Integrating Labor Market Data into Planning and Recruiting Strategies

Workforce planning uses a blend of hard data, human intelligence, and management intuition to accurately forecast upcoming recruiting needs. While the process is vital, a challenge to forecasting efficacy is general economic trends that don’t always jive with the labor market trends.

This can make projecting employee retirement or turnover rates and swings in the labor pool difficult. Tracking labor market trends to proactively predict changes and comparing your company’s historical experience to those changes can increase forecasting accuracy and recruitment strategy effectiveness.

A new Employment Trends Index (ETI) developed by The Conference Board synthesizes data from eight sources to predict swings in the labor market. Since the labor market usually contracts before the general economy and recovers earlier, the index is helpful in spotting changes and explaining variances to senior leadership.

“I think this type of data always helps talent acquisition leaders become more strategic and less tactical in their planning,” says Kevin Wheeler, president of Global Learning Resources.

“The individual index components may also point out potential sources of employees. For example, increases in the number of working temporary employees might point to hiring opportunities within the temp workforce.”

In developing the ETI, The Conference Board states that they plotted back to 1973, and the index accurately signaled every rise and fall in employment over the last 35 years. On average, it leads employment by six-to-nine months at peaks and by zero-to-three months at troughs.

If recruiters have the data and the resources, they can compare their company’s historical experience to the index to see how employee longevity, turnover, and wages have been impacted by the trends and then use the information to forecast similar rises and falls in the future.

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Wheeler suggests that talent acquisition leaders review macro labor market data once or twice each quarter to anticipate changes and then integrate the information into the long-term strategic planning process.

The review may also be helpful in gauging the mindset of candidates and then adjusting your company’s build versus buy recruiting strategy.

“When the index is trending downward, it may be very hard to lure passive candidates, and so expenses geared toward executing a buy strategy may not deliver a return and time-to-fill may increase,” says Mitzi Adwell, talent management practice leader for The Newman Group. “Recruiters can anticipate the market and adjust their talent acquisition strategies by watching the trends.”

The components of the ETI:

  • Percentage of respondents who say they find “jobs hard to get” (The Conference Board Consumer Confidence Survey)
  • Initial claims for unemployment insurance (U.S. Department of Labor)
  • Percentage of firms with one or more jobs open (National Federation of Independent Business)
  • Number of employees hired by the temporary-help industry (U.S. Bureau of Labor Statistics)
  • Part-time workers for economic reasons (BLS)
  • Job openings (BLS)
  • Industrial production (Federal Reserve)
  • Real manufacturing and trade sales (U.S. Bureau of Economic Analysis)

The Conference Board will publish the ETI monthly at 10 am ET on the Monday that follows each Friday’s release of the BLS situation report. A release schedule is available online.

Leslie Stevens writes for human capital and business publications. She was a senior manager in the staffing industry for more than 20 years and understands how talent acquisition contributes to the bottom line. She likes it when readers share their opinions, innovative ideas, and experiences about overcoming obstacles while fighting the global talent war.


1 Comment on “Integrating Labor Market Data into Planning and Recruiting Strategies

  1. A major challenge to forecasting efficacy that skews labor market trends is in the data that doesn’t get used. For example the Employment Trends Index (ETI) doesn’t consider workers that have exhausted their unemployment insurance benefits, employment volatility impacts resulting from off-shoring/out-sourcing, and immigration both legal and illegal.

    Legal immigration has skewed any comparative analysis beyond recognition. Historically, after 1925 up to the late 1960’s, the U.S. limited immigration to workforce replacement needs at a rate of about 170,000 per year. But now legal immigration, in all its forms, flows at a staggering rate approximating one million per year. These increases and the practice of importing high numbers of technical and professionals via a myriad of visas, hiring foreign post-secondary masters and doctoral students, has reduced wages for both skilled and college educated American workers.

    The Business Cycle Dating Committee of the National Bureau of Economic Research
    (NBER) puts official dates on U.S. business cycles. A report “America’s High Tech Bust” offers in depth analysis of IT industry employment revealing “there is a lack of current and reliable information on the extent of job losses due to offshore outsourcing, there is little doubt that it has contributed to soaring unemployment rates in the industry.” The report pointed to a “national unemployment rates for computer programmers of 6.7% in 2003, two years after the end of the recession, compared to 2.5% in 2001. Incidentally, computer programming is also one of the top occupations sent offshore (ITAA, 2003).(2)” The report also stated “Employment Data…Summary Findings – Despite recent aggregate monthly job growth numbers, there is little evidence of significant job expansion in the IT industry. IT industry employment changes reveal that nationally, between March 2001 (beginning of the recession) and April 2004 (the latest month for which revised data are available), the industry lost a whopping 403,300 jobs, of which 200,300 jobs were lost after the recession was officially declared over (Tables 1).”

    Another analyst of high-tech employment UC Davis Prof. Norman Matloff, has written extensively about the H-1B FRAUD being perpetrated against U.S. native born workers in computer programming and software engineering. Examples of his work include: “Should the U.S. increase its H-1B visa program? CON: Wages belie claims of a labor shortage” and

    Analyst John Miano a Center for Immigration Studies (CIS) Fellow lays bare the impact of H-IB visas in his recent article “H-1B Visa Numbers: No Relationship to Economic Need” His key findings include:
    o There is no cause and effect relationship between H-1B visas and job creation. Adding H-1B visas does not create additional jobs for U.S. workers.
    o Since 1999, the United States has approved enough H-1B visas for computer workers to fill 87 percent of net computer job growth over that period.
    o Since 1999, the United States has had a net loss of 76,000 engineering jobs. Over the same time period, the United States has approved an average of 16,000 new H-1B visas each year for engineers.
    o If current employment trends continue and the H-1B quota remains unchanged, the United States will approve enough H-1B visas for computer workers to fill about 79 percent of the computer jobs it creates each year.
    o Pending legislation would increase the number of H-1B visas for computer workers to above the number of computer jobs created each year.
    o The data suggest that a large percentage of those who legally enter United States on H-1B visas go into the illegal alien pool.

    Miano also wrote “The Bottom of the Pay Scale Wages for H-1B Computer Programmers”. Link to the report and key findings

    Another report “Information Technology Labor Markets: Rebounding, But Slowly” clearly demonstrates the myth of a talent shortage in IT: “IT employment declined in 23 of 24 months between April 2001 and March 2003, during which time 383,100 jobs were lost in the IT industry. From that point onward, employment levels have been volatile. Employment expanded in 21 of the following 35 months while it contracted in the other 14 months. Overall employment during this period of recovery (April 2003 to February 2006) increased by just 76,300 jobs, recouping less than one-quarter of the number of jobs lost earlier in the decade. When viewed in historical context, IT industry annual growth rates in the current period are anemic (Figures 1 & 2). After enjoying strong growth throughout the 1990s, the IT industry endured a deep recession. Though annual employment increases have been registered in 2004 and 2005, they have been modest in comparison.”

    No discussion on labor would be complete without discussing the challenges being faced by less educated U.S. workers. The Center for Immigration Studies Director of Research Steven Camarota recently wrote “Immigration, both legal and illegal, puts huge strain on the country.”

    Camarota and others have demonstrated the impact of immigration on U.S. blue collar skilled and unskilled workforce demographic. The fact is, a growing number of good jobs go to illegal aliens rather than to the millions of less educated Americans having a high school diploma or less. This tragic trend has affected every racial demographic; but has been particularly hard on the 40 percent of all black males in the U.S. that are unemployed. In fact illegal aliens currently occupy somewhere between 7 and 10 million Americans jobs. As for ag jobs, the agriculture community can get an unlimited number of workers, these employers instead find the illegal route is more efficient and cost effective than using legal visa programs. An those immigrants who come o ag visas seldom remain in the field, but rather simply walk away and go into other jobs. Twenty-five percent of construction jobs go to aliens in the U.S. illegally.

    Not only is this practice hard on adult U.S. workers, it has hit U.S. teenagers looking for work very hard as noted in a recent expose “Summer jobs are hard to come by: Poorer teen having particularly difficult time during struggling economy”, by AP writer Ellen Simon. It certainly different than when I was a kid. In 1967 I turned 18. At that time I worked in the construction industry as a laborer [hod carrier] tending to bricklayers. It was one of the best jobs in the market place for kids both in high school and those with nothing more than a high school education. At the time this was a job that paid between two and three times what my peers were making in other jobs (soda fountain, grocery store, custodian, at the hospital, etc). I was earning $6.00/ hr. Today, 40 years later, that same job pays between minimum wage and about $7/hr. It doesn’t take a math genius figure that there is something wrong with that picture, when some 40 years later, the pay for the same job is as much as a whole $1/hr more for what it was. While I don’t believe this is a job that American workers now won’t do…it’s no surprise that American workers aren’t in this and what were the even better paying jobs of skilled tradesmen such as block/brick layers, carpenters, plumbers…sorry, I’m preaching to the choir.

    Using the BLS CPI Inflation calculator…that same $6/hr job in 2007 is now equivalent to $36.36/hr; 80% than inflation adjusted dollars.

    How is it that 40 years later this job, and jobs in the skilled trades, are now paying the same nominal dollars (in some cases even less)? What happened in America that caused this dramatic decline in wages? Do they believe it might have anything at all to do with employers hiring illegal aliens? Could it be that the bottom line for employers is simply much better when in many cases they: (1) don’t pay overtime, (2) don’t provide benefits like, vacation, paid time off, and healthcare [because such services are provided tax payer supported emergency rooms] etc., (3) don’t pay SSI and the myriad other taxes; or alternatively employers pay significantly less in SSI and other taxes to people [employed at lower wages] who have gained employment with fraudulently acquired documents such as social security cards?

    High-tech and the less educated aren’t the only areas of concern…it’s everything demographic. Alan Blinder a former vice chairman of the Federal Reserve has warned that 42 to 56 million American service-sector jobs are in jeopardy of being outsourced. This is three times the number of manufacturing jobs at risk. Outsourcing has serious implications for nearly all occupation and income levels in the U.S. labor force.

    According to the DOL citizens wages are suppressed nominally by 30% and as much as 45%. And according to a recent report on the MSNBC financial news, as many as 3 million or more domestic white collar jobs are at risk over the next decade. I really want to tell my kids that.

    These conditions not only depress wages, tax revenues, and living standards of American workers; they mask labor trends and labor supply reality.

    Rather than simply complain, here’s a novel solution. Get behind the bi-patrician support for the “Save Act” currently being ‘held up’ by Senator Reid and Rep Pelosi. While this legislation won’t do much to counter act the impacts of one million jobs being lost do to legal immigration, it has real teeth in that promotes employment verification that will dry up the jobs magnet attracting the illegal aliens taking the seven to ten million jobs from the less educated and teenage American worker.

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