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The Myth of Job Creation

Our board member Mark Lange is a former presidential speech writer, and in fact wrote the George H.W. Bush’s 1991 state of the union address.  In today’s Christian Science Monitor, he writes about last night’s speech in an article entitled Obama and the myth of job creation.

Here are some highlights of Mark’s article:

Redefine our idea of a “job.” The labor market already has, ever since the employment “contract” began to change forever back in the 1980s. Particularly for white collar workers – disproportionately affected in this recession – the prospect of contract work and free agency has never been easier. And by doing something of value, the résumé expands and the long grind (and potentially paralyzing shame) of joblessness is eased.

Re-tool, quickly and regularly. Small businesses looking to expand are finding more independent contractors for Web design, programming, marketing, videography, and similar work. Focus on areas of employment in healthcare and education, where there’s growth.

Reconsider unemployment benefits. Rather than make unemployment insurance an all-benefits-for-no-work proposition (which discourages any work and earnings at all), states should apply the same kind of incentive that worked with the Earned Income Tax Credit – as beneficiaries earn a little more, they receive a little less in benefits, but their net take-home is higher.

Welcome free trade. For seven decades, America’s economic and political leadership has told the rest of the world to open up trade. They did – and we and the global economy prospered. The irony of our closing down trade now makes no sense. It’s our responsibility to mitigate the negative consequences of global trade for the vulnerable (that’s something government can be good at). But to drive living standards up, we need more and freer trade, not less.

Recognize immigration for the competitive advantage it is. Our great secret, relative to Europe and much of Asia, has always been our ability to assimilate and engage the most ambitious people from around the world. This applies as much to the PhD student here from Asia or India as it does to the guy with the leaf-blower. We need to find better ways to enlist them here, not erect paper walls of visa requirements.

Innovation is no abstraction. In fact, all innovation is local – it applies to the payables clerk who comes up with a more readable spreadsheet, or the line manufacturing employee who tweaks and improves a machining process. There’s nothing exotic about “knowledge work” – we all work with our brains. Some of us use them to run our mouths. Others, our hands – on paint brushes, keyboards, school chalk, machine tools – but we all use our brains. And we can all use them better, starting tomorrow.

The economy and unemployment remain burning issues for most of us as this recession marches on worldwide.  What do you think about the role of the government vs. the role of individuals and organizations in creating new jobs?

Consider helping out in Haiti

I usually confine my blog posts to workforce matters, but the people of Haiti are top of mind today.  I was happy to hear that my friend and his family in Haiti survived the earthquake without harm, but many others are in dire need of medical assistance. Please consider a contribution to Doctors Without Borders to help them out.  This recommendation comes from my friend in Haiti.

Support Doctors Without Borders in Haiti


January Retail Labor Index

The January release of the Kronos Retail Labor Index report provides results for the December 2009 Index as well as a year-end recap of trends in the applicant population.  The December Index level was the highest of 2009, at 4.02% (for every 100 applications received, 4.02 hires were made).  This result appears to be driven by a continued decrease in applications (the lowest since August 2008) which outweighed a 7.1% decrease in hirings relative to a year ago.

December unemployment numbers from the Bureau of Labor Statistics show that while unemployment remained constant at 10 percent, the “underemployment” rate, which includes those who have given up looking for work and those employed part time for economic reasons, rose slightly from 17.2% to 17.3%.  We will be watching Kronos application levels closely to see whether recent declines in application volumes are  the result of discouraged unemployed workers giving up on applying, or whether they reflect early signs of an improving labor market.

Holiday 2009 recap. In reviewing the holiday hiring season, which typically is in full swing by October, some interesting dynamics emerged when we compared 2008 and 2009.  September and October Index levels were far higher in 2008 than in 2009, with a new all-time low reached in September 2009 (2.58%), and with only a slight rebound in October 2009 (2.90%).  These numbers reflect the extreme caution with which retailers approached the holiday 2009 season, after being burned by low sales and heavy discounting in 2008.  However, a hiring surge in late November, combined with a decrease in applications, pushed the November 2009 Index above the November 2008 level.  This trend evened out in December, with December 2009 and December 2008 Index levels at the same 4% level.

These Index patterns reflect overall trends in holiday season sales.  In 2008, the extremely weak holiday sales surprised retailers; accordingly, hiring rates were relatively strong early in the season in September and October 2008.  After this experience, and in light of sales projections, retailers held back on hiring in September and October 2009, planning to add staff on an as-needed basis.  By November 2009, with retail sales at an adequate level – 1.3% higher than in November 2008, according to the Census Bureau – retailers were confident enough to add staff in the latter half of November; seasonal sales were weighted towards the end of the season, with December same-store sales posting a 2.8% increase over December 2008, according to the International Council of Shopping Centers.

2009 and the changing applicant pool. Our analysis of application data collected via the Kronos hiring system has revealed some interesting trends which reflect wider changes in the labor market and unemployment rates.  Highlights include:

  • The percentage of male applicants in the 25+ age group has increased from 45% in Q4 2006 to 52% in Q4 2009.  This reflects the disproportionate loss of jobs by men employed in construction and manufacturing.  As a result of job losses in these sectors, more men have entered the retail labor force, and within this age group, men now comprise the majority of applicants.
  • We did not see such a change in the “traditional” retail labor pool – high school and college-age applicants.
  • The applicant pool is becoming older as more experienced workers are competing for entry-level jobs with younger workers.  The percentage of Baby Boomer applicants has increased since 2006 from 6.2% to 8.3%, while Generation Y’s share has dropped from 79% of the total to 74%.
  • Historically, a segment of the population sought part-time retail work either for supplemental income, or to work part-time for lifestyle reasons (for example, as a second household income).  Those specifically seeking part time work have decreased from 43% of the total in Q4 2006 to 34% in Q4 2009.  Less confident of their ability to find work at all, a larger percentage of applicants will now accept either part time or full time work.