Solving the Improving Job Market and Steady Unemployment Paradox
First, there’s the good news: The U.S. job market is recovering and on the rise since the recession. But then there’s the not-so-good news: Unemployment doesn’t seem to be budging to move to a lower rate. According to The Wall Street Journal:
- Employers have added an average of 235,000 jobs a month over the last three months
- Employers added 6,000 more jobs in May and 8,000 more jobs in June than estimated
- Unemployment is at 5.3% — the lowest level in more than seven years, but holding steady for months
So not only is the job market on the rise, but it’s actually adding open positions on a larger scale than industry projections. And yet, more people aren’t actually finding those open jobs.
For example, Baltimore-based company Marlin Steel Wire Products LLL talked to The Wall Street Journal about its experience trying to hire candidates in this improving job market. Baltimore is currently at an 8.2% unemployment rate — nearly 3 percentage points higher than the national rate — and yet Marlin Steel Wire Products is having a difficult time hiring employees for its open positions.
President Drew Greenblatt noted that his company expanded its factory floor and aims to boost its workforce in turn, paying between $15 and $30 depending on experience. Yet, even with the unemployment rate so high, he can’t seem to find anyone to accept the positions.
How can these two facts exist simultaneously? Well, there are five reasons why having more open jobs doesn’t always mean more people employed.
Unemployed People Are Giving Up
Many people have been out of work and struggling to find employment since 2009, when the recession hit the United States. The job market hasn’t been on a strong rise until now, six years later. It’s understandable that many unemployed men and women gave up on looking for full-time jobs. Instead, they’re finding other ways to support themselves, going back to school for higher education or adjusting their personal lives to sustainably live on one spouse’s paycheck. And the statistics support this assessment.
In the same Wall Street Journal piece, research found:
- 1.9 million people wanted work but had not looked for work in at least four weeks
- The percentage of Americans participating in the labor force was unchanged at 62.6% in July 2015
- This 62.6% matches the lowest account since 1977
Having been used to looking and not finding appropriate jobs, sometimes for years, it’s no surprise that some people have opted out of the labor force.
People Are Stuck In Part-Time Jobs
Rather than opt out of the labor force entirely, some people who struggled to find work chose to take part-time jobs to support themselves. When there weren’t full-time jobs available, a part-time job was considered a necessary investment to earn money. However, now that more full-time jobs are opening up and the job market is on the rise, it’s not as simple as just ditching one job in favor of another.
The Wall Street Journal found that 6.3 million people were working part-time but would have preferred full-time employment.
Not wanting to give up a paycheck after being knocked around by the recession can make employees feel stuck and cause them to opt out of searching for a full-time job, no matter how much they would rather have one.
Some Skill Sets Are Underserved By Job Market
While the job market is on the rise, that doesn’t mean that every industry and every skill set is rising at the same pace. Pennsylvania-based 57-year-old Stephen Pangborn told The Wall Street Journal his story about feeling left behind by the rising job market.
Last year, Pangborn was laid off from his job in printing. In the meantime, he — like many others, stated above — took a graveyard-shift maintenance job at Walmart to make ends meet. While thousands of new jobs are opening up monthly, Pangborn says, there are still no jobs he’s suited for with his decades of experience in the printing industry.
“This should be my prime earning time,” he said, “but unfortunately, it’s not.”
The Recession Capped Experience and Learning
When people are out of work for months and even as long as five years, they can fall out of touch with the changing skills and experience levels needed for the position they held when they were laid off. It becomes more and more difficult for these candidates to compete with qualified people who haven’t had this gap in their work history or even top performers coming out of college or graduate school.
Research has already shown that older millennials are working to play catch-up after the recession hurt their employment rates immediately out of college. The same problem can affect anyone who has been laid off — particularly in areas like tech and other evolving industries. Even though the recession is technically over, its after effects are still reverberating through the workforce that it directly affected.
There’s Less Money In Recruiting
During the recession when there were not as many — if any at all — jobs to fill, companies took their cost-cutting measures to recruiting. After all, there’s no need for a large recruitment team when you don’t plan on recruiting anyone. Now that the country is emerging from the recession, companies are getting on their feet and are unlikely to reinvest the same amount or more in recruiting than they did five years ago. So while there are open jobs, there aren’t as many skilled people seeking out the right candidates to fill them. Instead, already overworked employees have to handle the burden of recruiting and hiring, and it’s being pushed to the back burner.
It may seem contradictory that the job market is on the rise — even more than expected — but the unemployment rate is staying the same. Just because there are jobs that need to be filled doesn’t mean there are qualified and able candidates available to fill them.