RSSThe following predictions regarding employment conditions during 2006 are provided by Ted Daywalt. Ted is CEO of VetJobs, the largest military related job board on the internet. For more information about VetJobs, visit www.vetjobs.com. CRI is proud to support America’s veterans, and encourages employers to utilize VetJobs as a source for candidates for job openings.
By Ted Daywalt:
I predict that 2006 will be a banner year for candidates seeking employment. The employment market for 2006 has emerged as a seller’s market, which will make it harder for employers to find good, qualified candidates. For the last five months I have been hearing employers complaining about labor shortages throughout the United States. The labor shortage situation is only going to get worse.
But to understand where the American economy is going, let’s take a quick look at where we have been.
Many politicians made great issue in the last presidential campaign that during the recent recession median-income numbers fell slightly. While technically true, what they did not talk about is this has been the pattern during every recession and immediate post recession period since the Great Depression. What is really important is the long-term trend. When one examines the long-term trend data objectively, there is no room for argument. The data clearly demonstrate that the middle class has not been shrinking or losing ground as some would have you believe. The facts confirm that the middle class has been getting richer.
As discussed in the Wall Street Journal (12/21/2005 Pg A18, Great American Dream Machine, Stephen Moore and Lincoln Anderson), the Census Bureau and the Federal Reserve Board reported that over the last three decades the typical American family experienced a rapid growth in their income and wealth. Now, nearly six out of ten households own stock and two out of three own their own homes! And for the first time ever, the average family net worth (assets minus liabilities adjusted for inflation) exceeds $100,000. The median family income has climbed to an all time record of $54,000.
This is incredibly positive news, which not unsurprisingly in the current political climate the national mainstream media has ignored. The media has barraged us with misleading and gloomy stories taunting stagnant wages, claiming a growing income gap between rich and poor, the disappearing middle class, and rising poverty in America. The reality is quite the opposite. The press coverage reminds me of Mark Twain’s comment: “If you don’t read the daily newspaper you are uninformed. If you do read the daily newspaper you are misinformed.”
Let us review some real facts. The Census data from 1967 to 2004 provides the percentage of families that fall within various income ranges starting at $0 and going to $100,000 plus. While most families in the 1960s were single income earners and many families today are dual income families, the trend is significant. These data show (adjusted for inflation) that in 1967 one in 25 families earned a real income of $100,000, whereas now one is six earn $100,000. The percentage of families with incomes of $75,000 a year has tripled from 9% to 27%. The data showed that virtually every income group rose in real income. The current 12.7% poverty rate is the lowest coming out of any recession in the last 25 years. In fact, the unemployment rate during this last recession was the lowest of any since the great depression! This huge move out of lower incomes and into middle and higher incomes proves that upward mobility is the rule, not the exception, in America today.
Reinforcing this data is the current unemployment report. The Bureau of Labor Statistics reported Unemployment rates were lower in November 2005 than a year earlier in 224 of the 367 metropolitan areas, higher in 118 areas, and unchanged in 25 areas. The general unemployment trend in the metropolitan areas continues to go down. This is also typical following all of the past recessions. Of the eighteen metropolitan areas that registered jobless rates below 3.0 percent, 13 were in the South. Many would attribute this to the benefits of a right-to-work state versus union state. Only eight metropolitan areas, most of which were impacted by hurricanes, recorded rates of 10.0 percent or more, down drastically from last year. The national unemployment rate was 4.8 percent, not seasonally adjusted, down from 5.2 percent a year earlier. With normal unemployment now considered to be 5.0 percent, the United States is in a labor shortage situation.
And I might add that there is no economy in the world that could have had this incredible performance while simultaneously suffering the attacks and economic trauma of 9/11, the stock collapse from the dot com stock bomb, the damages from the hurricane season and be fighting a long term world wide war against a non-territorial foe. The American economy is unequalled and continues to perform in spite of the naysayers. You might want to ask the national press why they continue to refuse to cover the positive news. And don’t accept their answer that good news does not sell. Good news does sell and makes those who refuse to cover it look foolish or politically motivated.
With this as background, I have surveyed the Internet for what people think will be happening in the United States economy in terms of employment for 2006. After reading many predictions, here are my baker’s dozen predictions for 2006:
1. Labor shortages will become very acute and painful for companies.
As has happened in previous post-recessionary periods, the economy’s skill requirements have changed. And labor shortages will come from two areas: real shortage of actual candidates or shortages of candidates with current skill sets. For example, we do not have a shortage of programmers. Rather, we have a shortage of programmers who have the current skill sets required by employers. But in the trade craft area, due to the rebuilding that is taking place in the wake of Katrina, there is a real shortage of trade skilled individuals (HVAC, plumbers, carpenters, electricians, etc). Skilled crafts people are in high demand nationally and there are not enough people trained in the trade crafts. And there is a shortage of qualified executives. This is due in great part to the flattening of corporations, which started in the late 1980s, followed by the lengthy recession. The result is there has not been a training ground for middle managers and senior executives. The labor shortage is already here and employers will be looking on the labor shortages of the late 1990s with fondness. For more information on this phenomenon, read Impending Crisis, Too Many Jobs, Too FewPeople by Roger Herman, Tom Olivo and Joyce Gioia.
2. Competition for qualified workers by employers will intensify.
As the economy continues to move away from the recession, the job growth in the small to medium sized companies will continue to grow rapidly. This means more jobs, but not enough qualified candidates. Retail giants will be hard pressed to find enough employees for their expansion plans. The days of hiring bonuses, cars and special incentives are already returning. It is definitely a seller’s market. And those employers who do not make efficient use of creative incentives will be unable to attract the candidates they need to grow their companies.
3. Labor shortages will force employers to seek non-traditional employees.
In the 1990s the joke was if you had stayed at a company more than 18 months, what was wrong with you? Companies learned from that mistake and now want a more stable work force. The older worker offers that stability. The competition for qualified employees will encourage employers to seek new sources of candidates. This includes a bigger effort to hire veterans and transitioning military, candidates with disabilities and candidates from the older worker population. There will be issues of training and skill sets involved for the disabled and the older workers, but employers will be willing to pay the training costs in order to increase the labor pool.
4. Employers will make greater use the Internet for recruiting.
A WEDDLE’s study of over 3,000 candidates who had recently obtained a job found that candidates were finding jobs using Internet job boards, especially niche sites, three to one over any other source. And importantly, 69.7% expected to find their next job using an Internet job board. Another study of 3,900 recruiters and human resource managers found that 82% got their best candidates from internet job boards. The paradigm shift in terms of how to find a job is complete. The Internet has replaced newspapers and networking as the dominant source for finding a new job. And employers who do not make use of the Internet, especially niche job boards, will not be reaching their target candidate population. The use of Internet blogs for recruiting purposes will increase.
5. There will be a greater acceptance of flexible work by employers.
With the shortage of workers, employers will be more open to job sharing, working from home, and flexible work schedules. Using the Internet will give more employees greater flexibility. But this will require a serious paradigm shift in how companies treat, compensate and manage their employees.
6. Employers will put greater emphasis on employee training and retention.
Training and retention go hand in hand. Better training and especially better on-boarding, leads to better retention. Retention reduces turnover, which provides stability and leads to better profits. My concern here is that employers are not looking at this area and will be too late in making the needed changes before employees leave. Over the last two centuries, a person could learn a skill or trade and never have to go back to school in order to retain a job. That paradigm started to change in the 1970s. With the United States now being in an information economy (or whatever the latest fad term is today), training and further education will be a continuous event. In order to be competitive in today’s work environment, candidates will continuously have to be upgrading their skills and education.
7. Job hopping will accelerate in the first half of the year.
As more jobs become available, candidates will move from those companies who they felt did not treat them fairly during the recession. This is another trend that is noticed after each recession. And some companies have earned the reputation for not treating their employees well. With the advent of Internet chat rooms and blogs, those companies that do not treat their employees well are discussed in great detail. This will place a severe burden on the recruiting function in many companies, but be a source of good employees for other companies.
8. Retirement as we know it will change.
Retirement as we know it in North America and Europe is a relatively recent phenomenon, which accelerated in the post World War I economy and became a standard after World War II. Prior to World War I, few people actually retired. The idea of just playing golf four times a week is not as appealing today as in the past. People want to have meaning in their lives. So people are now working longer, but in different jobs. Many now work into their eighties and nineties. This will have a major socio-economic impact on our society.
9. Sending some jobs off-shore will continue, but more jobs will be coming to the United States.
Employers in developed countries will continue to send work to less-developed countries for cost savings, but it is not the mass exodus many politicians had us believing. As one study pointed out, only 1.5 million jobs were off-shored from ALL the developed countries. Peter Drucker pointed out that for every low wage, low skill job the United States off-shored, the country imported two high wage, high skill jobs. It is fascinating to now watch China off-shoring jobs because their wages and standard of living has improved. This is a repeat of what happened in Japan in the 1960s and 1970s. Work that is sensitive to customer satisfaction, involves cross-cultural communication, or is technical with a need for quality or creativity will return to the home country. And many companies had to learn the hard way that copyright and trade secret laws are not enforceable in many third world countries.
10. Out-sourcing of jobs from union states to non-union states will continue.
Thanks to the union movement of the late 1800s and early 1900s, the United States has one of the finest work environments in the world. The problem is everything the unions fought for is now law. And the unions of today do not have a real purpose. Union states like Michigan and Ohio are having problems attracting jobs and getting investment due to the perception of union work rules. If you are investing in a company and want maximum productivity from your employees, you can not get the productivity with the current environment in union states. A classic case is the automotive industry. Note that the new automotive plants built in the last fifteen years have been in Alabama, South Carolina and Tennessee, not in Michigan and Ohio and Pennsylvania where the older plants and automotive labor existed. This was a political issue in the last election and will probably be an issue in the next election. But as the economy continues to improve, companies will move their jobs to where they can get the best productivity, and that is in the right-to-work states.
11. The immigrant labor issue will have to be resolved to keep the United States competitive.
The issue of illegal immigration is a hot political issue and emotional issue with many voters in the United States today. Unless you are a Native American Indian, every American family was at some point immigrants. A formal immigration policy was not implemented in the United States until the mid-1800s. Prior to then, if you could make it the United States, you became a citizen. Laws have changed all that. While some consider the immigrants felons since they are living here without visas, companies need the labor due to the rising labor shortage. Estimates of undocumented workers range from twelve to twenty million who are currently working illegally in the United States. But the fact remains that if there was not a demand for their labor, they would not be coming. They are coming to America from countries all around the world. And companies would not be hiring these workers if the companies had viable alternatives. Not all illegal immigrants are working in low wage, unskilled jobs. Many are skilled professionals. Our work visa system will have to undergo serious revision to make it easier for people to come to the United States to work. The labor shortage will force this issue, if not in 2006, definitely by 2007. Ultimately, some sort of amnesty will have to be worked out, document all the illegal workers, and then move forward with a more workable work visa system. Then the immigrants will be paying taxes and supporting the services they use. Security issues during this time of war will be a factor. The immigration issue will be a political conundrum. But the sooner we as a nation tackle the issue, the more competitive our economy will be on the world economic stage.
12. Political correctness and EEOC policies will have to change to retain employees.
When equal employment opportunity (EEO) programs were first starting to be implemented in the late 1960s, they were needed in order to help eliminate racism. But over the last fifty years, the problem of racism in the work force for the most part has been eliminated. Now, the country is seeing a rash of reverse discrimination law suits. The Equal Employment Opportunity Commission (EEOC) recently filed six cases alleging this type of discrimination. More importantly, employees who are highly qualified, irrespective of race, do not want to hear from their employers that they can not be promoted due to a corporate policy of meeting quotas or wanting to promote based more on a person’s ethnicity rather than capabilities and education. To see obviously less qualified workers get promoted over more qualified workers destroys company morale and reduces retention, which negatively affects profits. Employees will not stay in an environment where they feel they are not being treated fairly. If companies continue this practice, they will lose their best employees to the competition. It is a good thing that political correctness is finally running its course in the United States.
And finally, to borrow from The Herman Group, Neal Boortz and Rush Limbaugh:
13. Employers will become increasingly dissatisfied with public schools.
Managers are becoming increasingly frustrated with the low level of preparation of the entry level workforce coming out of our public school system. As a result, corporate executives will be demanding greater performance from public schools and technical, community, and four-year colleges. Local leaders will have to focus more resources on improving local education in order to improve tomorrow’s workforce. It is disappointing that high school graduates cannot read properly, write a letter, do basic math or received any training in history. A great strength of the American economy has been its educational system. But political correctness, combined with school boards more interested in pushing religion than education, school boards having to fight Unnecessary ACLU suits and having to deal with unfunded federal mandates, have brought our educational system to a new low. The public primary and secondary education system has to be improved if America is to maintain a strong economy.
Ted Daywalt is CEO and President of VetJobs, the largest military related job board on the Internet. Ted is an internationally recognized expert on the use of the Internet for recruiting. Previously, he held senior executive positions in private industry. Additionally, he has 30 years in the military, seven years on active duty and twenty-three years in the Naval Reserve Intelligence Program, retiring as a Navy Captain. Mr. Daywalt is a Thought Leader for the Human Capital Institute, the host of a weekly career radio show called Career Call and sits on several national boards of directors. Ted earned a BS from Florida State University, an MA from the University of Southern California and an MBA from Emory University. Ted can be contacted at tdaywalt@vetjobs.com.
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