The U.S. government's monthly labor report paints a glowing picture of the job numbers in a robust economy. The unemployment rate is 3.8 percent as of June 2018, which is historically low. Jack Kelly, founder and CEO of executive recruiting company Compliance Search Group, lends his thoughts to a more realistic perspective on the labor report for June 2018.
Full employment, generally regarded as 5 percent unemployment, means everyone who wants a job has a job, so how is the unemployment rate lower than 5 percent? The job numbers leave out certain segments of the population. The 3.8 percent figure may reflect people in between jobs, basically those transitioning from one position to another, in the search for a better job due to a highly competitive market. People hop from one job to the next trying to make a better career move.
The U.S. economy is at full employment in its job numbers due to the exact same number of people who are unemployed as there are job openings to fill in mid-2018. This hasn't happened in the history of the U.S. economy since the Department of Labor tracked the number of job openings.
Three Things Should Happen
Kelly talks about three things that should happen if the job numbers indicate a rate that's better than full employment in 2018. First, because of extra competition for employees, wages should rise because companies are having a hard time hiring good help. That salary increase simply hasn't happened yet, or it's happening more slowly than it did last time unemployment was below 4 percent.
Second, companies should also be offering training courses for people who lack qualifications for certain positions so they can at least get someone on board. Instead, the average job posting has a lengthy list of qualifications a mile long.
Third, businesses should offer higher starting salaries to draw top talent. However, top employers aren't increasing their salaries to try to woo people away from their competitors due to a tight labor market. If there are so many openings, companies would do whatever it takes to get someone into a position.
What's Actually Happening
The job numbers for June 2018 don't reflect people in the gig economy, the workers who have part-time work doing contract work. Neither do the data take into account people who stopped receiving unemployment benefits because they're out of work for an extended period of time. When someone stops collecting unemployment, the government stops counting that person as unemployed.
Two generations of workers don't show up in the monthly labor report. Baby boomers are struggling to recover the nest eggs they lost during the Great Recession, and they may have more than one job to compensate. This generation may stay in the labor market beyond the retirement age of 65. Millennials, in their push to pay off student debt, get low-paying jobs right out of college because they cannot find jobs befitting their degrees just yet.
A more realistic perspective on job numbers for June 2018 gives both recruiters and job seekers a better idea as to what candidates need in terms of becoming successful. There may still be millions of people who want a great position but don't have one yet.
Photo courtesy of Aphrodite Shop at Flickr.com