time are being selectively ignored when applying for jobs. There’s evidence that this “selectivity” does now exist at the employer level in the form of “No Unemployed Need Apply” want ads and to some extent (warning: anecdotally) the computerization of employment screening processes to automatically discard resumes in which the person’s last job listed does not fall within a certain window of time (i.e. filter out those over N months) using the big HRMS systems such as Taleo, etc.

I’m going to post the article here early; I believe that now is a pretty important time to talk about this issue. It’s still a work in progress but it is just one raw idea/opinion. Caveat Emptor.

Structural

I realize that with technological progress, there is going to be some degree of structural shifting that takes place in a particular economy. Grocery store checkout clerks are increasingly replaced with “self-serve” checkouts that only require one or two people to monitor; COBOL programming skills are simply not in demand in the technology sector; phone clerks /runners aren’t needed on the floor of the major exchanges anymore. Progress will indeed cause structural shifts in certain industries. However, despite these structural shifts, companies and people alike have managed to remake themselves. They acquired new skills and successfully transitioned to the new “structure” in the nation. Phone clerks went on to other positions upstairs if they had the aptitude and desire to progress, COBOL programmers shifted from mainframe/batch processing to multithreaded/asynchronous programming languages, the grocery store clerks moved on to other retail jobs, etc.

That was in the past – with today’s problems we find ourselves faced with a unique new set of challenges. With long-term unemployment, it is true that some skills will deteriorate. Take for instance technologists: if during their unemployment they do not keep their skills current by learning new technologies as they emerge, they will run a fairly high risk of being structurally displaced. For those who lost their jobs in manufacturing they face a similar issue with keeping up. Unfortunately, no matter how much one attempts to keep their skills sharp throughout a spell of unemployment, a macro-based structural shift hits them as well. Quite simply it involves offshoring: The global flow of money shifts where input/labor costs are cheaper and companies can get more while paying less. Indeed, out of the 6 million long term unemployed there will be some aspect of structural unemployment that only sensible solutions will be able to solve such as: tax reform, investing in those people who are willing to retrain (and not force them into “Green Jobs” or whatever whim the Government feels like having people do). I don’t buy the argument that 8% unemployment is an “appropriate” level that takes into account “structural” problems because there are too many people out there who are qualified for jobs, but are not able to get them.

Structurally Selective

This happens on both sides of the employment arena: people are holding out for “dream jobs” while the employers are looking for the “perfect candidate”. It seems quite interesting that some (not all) employers will rail on about not being able to find “qualified” candidates when they put up requirements for jobs that border on the edge of obscene. You routinely see this in technology related jobs – where the list of requirements will routinely stretch into a laundry list. If a candidate has 18 out of the 20 relevant skills – a candidate is often overlooked because of the lack of two remaining skills.

You can also see this “structurally selectiveness” at work: credit checks, “no unemployed need apply” and in some limited cases hidden or blatant discrimination. Granted, it is prudent to for some firms/occupations to perform credit checks on employees as part of the hiring process (banking, Credit Bureaus, law enforcement, etc.) where the employee may come across or be in charge of sensitive personal data. However, if the employee is going to be working as a software tester/developer and have no unsupervised access to “financial” data is it necessary to subject them to a credit check given the problem we face with the length of unemployment? By denying this person a job  – a job which will give that individual the ability to regain their footing? Quite the opposite: it is exacerbating the problem.

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2 Responses to “May Job Numbers, Structural or Structurally Selective?”

Trackbacks/Pingbacks

  1. 6/11 Weekly Summary « Stone Street Advisors - June 11, 2011

    […] The argument over at TheStreet.com that tech jobs are plentiful, yet talent is not and my original rebuttal that talent is plentiful, it’s the employers who are being excessively picky. […]

  2. Boots On Throats, The Long, Hot Summer « Stone Street Advisors - June 22, 2011

    […] agree with this statement. As I wrote in Structural or Structurally Selective, legislation to prevent unemployment “discrimination” will only push it into more subtle, less […]

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