arketI did not write this, but thought it was great information to share. Michael Blackman regularly creates "The Blackman Report", helping us to better understand today's labor market. I hope this can shed some light on the sometimes confusing, BLS data:
THE BLACKMAN REPORT
LABOR MARKET CONFUSION WHAT’S BEHIND THE HEADLINES
EMPLOYMENT INDICATORS
• Total unemployment: 9%
• College educated unemployment: 4.5%
• The temp sector (1.7% of payroll) created about 30% of private payroll jobs over the last year
The April BLS report indicates continued labor market strengthening, consistent with other labor indicators. Highlights include:
• Headline non-farm payroll for April was a much better than the expected net, with 244,000 jobs created, and much better than the 186,000-plus consensus.
• Growth was driven by the private sector, which was up by 268,000, reflecting the strongest level of private sector job growth since the “good old days” of February 2006.
Growth in the BLS/ADP reports in recent months show a return to a solid rate of growth, consistent with some of the best multi-month periods of the last expansion. In addition, we are seeing an unprecedented degree of bifurcation in the labor markets. Masked underneath the “headline” BLS 9% unemployment number is an already increasing difficulty in attracting highly skilled knowledge workers, particularly in the tech world.
Overall, the economy’s fundamentals are improving. Most encouraging are improvements in the job market and the flow of credit. Of concern are higher commodity prices and the battle over the federal budget. We continue to hear from many clients their desire to maintain as much flexibility as possible given the many regulatory uncertainties as well as concerns about the depth and length of the recovery.
Does this signal any new hiring trends? If so, what are they?
Tech staffing continues to outperform given the ubiquitous nature of technology in American business, and the accelerating rate of change in the tech realm. Further, the Tech sector is benefitting, as many companies are still reluctant to hire technology employees on a full-time basis — especially those working on project-oriented tasks (e.g., system rollouts).
Anecdotal evidence from executives has also led the Street to believe that tech staffing will once again be a leader in 2011, with many citing supply shortages in some skill sets, which is driving increases in wage rates. Interestingly, the Street believes some of this wage inflation may be driven by the higher wages being paid by such high fliers as Google, Twitter and Zynga, which is starting to have a ripple effect in many other Tech areas.
If you had to characterize the current labor market in one word, what would that be? What does that mean for employers with regard to solid hiring strategies?
I think the question here is – is there a so-called temp “super-cycle” emerging, where peak temporary penetration rates move continuously higher? The answer may well be yes, as supported by the fact that we continue to see a recovery where a disproportionate amount of private sector hiring is being created through the temp sector. Additionally, many economists recently tempered their GDP expectations for the U.S. economy which may result in clients turning increasingly to flexible staffing, which allows them to quickly adjust to this constantly shifting economic environment and the significant uncertainty surrounding regulatory, tax and health care reform.
Kforce continues to benefit from the strength of our diversified revenue footprint, which is concentrated in some of the highest demand areas in today’s knowledge-based economy. While the overall BLS unemployment numbers remain relatively high, college-educated unemployment was just 4.5 percent in April. Talent shortages are particularly severe in tech, which is project driven by nature and constitutes more than half of our revenues. Kforce is well positioned to service our clients' increasing desire for a more flexible workforce during this unique temporary employment led recovery, which may contribute to a sustained secular shift toward a temp staffing model as clients look to maintain a maximum degree of flexibility.
- Michael Blackman
