The signs—nearly all of them—continue to point to a squeaky-tight labor market that is challenging companies looking to hire and expand. Is it really that tight?
The Bureau of Labor Statistics reported in October, for instance, that a record number of Americans were employed: 165 million of us. That agency’s data tracking shows that nearly 2.8 million jobs had been added to the work force in
the year-over-year period. And the numbers say unemployment, at 3.7 percent for September, is at its lowest level
since 1969—when today’s Baby Boomers who are just hitting retirement age were still seniors in high school.
But only in recent months have those job figures influenced employee compensation levels, which have increased only marginally since the official end of the Great Recession nearly 10 years ago.
One reason for the apparent disconnect between hiring executive, prospective candidate and salary: We’re creatures of habit, and we have paid a great deal of attention to the official unemployment rate for too long. Broader measures of unemployment show that, while the nation is returning to historical norms with those metrics, Millions of people remain locked in jobs they consider beneath the true value of their labor and skills, or are holding down multiple lower-end jobs to make ends meet.
A great many headlines flowed from October’s news that the nation had more than 7 million job openings advertised, a figure cited as evidence of the labor market’s tightness. But as opposed to the oft-cited U-3 “official” unemployment rate, the U-6 rate tracked by the BLS showed 7.5 percent of the work force unemployed or under-employed. That’s well over 12 million people—easily enough to fill the jobs available.
What we’re seeing, hiring executives say, is a disparity between the skill sets of the unemployed and under-employed as they relate to demands of jobs that are going unfilled—evidence of the need for more continuing training to align available labor with hiring demand.
If there’s an upside to the unemployment figures, it’s that the spread between the unemployment measures from 2009 and 2018 has closed dramatically. At the peak of job losses in ’09, the U-3 rate hit 10 percent, and U-6 was 17.1 percent—a spread of more than 7 percentage points. By this past October, that had been cut nearly in half, with a U-6 rate of 7.5, something more in line with historical norms, says Tyler Tenbrink, a labor economist for the Kansas Department of Labor.
As a result, Tenbrink said, “we’ve started seeing some stronger pressure on wages. Measured by the pay-
roll survey, we started seeing stronger wage growth in June of this year,” with real hourly earnings up 2.1 percent over June 2017.
Tenbrink also said the department was watching average weekly hours worked, a figure that has also ticked up in the private sector. That, as well, has been trending up each month since March. “It’s another indicator to us that employers are looking for labor,” he said. “They’re willing to schedule current employees for more hours.”
Jake Sorenson, director of business operations at the region’s largest staffing agency, Aerotek, said that irrespective of any labor-demand disconnect, employers hiring at the lowest compensation levels face the biggest challenges in this market.
“With a lot of companies where we’re placing, I want their wages to be above $13 an hour,” said Sorenson. Below that, he said, “wages are sometimes so close to what might get on unemployment. … We want to get a good person a good job at a good com-
Workers are out there, Sorenson said, “but some of the accountability and longevity has changed—people have way more options, so if they are not paid fairly, or if they don’t have the opportunity to move up, they can take another job.” Companies with excessively drawn-out interviewing and hiring processes, he said, are also at risk of losing out, especially with younger workers who are more insistent on getting what they want today.
“There are so many options for workers,” he said, “and some employers are missing the boat on hiring. We see that a lot.”
At the primary sectors served, particularly in engineering, life sciences, professional and industrial settings, he said, “the market is quite a bit tighter.” Adding to the demand right now, he said, has been the white-hot warehousing/logistics sector, which “makes this a very, very attractive place for companies to move here. It’s really, really booming.”
He said the companies that need to rely on temporary workers would do well to use staffing agencies more strategically, especially by bringing on those workers to build up a farm system, of sorts, and have a plan to on-board those workers in full-time, permanent positions.
For those who follow that strategy, he says, “we’re seeing way more people convert (to permanent status). That’s a very high ratio right now because companies are adding and growing.
The upside for most employers now, he said, is that there are no signals of a looming slowdown. “Not at all,” Sorenson said. “We’re not hearing anything—people are making money, they’re successful, and they’re growing.”