October Employment and Unemployment: It’s Crunch Time
By: John Rossheim
Recruiters and hiring managers, are we having fun yet?
News item: Your hungriest pool of candidates is shrinking: The unemployment rate was down to 5 percent in October, according to the Bureau of Labor Statistics. Yet the employment rate — as measured by the employment-population ratio — is also down compared to a year ago. A related measure — the labor force participation rate – has continued to dwindle through this economic recovery, last month reaching its lowest rate since the 1970s.
Which all means: Fewer workers are hungry for a job, and significant numbers have lost interest in working, at least for now.
News item: Your salary offers may need to get bigger faster: Although many executives are determined to hold the line on labor costs, the market is playing a different tune. In October, wages rose 2.5 percent compared to a year earlier, the largest such increase since 2009.
Therein lies another uncomfortable bind for those seeking to fill requisitions.
How are employers supposed to act on these employment data and their sometimes unwelcome implications for workforce strategy? Here are some key considerations.
You may need to sell harder to win candidates’ consideration. More Americans are saying “Enough with the job search” even before they reach traditional retirement age. “The labor force participate rate is the lowest it’s been since 1970s,” says William Even, a professor of economics at Miami University in Oxford, Ohio.
“We still have discouraged workers who think the labor market is too weak to warrant looking for a job.” Boomers are retiring, and teenagers are less likely to look for work. Some older workers are opting for unemployment in part because they can buy subsidized coverage through health insurance exchanges.
Your recruiting results may vary, by industry. App coders are in high demand; oil drillers not so much — and so it goes. “Retailers are having difficulty attracting part-time workers,” says Even. “Construction companies in some parts of the country are having a hard time finding workers to build homes.”
Talent is less likely to settle for part-time. Although 5.8 million Americans are working part-time because they can’t find full-time work, that number is dropping. “My research suggests that a lot of involuntary part-time is because the Affordable Care Act gives employers incentives to keep workers part-time so they don’t have to provide health insurance,” says Even.
Some retailers unable to entice enough part-timers may be forced to offer full-time work for holiday hires, at least through the holidays.
Up your offers or risk losing candidates. More candidates are entertaining multiple offers or simply refusing low offers. “If we continue to see this kind of job creation, we’ll start to see wage growth gradually improve, but mostly for higher-skilled jobs,” says Even.
Be ready for an interest-rate hike that could kill requisitions. The likelihood of an imminent interest rate increase may give some employers pause when it comes to hiring — especially at companies that make or sell big ticket items like cars and houses, since rising rates could potentially cool demand.