The Unemployment Rate Is Down – Why That’s NOT Good News

The Unemployment Rate Is Down – Why That’s NOT Good News

By Vinda Rao, Bullhorn

 

The Bureau of Labor Statistics released their nonfarm payroll report today.

The numbers were not very positive, as the nation’s employers only increased their payrolls by 88,000 last month, compared with 268,000 in February – the slowest growth pace since June, missing economists’ expectations by a mile.

Catherine Rampell had a great wrap-up of the payroll report today in the New York Times. There were several things that Catherine wrote that really piqued my interest, in a bad way:

“The unemployment rate, which comes from a different survey, ticked down to 7.6 percent from 7.7 percent, but primarily because more people dropped out of the labor force, not because more people got jobs.

  • “’The drop in the participation rate has been centered on younger workers,’ said Joshua Shapiro, chief economist at MFR Inc., ‘many of whom have given up hope of finding a decent job and are instead continuing in school and racking up enormous amounts of student debt, which has contributed to the recent surge in consumer credit outstanding.’”
  • “Long-term unemployment — joblessness lasting more than six months — has been a persistent problem and could permanently affect workers’ skills, networks and employability.”

 

Rampell also quoted an expert who pointed out that a lot of “retirees who didn’t expect to live in poverty are going to be in poverty” due to long-term unemployment.

 

First of all, this is depressing to read as a human being. There are people in this country who are so used to being ignored by employers that they’ve given up hope. Some may have thought this problem went away with the end of the Great Recession, but far from it. We just hear about it less because other things are making headlines now.

 

The unemployment rate has dipped slightly because people are too worn out to search. We have not solved the problem of rampant unemployment. On the contrary, we’ve just added another problem – disillusionment.

 

Secondly, the stigma and ramifications of long-term unemployment are affecting people regardless of age. We conducted research last year into recruiters’ experiences in placing different types of candidates and this is what we found:

  • The range of time for which a candidate can be unemployed before it becomes difficult for recruiters to find them a job is between six months and one year, according to 36% of respondents. Seventeen percent said that being unemployed for fewer than six months would still make it difficult to place someone in a job and four percent feel it is difficult to place anyone unemployed, no matter the duration.
  • Seventy percent of respondents say candidates in their 30s are the easiest age group for recruiters to place in new jobs. Respondents also said that there is greater demand for candidates in their 40s than for candidates in their 20s. Only one percent of recruiters felt candidates in their 50s were the easiest to place, with zero percent responding favorably for the 60-year-old age group.
  • Recruiters admit that it’s easier for them to place someone with a criminal record (non-felony) in a new job than it is to place someone who has been unemployed for two years.

Additionally, Northeastern University researchers reporting in April 2012 that 53.6% of all Bachelor’s degree-holders under age 25 are unemployed or underemployed.

Bullhorn’s CEO, Art Papas, wrote about the employment issues facing fresh college graduates and the implications of blindly favoring personal development over professional development at the expense of young people’s future livelihoods. Meanwhile, our recent North American Trends Report found that the staffing industry’s biggest challenge for 2013 as “a lack of skilled candidates.” And 76.1% of respondents in a separate question claimed to have a “shortage of skilled candidates” in their respective recruiting sectors, the most common of which was IT.

What does this mean? There are too many unemployed people who are being overlooked for jobs because they don’t have the right skills. Employers are frantically competing for the best and brightest talent in specific sectors such as information technology, and they’re not filling those positions. Why? Because, as one recruiter told us, “candidate compensation requirements are not in line with client expectations.” In other words, companies can’t necessarily afford the best and brightest skilled workers, who can choose from any number of lucrative opportunities.

What’s the answer? Train people. Develop more skilled workers.

Tools like Bullhorn Reach make it easier than ever before for recruiters and hiring managers to identify candidates who have an interest in growing their careers through skills acquisition. And with so many unemployed workers who would be willing to learn new skills and programming languages (companies like Khan Academy offer online education options for free), and fresh college grads who are looking to get a foot in the door, it seems strange that employers would continue to pursue the best of the best candidates who they probably can’t afford or interest. If they were more willing to consider candidates who could be taught skills, instead of looking for those who already have the skills, “a lack of skilled candidates” – as well as unemployment in general – could be a much smaller problem.