US Employment Update: Not Out of the Woods Yet
As part of our TalentWatch® business research program we keep a close watch over US and worldwide employment figures. Each quarter we try to give members actionable insights into key trends in demographics, readiness, and industry-by-industry talent needs.
While the Q3 TalentWatch® report is not out yet, I did just review the August employment statistics in detail, and there are some consistent trends here:
- As you have likely read, US unemployment went up to 9.7% and we lost 216,000 more non-farm jobs (actually we lost 466,000 jobs overall). To put that into perspective, this rate of job loss represents an annualized rate 2% of the total workforce – still a startlingly high number.
- This month every industry lost jobs except government and healthcare (and a slight uptick in Utilities, but this is negligible). While the rate of loss is declining, this is still not positive. Government and Healthcare, the only two growing employment sectors, are support sectors of the economy.
- This week Kronos’ new Retail Labor Index was released, which looks at open positions, job seekers, and retention. It shows that employee retention is at a 3 year high (people are desperate to keep their jobs), while hiring ticked up slightly. However this is Kronos customer data: the Bureau of Labor Statistics shows almost zero retail hiring in July.
- Only Federal and Local governments added any jobs at all, State governments had a net loss of jobs. I am not sure how local governments increased employment when they are among the worst hit of all industry sectors, but maybe I’m biased because I live in California, where the public sector is particularly hard hit.
- Globally, workforce trends are starting to look better. Manpower’s survey of 72,000 employers shows that many countries (Argentina, Australia, Canada, China, Columbia, France, Germany, Hong Kong, India, Ireland, Italy, Sweden, UK) forecast increases in employment in Q4 of 2009. Their data also shows that the US and many other countries continue to see job losses.
If we look back 18 months to January of 2008, when we now believe this recession started to appear, the changes in US employment are very dramatic: the country has lost 18% of its construction jobs, 14.4% of its manufacturing jobs, 4.8% of its retail jobs, 6.3% of its finance and insurance jobs, 8.5% of its professional and business services jobs, and 7.6% of its wholesale trade and distribution jobs.
On the other hand, education and healthcare industry positions have grown by 3.7%, federal jobs have grown by 2.1%, and local government jobs have grown by .5%.
To put it another way, the US economy has changed fairly significantly. In January of 2008 16.1% of the country worked for the Federal, State, and Local government. Today that number has increased to 17.1%. Today 14.7% of the people in the country work in education and healthcare (vs. 13.5% in January of 2008). Manufacturing jobs dropped from 10% to 9% of total employment, construction positions dropped from 5.4% to 4.6% of the total, and professional and business services dropped from 13.1 to 12.7% of all positions.
Is it any wonder why today’s college graduates want to work for the government or go into health-related careers? We, as employers, business leaders, and HR and L&D professionals must work hard to rebuild our organizations so that we can refocus on designing positions and programs that drive deep levels of technical specialization. While today’s economy looks weak, we know that our future depends on new technologies, services, energy sources, and public services. Information industries, new sources of healthy food products, alternative energy, mobile technology, re-engineered financial products, and many more products and services will help us bring our economy back to life.
Rather than watch these statistics and wait for them to turn around, I think it is our job to create a new future. TalentWatch® research continues to show that despite the large number of people unemployed, businesses still suffer from technical and professional skills shortages. Our research clearly shows that “deep specialization” is the secret key which has helped businesses survive this recession. Companies like Accenture, Intel, Goldman Sachs, IBM, Cisco, Google, Aetna, and many others have gained market share during this business cycle. They did this by becoming even more focused on hiring and developing deep levels of expertise in their core markets, a strategy which helps every business succeed.
Although much of the employment data is discouraging, I see this as a wake-up call for us as HR and L&D leaders to focus on defining and building high-value job roles, recruiting and developing people for these roles, and becoming rutheless in our efforts to make sure that all HR and L&D spending is focused. While HR spending is down almost 8% in 2009 and L&D spending is down over 11%, these changes give you the opportunity to redefine your priorities and put your reduced resources into the key talent strategies that drive your organization’s competitive advantage.
I spoke with the head of talent acquisition for one of the biggest banks in the US last week and she told me that “while we are not spending a penny on external recruiting right now, we are actively talking with key talent in all areas and very aggressively moving people around the company to make sure they are in the highest value roles.” A good lesson for all of us.