The Job Market Blog | TheJobMarketBlog.com

We are almost at the end of 2009, just over one year since the world financial markets and took jobs with them throughout the world.

In the USA in July, 2008, unemployment stood at 5.7%. Today, we are almost double that rate at 10.2%.

A large amount of that can be attributed to the collapse of the credit markets, the fear instilled in people, job loss . . . you know, everything that we read about every day in almost every story that covers the job market and employment.

What is fascinating is how little has been covered about the failure of the stimulus bill to actually stimulate the US economy.

The administration is correct in pointing out that the bill saved jobs– the jobs it saved though were government jobs at the state and local levels. State governments were permitted to take half the money they received and apply it to current operating expenses to help reduce the impact of lost tax revenues.

This was enormously helpful to large spending states like California, New York and Massachusetts in helping reduce government programs (and by extension) and employee cuts. Invariably, the first workers cut are teachers (I thought their union was more powerful than that. Next come hospitals. All the cuts designed to scare taxpayers before the states get serious and cut bureaucrats.

The problem I forecast early this year has come to pass–most of the stimulus money was back-ended. By that I mean, no more than 20% of the money has been spent so far so instead of stimulating is has been preserving a status quo.

And not a good one at that.

So the real stimulus money is going to be spent beginning next year and things will start improving next year! Hurray!

Unfortunately, business hates change and among the many changes this administration has focused on is healthcare reform and “cap and trade.” I am not saying these are bad things (although I think what is working its way through the system is in both cases for reasons it is unnecessary for me to explain), it is just that business has no idea how to plan for the additional costs that will come with these changes.

We have listened to so many different proposals for healthcare legislation for the past year . . . public option, no public option, insurance exchanges, tax credits, the Baucus bill . . . on and on. What business knows is that the cost of hiring a worker is about to increase significantly in order to increase coverage for those who do not currently have insurance.

Why would any significant hiring go on until business knows what the costs will be? How does business bid a contract to perform a service until it knows what its labor costs will truly be?

Again, I am not debating merits. I am pointing out unintended consequences of our one year long debate over healthcare during the midst of an economic crisis.

And crisis it is.

The unemployment rate is only part of the story. To re-absorb all the workers who have lost jobs PLUS take on all the students who will be graduating universities and want to enter the system is going to take years (send your graduates back for a Masters).

Plus wages and real wages (inflation adjusted/ currency depreciated purchasing power) is collapsing and won’t end any time soon. As I said to a friend recently, salary levels in IT haven’t changed in the last 10 years . . . and it has nothing to do with outsourcing (that will have to wait for another time).

What do we have to look forward to?

To use that memorable quote (at lest to me) in “Rocky III,”

Interviewer: “What’s your prediction for the fight?”
“Clubber Lang: My prediction?
Interviewer: Yes, your prediction.
[Clubber looks into camera]
Clubber Lang: Pain!

Although there are one or two modest signs of recovery (white collar hiring has improved and temporary labor has shown a modest increase), budgets were being formulated during the summer and approved (for calendar year corporations) during October to go into effect in January. How optimistic do you think people were during the summer?

Add the weight of potential change is hanging over the US economic system that will continue to inhibit job creation until resolved and we have a mediocre year ahead of us in 2010.

And people are getting hired and some strategies are working. I teach those strategies in my VIP program.

© 2009 all rights reserved

Imagine that you’re on a raft in the ocean. Off in the distance you see a hurricane. What’s the first thing you decide to do?

Paddle as fast as you can to get to shore so you can live for another day! You don’t care where or what y0u do . . .You just try to get to shore and live, right?

Official unemployment is now at 8.9% but that is a low number. We all know that it does not include people who are no longer looking for work and those who have already exceeded the period of time that government collects benefits.

But what about the people who are used to working full time and had to accept a part time job (The Democrats used to call them “the under-employed” when Bush was President)?. What about business owners who have stopped taking a pay check for themselves? These people are not counted.

And among those who are counted are new government census workers who will be out of a job in a while. Those are not “good jobs” with any sort of future. Those people who will be out of work soon enough.

Ah! The government now says there are 3 million jobs available in the US! Good news, right?

The problem is that many of these positions require specialized skills that require years of training. The unemployed don’t have the skills sought and are unemployable.

For example, how many Pediatric Gastroenterologists do you think are among the unemployed? Pharmacists? Cardiologists? Orthopedic Surgeons? OK, you understand that there are many jobs in the medical profession that exist.

But it isn’t likely that there are many unemployed people who would qualify for roles senior tax accountants, energy traders, compliance analysts, be a registered investment advisor in Boise, Idaho or be willing to move to Boise.

And thus in those two paragraphs is defined the  problems we face . . . the skills sought in the Obama era or different than those sought in the Bush era and require specialized training that requires years to achieve. Secondly, even if you have the experience, you don’t live where the jobs are and can’t move because you can’t sell your house and, even if you could, you’re reluctant to lose money on the deal.

The people with an advantage are those who are young and single. They have less to lose with a move and fewer ties that bind them. The problem is they don’t make much money and can’t afford set up costs for the move.

The structural shifts in the economy are enormous and, from a jobs perspective, will continue on for some time.

It is critical to give yourself the financial chance to outlast this hurricane by cutting expenses drastically.  This will also help because, in many fields, wages are also coming down.

In most parts of the country, people already understand that they will be earning less than they previously did. Every employer knows that they can extend low job offers for positions because if there first choice won’t accept, the second choice will.

So even though the banks are doing better and all the rosy news will start showing up soon, from a jobs perspective, this is going to be a long slow grind back.

Jeff Altman, The Big Game Hunter
Concepts in Staffing
TheBigGameHunter@cisny.com

© 2009 all rights reserved.