January, 2007: A Tsunami is Coming

It's been a while since I've been this late with my thoughts about the job market. Please accept my apologies. I believe you'll find my thoughts worthwhile.

If you've been reading my blog for a while, you'll find I've been bullish about the labor market for some time and, in particular, the technology labor market. I have written about some of these before in piece meal fashion let me put it all together.

Toward the end of last year, we entered a period that will shaped by unprecedent labor shortages in the "developed world" (interpret that as the US and Western Europe.

In the US, there are several factors that have come together to create this vortex of events. They are part demographic; part is caused by government interference. Part is derived by the impact of the 9/11 depression.

The government tracked the last recession and say it began in March 2001 and ended in January, 2002. A recession is defined as two consecutive quarters of negative GDP. In fact, for the labor markets, it, too began in March, 2001 and would have ended in August/September, 2001 were it not for 9/11. The impact of that horrible day was that, as a nation, we were collectively traumatized and companies went into survival mode.

In doing so, millions throughout the country were laid off, new business creation halted and small and large businesses failed. In technology, the government reported that, on average, 200000 jobs per year were lost. My opinion is that the real numbers were actually far larger than the government statistics.

This was a heavily white collar recession. In fact, it was the first US recession to hit technology workers and hit them it did. Technical workers who were fired were older and younger and found it difficult to find work. A common story was one of someone who had been in demand now finding that it took more than a year to find work again.

Their children, seeing their parents suffering through job loss, financial difficulties or ruin, abandoned the idea of considering a career in technology and went in other directions.

Our politicians, hearing an outcry from affected voters against outsourcing and against cheaper foreign workers coming to our country and taking jobs from out of work Americans, reduced the H-1b visa program from approximately 230000 foreign workers per year to 65000.

Then you need to remember this—the baby boom was followed by the baby bust. We have fewer workers entering our labor markets to begin with because their parents delayed having children and then cut back on the supplement we have used(immigration) to support our nation’s labor needs, particularly for skilled labor.

Is it any wonder that many of you are finding it difficult to hire skilled professionals? And that when you hire them, you are paying far more for them than you would have years ago?

This confluence of events can only be alleviated by two conditions—time and/or a revision in the immigration laws to allow more workers into the United States.

Time in that the demographic cohort soon to enter the workforce behind Gen-X and Gen-Y is fairly large—more in keeping with previous groups entering the system.

But that won’t alleviate the pressure that will exist for the next few years where there are just not enough workers to satisfy projected demand.

This more, far more than the decline in real estate prices, may be the cause of the end of the boom in our economy. Unless we have workers, who do you hire?

For the immediate term, companies need to map a course to retain their talent, attract people to their organization while concurrently purging their worst performers.

For job hunters, this will be a second golden era of employment. For several years, talented people will have abundant choices. Firms will be increasing wages to their talent in an effort to retain them

Boomers entering retirement years will be highly sought after, rather than simply discarded and previous generations have been.

Given the technology available, telecommuting will give organizations the choice to retain the services of Moms throughout the early parenting years that normally cause women to leave the workforce and offer them flexible hours.

Yes, it will be an interesting few years.

Jeff Altman

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

© 2007 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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