Jobless recoveries is an all-too-frequent phrase in our modern economy.  The 3.5% growth in 3rd quarter GDP is a bit misleading as the government poured money into the economy (cash for clunkers, first-time home buyer program, etc.).  The hiring trend continues to be abysmal as somewhat expected as it is a lagging indicator.

But is it becoming more of a lagging indicator?  This article from Commentary Magazine makes an observation I haven’t heard elsewhere (emphasis mine):

The underlying reason for increasingly jobless recoveries in recent decades can be found in Chart 5 of the New York Fed’s report. In the early 1980s, 51 percent of industries were undergoing structural change as opposed to merely cyclical change. By the 1990s, that percentage was 57. In 2003, it was fully 79 percent. It is undoubtedly even more now, six years later. The fact of the matter is that the microprocessor is remaking the economy from top to bottom—just as the steam engine did two centuries earlier—but it is doing so much faster. One result of this profound economic revolution is that productivity—the amount of output per unit of input—is rising quickly, and the largest input in most industries is labor. Thus the need to hire new workers as the economy begins to grow again is less and less urgent. It increasingly makes a lot more business sense to invest in new, highly productive equipment instead.

The author makes a good point regarding ever increasing productivity requirements.  My impromptu analysis of my business circle supports these requirements.  Many people talk of doing 2 –3 different jobs for their company…and the company expects this effort.  Clearly the present job market supports companies requiring this of their employees – jobs are scarce.

The ability to leverage technology to greatly increase productivity is an ominous development in the effort to recover from this deep recession.

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I have heard many cheerleader reports attempting to claim the recession is over and the recovery has begun.  I’m not so certain especially when these people note the stock market as the leading indicator.  This article from CNNMoney.com explains why this cheerleader approach is flawed (my bold):

Several experts point out than many of the relatively strong earnings reports helping to lift the markets in recent days are being driven by cost cuts, rather than strong revenue growth that would be a better indicator of consumers and businesses being willing to spend again. If businesses keep cutting costs to make the numbers that Wall Street wants to see, that can only put more downward pressure on jobs and wages, and result in weaker economic growth or another downturn.

“The companies are cutting fat, and in many cases cutting bone and muscle. There’s no organic economic growth there,” said Yamarone.

And then there is this crucial fact of which I was unaware:

Another reason that comparisons to Dow levels of a year ago are risky is that two of the more troubled components — General Motors and Citigroup (C, Fortune 500) — were dropped and replaced by stronger companies such as Cisco Systems (CSCO, Fortune 500) and Travelers Cos. (TRV, Fortune 500) in June.

The recover, when it starts, will take far longer to bring us back to our past levels.  My question is this, how many Baby Boomers are going to simply leave the workforce after this extended recession?  The rehiring that is sure to occur may accelerate due to the certain lack of candidates.  I am hopeful that we see a sling shot of hiring once the corporate world is certain the recover has legs.

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Here is one from the weekly Herman Trend Alert of which I was not familiar:

“corporate cocooning” – staying put out of fear

A rather appropriate construction for today’s economy, wouldn’t you say?  Here is the paragraph from which it is used:

Due to “corporate cocooning” (staying put out of fear), the “unprecedented churning” of the labor market we have forecast in the past has not yet happened. Now, we again see a high level of expectation of job hopping. Wise employers will heed this warning and take steps now to engage their valued employees and avoid this unwanted turnover.

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I was having an economic discussion with my father this past weekend and we got on to the topic of the unemployment rate.  I remember hearing John Sumser in talk last year state that having a national unemployment number is pointless.  Unemployment is local – it depends upon the region and, even more, the city in which you are employed.  I agree completely with that premise.

The current national unemployment number is listed at 9.8%, but there is much discussion about what the real number is.  I have heard that it is closer to 16% if you factor in the people who have stopped looking and/or had their unemployment benefits expire.  Of course, the unemployment rate varies greatly from Detroit to Fargo.  Hence, the national number isn’t necessarily representative of what is happening in your city.

My father was recalling a persuasive argument he heard from a professor in graduate school.  This prof argued that the better statistic would be an employment number.  What percentage of people are employed?  I know it may sound like splitting hairs, but I like the premise.  How many people are presently employed?  I think that number would be more illustrative, on a national level, than our current, questionable unemployment rate.

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From a CNNMoney.com article this morning (emphasis mine):

Private sector employment fell more than expected in September, but the pace of job losses continued to slow, according to a report released Wednesday.

Automatic Data Processing, a payroll-processing firm, said private-sector employers cut 254,000 jobs in September, down from a revised 277,000 in August. It was the smallest monthly total since July 2008.

The decline was greater than the 200,000 loss economists surveyed by Briefing.com had forecast. But the difference was “not statistically meaningful,” according to Joel Prakken, an ADP spokesman and chairman of Macroeconomic Advisers, LLC.

“Not statistically meaningful” – tell that to the 54,000 people who lost their job this month.  Safe to say 10% unemployment is only a couple months away.

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Call me an optimist, but it is always of interest to see where “experts” believe the recovery will begin.  This information comes from the Herman Trend Alert and seems to make simple sense to me:

When considering where the new jobs will come from, remember that there are two kinds of small businesses: those without employees (or non-employer businesses), and those with paid employees (or employer businesses). The US Small Business Office of Advocacy estimates that in 2008 there were 23.1 million non-employer and 6.1 million employer businesses.

When the economy struggles, the number of non-employers tends to increase at higher rates, while the number of employer businesses stagnates or declines. Going into business for themselves (becoming non-employers) has been a lifesaver for an additional 1.7 million individuals and their families.

However since most of these non-employers work only part time, we are most interested in employer firms. In the aftermath of the 1991 downturn, firms with 20-499 employees led employment expansion, while the smaller- and larger-size businesses struggled. During the 2001 downturn, larger firms (500 or more employees) experienced the greatest net employment losses, followed by firms with 20-499 employees. The smallest firms, with fewer than 20 employees, weathered that storm better than the others.

Expect small- and medium-size businesses and the services that support them to lead the economic recovery worldwide.

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I was at a networking group last week where I was able to talk to some jobseekers in a general format.  One of the things that consistently surfaced was the perception from older workers that they were being discriminated against due to their age.

I don’t know if these accusations were true, but they seem more than plausible.  Some of the stories were downright sad – one candidate arrived for an interview and was sent out to the lobby to fill in the dates of his previous employment going back to the beginning…in the 1970’s.  He didn’t get the job.

The massive erosion of wealth over the past year has led to most of these people continuing to search for new employment even though they are in their 60’s.  Just today, I received a PR email regarding a survey by Golden Gateway Financial:

-   Now, almost 50 percent of seniors plan to retire after age 70
-   More than 40 percent of seniors polled said the current economy has had some kind of negative affect on their ability to retire
-   More than 50 percent of respondents said they are concerned that their overall net worth may no longer be enough to sustain their retirement
-   86 percent of seniors said they had a reasonable understanding of their net worth, and 50 percent said that net worth had declined by between 10 and 30 percent

Again, not surprising.  I’m a Gen Xer so these topics were, to be blunt, of little interest to me until I had a chance to talk to people caught in this exact situation.

The repercussions from this economy are going to be with us far longer than the time it takes the economy to recover.  The secondary effect from these “older” jobseekers is going to be the job opportunities facing young people entering the workforce.  Clearly there will be a pull between hiring the experienced older worker vs. the young, inexperienced go-getter.  This tension has always existed – the difference is the future force of it.

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That is the ratio of jobseekers for every advertised job opening in April of this year.  The data comes from the Bureau of Labor Statistics by way of the Career News newsletter (sorry, no link).

…there were 5.4 job hunters for every advertised opening in April. The Job Openings and Labor Turnover Survey said the April ratio was up from 4.8 in March, and up dramatically from 1.7 in December 2007, when the recession began.

That is one tough market for jobseekers.  You notice the reference to “advertised” openings?  At some point, maybe already, networking will become the highest priority for jobseekers in their search for job openings.  The fact that Gen Y is a driven, networking generation leads me to believe they will rely on networking for candidate sourcing before advertised job postings.

Nonetheless, the ratio is remarkable for today’s economy.  The fact that hiring is a trailing indicator means this ratio will likely increase over the next few months.

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The epitome of optimism – a headline from abcnews.com:

Has the Recession Finally Ended?

I guess you could characterize this as “talking up” the economy.  Here is one paragraph from the article that made me laugh (emphasis mine):

Today also brought some positive news from the much-battered retail sector. For the first time in three months, retail sales in May rose, by 0.5 percent, according to the Commerce Department. The sales were pushed higher by increased demand for new cars and sales at gas stations. It was the largest increase since sales rose 1.7 percent in January following six straight monthly declines. While this is good news, part of the jump can be attributed to a recent spike in gas prices which isn’t helping average consumers.

“Sales at gas stations” is clearly the spike in prices as the last sentence states.  That would actually be working against consumers and the economy.  A .5% increase could clearly be nothing more than a spike in gas prices, couldn’t it?

My discussions with candidates has been fairly consistent – the economy is brutal and another spike in gas prices like last year would be a tremendous blow.  Telecommuting jobs will be in even higher demand if a significant gas price increase occurs.

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Hiring, that is, and it appears that it is going to be an even rougher road over the back half of 2009.  If you are in the recruiting, hiring, assessing business you are aware of this fact.  9.4% unemployment is remarkable.  From abcnews.com:

The percentage of people without jobs in this country is now at the highest point in nearly 26 years. Every month since January 2008 we have seen jobs disappear.

So far the economy has shed 6 million jobs since the recession started push (sic) employers to start handing out pink slips.

I’m still looking for the report that lists the number of jobs “saved” by the stimulus package.  I suspect I will have to wait a bit longer for that information.  But fear not, the bleeding does seem to be slowing down:

The Labor Department this morning announced that another 345,000 Americans lost their jobs last month, pushing the unemployment rate up from 8.9 percent in April. Economists had expected a loss of 550,000 jobs and the news that significantly less were lost initially shot the stock market up.

Again, more economists with an inaccurate prediction.  I dare say the economy is too dynamic, too multi-faceted for any one person to accurately predict…much like the weather.  Yet, here is a development for which I was unaware (emphasis mine):

The (EEOC) commission received an unprecedented 95,402 complaints during a 12-month period ending in October. That’s up 15 percent from the prior year. Of those, 24,582 are charges of age discrimination, a massive 29 percent increase.

I think most of us know that companies often use down markets to purge employees whether deserving or not.  A recessionary economy provides cover for companies to layoff workers from a protected class with less liability.  I’m not condoning the practice, just being brutally honest.

This uptick in complaints seems to support this unwritten business practice.  I think an aspect that the reporter did not address is the overall aging of the workforce.  If the Boomers are the majority of the workforce, there stands to reason that there will be a continued increase in age discrimination charges simply based on the numbers.  That data would have provided a needed context to the article.

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