The PeopleCap Playbook

Timely insights and actionable people strategies for leaders.

Labor Stats Force a Shift in People Strategy

It’s no longer a buyer’s market for talent. Three key labor stats indicate that companies will be forced to do more to attract, retain and develop talent.

1) July’s Unemployment Rate fell slightly to 3.9%

In May, however, the unemployment rate hit 3.8% – its lowest level since 2000. And according to Robert Half & Associates, the unemployment rate for college educated workers was even lower – 2%!

2) July’s Jobs Participation Rate was 62.9%.

The jobs participation rate measures the number of people who are employed plus those who are unemployed but looking for a job as a percentage of the population aged 16 years and over. This stat has trended steadily lower since 2008 when – as one might expect – it dropped sharply due to the recession. What’s interesting is that it has still not recovered, even though the economy has.

Some analysts attribute at least some piece of this trend to the Opioid Crisis. Goldman Sachs Economist, David Mericle, says “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.”

3) The JOLTS (Job Openings Labor Turnover Survey) for May 2018 showed that the number of job openings exceeded the number of people starting new jobs by roughly 800,000.

Since 2014, job openings have outnumbered new hires by a wide margin – by as much as 1.2m in March of this year. One explanation for this is a skills gap. New job openings do not match the skills of the labor force leaving hundreds of thousands of jobs unfilled. For example, one study reports that more than three-quarters (76%) of financial institutions have created new IT roles in the last two years, but are having a hard time finding the IT talent they need. Half of all financial institutions say that hiring IT staff is either “difficult” or “very difficult.”

These numbers are creating a new sense of urgency for companies and forcing them to reevaluate their strategies – and in some cases policies and practices – around hiring, retention and training.

In a recent conversation with HR executives across a broad swath of industries, we learned that it’s anything but business as usual when it comes to talent. Some have raised wages or offered more robust benefits like student debt assistance to remain competitive. Others have partnered with colleges and universities to hire part time student workers to fill gaps and help build a pipeline of new talent. Some are building robust learning programs and relying on internal subject matter experts to train the next generation. Others hinted that for certain positions they have relaxed policies around drug testing or prior convictions in order to cast a wider net. Though the remedies differed, all were very concerned about the current climate and open to thinking creatively to meet their challenges.

What’s our takeaway? Talent is increasingly important and increasingly scarce. To remain competitive, companies will have to develop and execute on a People Strategy that is as comprehensive and detailed as their financial strategy.

Stay tuned to the PeopleCap Playbook for more ideas on talent acquisition, retention and development in the coming months. Contact us to help you develop your People Strategy.