November, 2006: A different view

This is a summary of the unemployment report for October, 2006 coming on after two good months.

The unemployment rate dropped to a five-year low of 4.4 percent in October as employers added 92,000 new jobs. The civilian unemployment rate fell 0.2 percentage point from 4.6 percent in September. It marked the third month in a row that the jobless rate declined.

Workers’ average hourly earnings climbed to $16.91 in October, a 0.4 percent increase from September. That increase was larger than the 0.3 percent rise economists were expecting. Over the last 12 months, wages grew by 3.9 percent.

The average time that the unemployed spent in their search for work in October was 16.5 weeks, an improvement from the average 17.4 weeks registered in September.

There was additional data that spoke to better employment for blacks, Latinos and teens, three populations notorious for high unemployment rates (teens how unemployment rates in the mid teens—like their age).

Now, let me offer an interpretation you may not see in the popular press. I could be wrong but, for those of you on the front lines of hiring, maybe you’ll see what I’m seeing.

After a horrendous recession where we lost so many jobs, after all the news accounts about the impact of offshoring upon the US technology job market (my regular readers know that there are now more people working in information technology than there were at the peak of the dotcom bubble—after we reduced the number of H-1b immigrants admitted into the United States to 75000 per year, after consecutive 2,000,000 new jobs creation years and with so many new business starting that suck people out of the labor market, I believe we are hitting a milestone that makes the job creation numbers misleading.

That milestone is the advent of the era of US labor shortages.

Manpower, an international staffing firm, completed a worldwide annual survey of 32000 employers of all sizes (at least 1000 in the US). The survey looked at companies in many industries came to some startling conclusions.

First of all, the days when a company could extend a job offer and offer someone two choices (take it; leave it) are over for now. More and more firms are noticing something that I have been warning people about for the past year—labor shortages are now a part of the corporate landscape.

45% of employers are finding it difficult to locate engineers, nurses and accountants.

38% of firms are already paying higher salaries.

29% are finding it extremely difficult to find talent (not just the categories above).

25% are already paying higher wages than they were a year ago.

The US economy is expanding at an extraordinary pace. Jobs are going begging because companies can’t find sufficient numbers of people with the skills sought to fill these jobs. Many of these positions are for less experienced people—those who the current generation or population just does not have sufficient numbers to fill.

This has been a demographic inevitability for quite some time and will probably result in a few years of needed wage inflation to replace the half decade of wage deflation that occurred in the post 9/11 era.

For now, the biggest problem firms will have is retaining and obtaining human capital to meet objectives.

I may be found slightly ahead of the curve, but it’s coming.

Jeff Altman

The Big Game Hunter
Concepts in Staffing
jeffaltman@cisny.com

© 2006 all rights reserved.

Jeff Altman, The Big Game Hunter, is Managing Director with Concepts in Staffing, a New York search firm, He has successfully assisted many corporations identify management leaders and staff in technology, accounting, finance, sales, marketing and other disciplines since 1971. He is a certified leader of the ManKind Project, a not for profit organization that assists men with life issues, and a practicing psychotherapist.

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If you would like Jeff and his firm to assist you with hiring staff, or if you would like help with a strategic job change, send an email to him at jeffaltman@cisny.com (If you’re looking for a new position, include your resume).