As the U.S. economy continues to falter, unemployment has never been such an influencing factor since the Great Depression. Unemployment stands at between 12 percent and 15 percent, not the 9 percent you hear every day. That number is based on government statistics that come from people registering for unemployment. In reality, it is estimated that there are as many 25 million people who are currently unemployed.
The average monthly paycheck is $3,500. The average monthly unemployment check is $1,000. That means it costs the government as much as $50 billion each month in lost payroll taxes and paid unemployment benefits. The question then becomes, “How does the future look for job seekers, employers and the economy as a whole?” Also, “How does the HR and talent management industry react to the constantly changing landscape during these uncertain times?”
Many manufacturing jobs are simply gone forever. They are not coming back, either as a result of outsourcing overseas or because certain sectors have become obsolete or uneconomic from a production standpoint. Today, more than 50 percent of consumer goods — from semiconductors to washing machines — are manufactured outside of the U.S., and that trend continues to increase. At the same time, new industries are emerging, which are very much technology-driven but will take time to develop their full potential, especially as it relates to employment.
As a result, many companies are outsourcing their help desks and customer service activities to countries like India, which is having the effect of creating something of an unemployable labor pool in the U.S., due to a lack of job training and/or education.
So what this means is that for as far as the eye can see, we risk having a permanent unemployment rate of between 8 percent and 10 percent, compared to what was previously the norm of between 3 percent and 5 percent.
Looking to the future, the private sector of the U.S. economy is going to be far more dependent on service industries than manufacturing. Therefore, the human capital of industry must be re-educated and re-trained to meet this new criteria. Initially, it will be a painful transition that probably will get much worse before it gets better.
Human resource managers are now looking at significant changes in their hiring practices in an effort to reduce costs and improve efficiency. Due to the uncertain economic outlook, companies are relying more on temporary staffing than full-time employees. Fewer companies are outsourcing their search requirements and are scanning the job boards and going to social networks, such as LinkedIn, Twitter, Facebook and cloud computing to identify job applicants — from CEOs to entry-level trainees. This, in turn, has required talent management firms, such as ours, to essentially reinvent themselves.
No more brick-and-mortar office space. Outsourcing of consultants and virtual delivery has become the norm. And, many client companies have decided not to provide outplacement services when they plan a reduction in their work force.
The retained search business has also become a victim of these changes. Ancillary services, such as executive coaching and leadership development programs, have been put on hold by many employers indefinitely.
As a result, our company, ECS, has adopted something of a hybrid approach that incorporates a hi-tech/hi-touch delivery system, providing the best of both worlds to the candidate, including high-quality virtual programs as well as the more personal one-on-one consultation.
Today, the industry is becoming more sophisticated in the development of online career centers and interactive webinars. Consolidation has also begun to create economies of scale. All of the changes now allow candidates a choice to develop their job search from home by accessing the selected service providers’ website, as well as select online certified job training programs. This change has been slow in coming but is now more the rule that the exception. As such, more focus is being given to alternative careers relative to preferred training options and home office environments.
This will not be an overnight recovery. We anticipate unemployment will continue at between 8 percent and 10 percent well into 2012. Political uncertainty, along with tightening of bank credit, concern about higher taxes and the unknowns of health care reform, virtually guarantee it.
Most people in this country want to work and be successful. If we can combine this desire with a re-education program where we have round pegs in round holes, we really can “win the future.”
A viable solution is creating a task force composed of management, government, labor, educators and HR professionals. This group could begin the process of industrial renewal that will put us on a path toward rebuilding our labor pool into a more practical, sustainable level that will launch us into the 21st century and beyond.
In this land of opportunity, there is room for everyone to succeed in their own way. That’s what makes America great.
Peter Munson is managing partner of Executive Career Services. Reach him at [email protected] or (310) 442-7734.