This Week's Herman Trend Alert

Leadership in Normal 2.0

  The Herman Trend Alert

June 11, 2008

Unemployment--the Numbers Behind the Numbers

The latest jump in the United States unemployment statistics has finally prompted us to speak out about what is really happening in the US labor marketplace and what effects these changes will have on our trading partners around the globe.

Last Friday, the US Bureau of Labor Statistics (BLS) announced that the unemployment rate is the highest since October 2004; this 10 percent boost was the biggest percentage point gain in 33 years. The Payroll Survey of employers is the basis for this increase. To its credit, the BLS does include in its notes: "in the establishment (payroll) survey, estimates for the most recent 2 months are based on substantially incomplete returns".

This increase in unemployment continues to mask the real situation. Looking at the BLS' Household Survey, in the month of May, the national unemployment percentages among adult men and women were 4.9 and 4.8. At the same time, the rate for teenagers, ages 16 to 19 jumped from 15.4 in April to 18.7 in May, an increase of 21.4 percent. While part of this increase is due to high school and community college graduations, these new job seekers do not account for this huge increase. Rather, we believe that something else is happening.

We believe that employers are holding on to their skilled, experienced workers and those with lower skill levels are considered more expendable and easier to hire back---as employees or contractors---when conditions improve.

What these data reflect is that the US has a real problem with its under-resourced schools---schools that are either not engaging students enough to keep them there or preparing them for the job market. As a nation, we need to wake up to our workforce development challenges, including the lack of connection between employers and the community and technical colleges.

For our friends abroad, these data also mask our critical skilled labor shortages that present real opportunities for them. Lacking the trained, skilled labor here will mean location of future facilities in places like Brasil and Southeast Asia, where there are pools of skilled workers, capable of handling work that US employees can not.

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