Sorting out the May Jobs Numbers

Sorting out the May Jobs Numbers

Many very smart people have been working overtime trying to make sense of the May jobs numbers.  Economists have been poring over them.  Journalists have tried to translate them – some to explain to those who aren’t economists, some to soothe the fears of the average American, and of course, some to play to their audiences.

Compensation consultants comb over the numbers looking for clues.  Will they affect IT jobs? Will this relieve pressure over in another industry? Will job gains overall, regardless of industry, drive people back to stores and restaurants?

Suddenly the image came into focus.  Regardless of who you are, economist, journalist, or comp consultant, we all keep looking to the past for contextual clues to interpret these numbers.  That is about as sophisticated as the sorting toys that you gave toddlers in the 1960s. 

But that is how everyone IS looking at the jobs numbers.  “Oh, we have this many jobs openings and this many people out of work, so let’s just stack them up, and we know they will fit in this order. DONE.”

Kids sorting toys evolved.  In the 1970s, toys emerged that required you fit several different shapes into the space.  Far more analogous to trying to match skills and openings.  Then came the toy with the crazy shapes fixed upon wavy wires – they wouldn’t stay in place, very representative of today’s labor force. Today, kids’ sorting toys are so complex that they demand collaboration, one of those soft skills.

We all need to get that simple ring stacking sorter out of our head.  It will never be that simple again.

Reallocation & Retraining

Reallocation & Retraining

Despite the headache caused by all of the labor market reading done for our last post, we’ve persevered.  

Some Chicago economists have had their thinking caps on, and their musings are worth sharing. They are asking the right questions as we contemplate labor markets and human capital post-pandemic.  

The Chicago Fed’s April paper focused on this:  Why didn’t more people from affected industries move over to industries that were NOT affected by the pandemic? “One sign that Covid might have increased the need for labor reallocation is the fact that even while unemployment rose substantially, firms reported an increase in job openings, the opposite of what normally happens in a recession.”

That article raised a nagging question:  Do workers lack the ability to retrain? The resources? Or the incentives?

One of Chicago’s most wry economists, Carl Tannenbaum, addresses the risks if people do NOT retrain. Solving these problems will not be easy, but he rightly points out, failing to address them will lead to even larger problems along geo-political lines. His piece’s topic sentence sums it up:  “Renewing human capital is as important as renewing physical capital.”

Solutions depend on cooperation and innovation. Education needs to orient to life-long upskilling, supporting a different concept of education before 18 and after 18, with government support. Companies must put their money where their mouth was when they signed the Business Roundtable document in 2019. If they create that ecosystem, they will retain workers for far longer—hiring based on competencies for life-long learning—and partnering with employees committed to constant up-skilling.

So many numbers, so little time

So many numbers, so little time

This past weekend seemed a perfect time to catch up on some labor market reading.  

First topic: the real unemployment in the U.S. This article does a great job of explaining the difference between the monthly numbers released by the BLS, U3, and the more accurate measure of U6, which includes those whose unemployment benefits have run out, or who are too discouraged to look for jobs. After reading their estimate on actual unemployment, anyone would be discouraged. 

Next was an article in Crain’s Chicago Business regarding staff shortages in Chicago restaurants. Many factors contribute to this, including the current, enhanced unemployment benefits. In addition, until fully vaccinated, some are very reluctant to come back to the workplace, especially one that demands constant interaction with the unmasked public.  

Finally, the most recent Economist issue featured a special report about the future of work.  These articles point out some bright spots, including how quickly employment rebounded despite dire predictions, to how many jobs were NOT automated during the pandemic. The newspaper’s overall take is this: “Today, as the economy emerges from the pandemic, a reversal of the primacy of capital over labour beckons – and it will come sooner than you think.” 

So, the only conclusion for this firm? We will be spending much more time pouring over even more jobs data to make sense of how the labor markets are affecting our clients.