Employment is a name that gets through around a lot in the media. We care about the unemployment rate, play with graphs showing how this is a “blue-collar recession,” and hope to our 1st amendment gods that we don’t become part of the statistic. But other than a rate that pops up on headlines every month, people know very little about the employment situation in the US. I’d like to start with a look at the major employment reports, talk about the current situation, and speculate about the future.
The Reports:
Jobless Claims – Released every Thursday, jobless claims are published by the Department of Labor and contain basically two metrics. The first is “initial claims,” the second is “continuing claims.” These claims or jobless claims, or claims for unemployment benefits. Initial claims are the first time filings and continuing claims are self-explanatory. Generally speaking, the market does not move based on these releases, but a big surprise could. The market is mostly concerned with initial claims, which have lately been in the 400,000 range. As a comparison, this time last year it was more like 600,000. However that’s a relative improvement and this number really needs to drop below 400,000. More or less, continuing claims tends to move with initial claims.
Employment Situation – Released monthly by the Bureau of Labor Statistics, this is the number that actually gives us our unemployment rate. This rate comes from a survey conducted of American households. More data is collected, thus it also takes longer to organize and analyze. The market is very much sensitive to this rate. However there’s more to the employment situation than the employment rate you’re familiar with. The report also shows job growth (loss), average hourly earnings, average workweek, and the underemployment rate (U6). By the way, it makes little difference if you use unemployment or underemployment because they tend to move in lock-step.
So what does the employment situation look like in the US?
Unfortunately, it’s bad. But it could be worse. The unemployment rate has been hanging out around 10% for months now. It will likely continue to hang around there a while still. But this can actually be a sign of improvement. See, the unemployment rate often cited does not include workers that have just given up the search for a job. Sometimes people give up and try again 6 months later, only they don’t find work then either. However now they show up as unemployed in the rate. The latest release of data (up 0.2% to 9.9%) wasn’t surprising because workers are returning to the job search. If they hadn’t we might have seen an improvement in the rate since the economy has been adding jobs for the last 4 months.
The problem is we aren’t adding jobs fast enough. And there are other problems as well. We’re getting more efficient. We’re able to do the same amount of productivity in less time. Said otherwise, we can do more with less labor. That’s great news for a business trying to save money, bad news for the unemployed. Businesses were forced to lay off people and found they didn’t really need the people they laid off. Manufacturers may have moved their operations overseas as well. These are both examples of jobs that have left this economy, and aren’t coming back. Not good for overall health.
And what does the future look like?
We’re going to have high unemployment for the next year or two. Increases in hiring will continue to be offset by people reentering the workforce. To make matters worse, the effects of government stimulus are starting to wear off so we may see increases in layoffs. A number of companies are just hanging by a thread and the prognosis doesn’t look good for them going forward. They need a fast recovery now to survive, and that’s not happening. I wish I were alone in this thinking, but I know of no major economist that expects dramatic improvements in employment in the near future.
And I wish the bad news ended there. Baby boomers were SO CLOSE to retirement. They were going to take their big salaries and pensions and settle into the Villages to be brain-washed by golf and overwhelmed with Medicare paperwork. But the recession has put retirement plans on hold. All those jobs they were expected to vacate are still filled, by them. Their portfolios got killed in the recession and now they’re scared of losing everything again. The ones that got laid off are more experienced than you and willing to take a paycut to get another job. I had a very enlightening conversation with my tax preparer. Basically, executives with MBAs used to being paid $300k a year are willing to take a job for $80k now. They’re more qualified than you and not so old that they won’t be useful. The result is high unemployment for recent college grads that were brainwashed by their career services departments at college there would be high demand for us when we got out into the real world. I’m employed, but I’m not at all following the career that actually existed for me a few years ago. But enough personal stuff. The fundamentals of employment still exist. Undereducated and minorities are the most unemployed. Having a college degree does pay off.
Statistically speaking, I know that a good portion of my readers are unemployed. I also know people I care about are unemployed and read my blog. I want you all to keep a few things in mind:
There is nothing wrong with you. If you know you are a good worker, then you need to know that people out there do want to hire you. They just can’t or are very hard to find. Your unemployment is less a reflection of your work ethic as it is timing and bad luck. Layoff decisions are rarely made based on thoughtful processes of companies trying to get rid of their worst 10% as it is the organization cutting a specific unit. Gaps in employment are OK, hiring managers expect these days to see a mix of applications from people that are unemployed and employed. Make up for it with a good cover letter explaining how you’ve kept busy and up to date on the happenings in that particular industry. It’s hard to stand out in a crowd of resumes, especially since more people are applying for the jobs that do exist. Look for ways to grab a manager’s attention. And be flexible. You probably have a good idea of what you’d like to do, but the only time to ever be picky is if you have multiple offers on the table. This doesn’t mean to sell yourself short, just explore potential careers you hadn’t thought of before. Finally, I hate to admit it, but it really is about who you know not what you see posted on job sites. I’ve gotten my last two jobs by harassing an HR recruiter and using my personal network. Both jobs were “posted” for legal reasons but it was about what I did that moved me to the front of the pack. My next job is simply the result of an application, so things go both ways. But trust me, it’s who you know or who you force yourself to know. Identify jobs you want, then identify the people in them.
 By The Weakonomist |
The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice. |
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