A recent Hamilton Project analysis calculated that with making adjustments for population and demographics changes, the “job-gap” has been closed as of July 2017.
Since the Great Recession of 008-2010, when over 8 million jobs disappeared, with economic growth and expansion, those jobs were recovered. But there still was an unemployment rate of 6.3 percent, an indication of a gap that still needed closing, meaning we still weren’t at full employment.
The closing of the jobs gap does not mean that the labor market scars of the Great Recession are entirely healed, even though some economic markers indicate a tight labor market, a low unemployment rate, and relatively abundant job openings, according to the report.
There are still factors like the depressed 25- to 54-year-old employment rate, an elevated share of people working part-time for economic reasons, and restrained wage growth, all consistent with a weaker labor market. So, what is the reason the six million available jobs aren’t being filled?
In July, Digital Journal cited a Goldman Sachs report and testimony from Federal Reserve chair, Janet Yellen before the Senate Banking Committee concerning the impact the opioid crisis has placed on the decline of prime-age participation in the work force.
“The opioid epidemic is intertwined with the story of declining prime-age participation, especially for men, and this reinforces our doubts about a rebound in the participation rate,” David Mericle, an economist at Goldman Sachs, said.
Matching the unemployed with the right job
So with all the underlying problems associated with unemployment, and six million jobs available right now in the country, what can companies do to improve the odds of getting the right employee for the job? Andrew Chamberlain, the chief economist for the job site Glassdoor, says many companies complain that workers don’t have the needed skills required.
And this is true in most health care and technology jobs, especially in the upper levels. “But for the most part, it doesn’t look to be like there is a skills gap,” Chamberlain says. “That’s not the main reason why there are many job openings.” And while Chamberlain agrees that with the low unemployment rate and the U.S. labor force growing slowly, it may be harder for employers to find workers.
But Chamberlain says that is not the real reason. He says part of the problem is in company hiring policies. And Peter Cappelli, a professor at the University of Pennsylvania’s Wharton School, agrees. He points out that companies are posting openings with qualifications that aren’t really necessary.
“They’re just asking for the moon, and not expecting to pay very much for it,” Cappelli says. “And as a result, they [can’t] find those people. Now that [doesn’t] mean there was nobody to do the job; it just [means] that there was nobody at the price they were willing to pay.”
Jason Lorenz works for Human Technology Inc., a corporate recruiter. The company provides workers for firms in the Carolinas where many parts manufacturers for Ford, GM, and BMW are located. He says companies come to him with a long list of qualifications, and he tells them to “get real.”
“We understand that you would love to have that perfect employee, but give me a couple of things a successful candidate would look like for this specific job on this shift,” Lorenz says. He asks employers – does the job candidate need to operate a computer, or does he just need to show up on time and be able to lift 35 pounds?
Companies need to adjust to higher wages and new conditions
Lorenz contends that wages need to rise, even at entry levels if companies want to fill jobs. He tells manufacturers, “If you are below $12 an hour, I don’t know that I’m going to be the person to be able to help you with those jobs.” This is because jobs in the Carolina’s are being filled quickly and the supply of additional workers is shrinking fast.
Cappelli says another problem is that companies have not yet adjusted to the new conditions in the labor market. He points out that for years, companies had their choice of workers, desperate for a job, but with the labor market tightening, things have changed and companies are not responding in kind.
“Wages have not gone up despite all the talk about a tight labor market. And I think most important for the economy, we still don’t see lots of employers being willing to take people in right out of school and train them for jobs,” Cappelli says.
And don’t forget that companies like to meet their quarterly earnings targets, and quite often, those targets don’t include money for training employees. Lorenz instead, finds employees and enrolls them in community colleges to get that training, something the companies should be doing.
“Then we’re able to move those folks from an entry-level position at the $10-to-$12 range and then promote them within those companies at the $16- to $17-an-hour range,” Lorenz says.
The bottom line is this – Companies are going to need to adjust to the new labor market climate if they are going to succeed. “Every open position in the economy is money left on the table,” he says. “It’s a lost paycheck to a worker. It’s also lost productivity to the company,” says Glassdoor’s Chamberlain.
