CHART OF THE DAY: Job Openings Continue to Increase to New Record Highs

I know I've covered this territory a hundred times, it seems like every month lately, but I feel compelled once again to share the headline number from the monthly Bureau of Labor Statistics  JOLTS (Job Openings and Labor Turnover Survey) Report released earlier today.

Here's the headline (and an accompanying chart from our pals at the St. Louis FED) - Total Job Openings have climbed to 6.7 Million - reaching another new record high in the history of the data series.

The steady increase in record high job openings has been one of the truly amazing developments in the aftermath of the financial crisis and recession, which saw openings bottom out at about 2.2M in July 2009.

The questions are now twofold I think. One, just how high is the ceiling for US job openings to climb towards? I mean these records continue to be set even while trade wars are constantly in the news and many financial and labor markets observers have no idea what strange 'news' emanating from Washington might do to the market and the economy?

And two, when and by how much do we begin to see a much more pronounced increase in wage growth, as companies are finally forced to increase wages in order to try and fill these millions of openings? The sluggish nature of wage growth in the face of seemingly and endless supply of open jobs has been one of the must puzzling aspects of the labor market in the last several years. Something has to give soon, right?

It's a good time to be looking for work, I would say.

Have a great day!

CHART OF THE DAY: Your semi-regular labor market update

Two quick charts on my favorite CHART OF THE DAY topic - the trends in macro labor force dynamics in the United States.

First, the big headline from a few days ago, the official unemployment rate in the US dipped below 4% for the first time since late 2000, ( was the ) hitting 3.9% as of the end of April 2018.

For a look at this headline trend, see the below chart from our pals at FRED:

And while this dip below 4% for the first time in almost 20 years was what most reports about the state of the labor market honed in on, (and probably rightly so), the 'truth' of the health of the labor market usually resided in other metrics. Like, for example, one of my favorites - the length of time it takes organizations to fill an average open position.

Here's the latest on that - from the DHI-DFH "Mean Vacancy Duration" data (the latest I could find on this is from the end of February 2018).

While you can see some upticks and downticks in the average time to fill, the trend since the end of the recession in 2009 is clearly up and to the right - meaning it continues to take longer and longer for most companies to fill open jobs. Officially, the mean vacancy duration for February 2018 is at 28.9 working days - essentially over a month to fill any open job.

If you did into the details of the report, (and I did, since I am a weenie), one number really stood out. It now takes over 21 working days to fill roles in the hospitality and retail sector - think hotels, restaurants, fast-food, retail stores. That number is up dramatically from its 'bottom' of about 14 days just a few years ago. You would think that these roles should be the easiest to fill, and maybe they still are, but even today's easy roles to fill are taking longer and longer to actually be filled.

There is more to this story, and I need to take some time to look at what is happening with wage data, labor force participation, and the openings and quits rates, but these two charts and their data are both pretty revealing.

It's probably a good time to be a job seeker, all things being equal.

And it is also a good time to be a recruiter - a good one anyway, because your value to organizations keeps growing.

That's it from me - have a great day!

No more philosophy majors?

For a 'I can't believe it's mid-April and my flight is probably going to get canceled because it is STILL snowing Friday', an interesting piece of news from a couple of weeks ago on how one university is seeking to re-align many of its programs of study with its assessment of labor market changes and trends.

The TL;DR version?

No one wants to hire History, English, or Philosophy majors. (I am not sure that this is actually true by the way, but that seems to be the conclusion). Here's some details from a recent piece in Fortune on what the University of Wisconsin at Stevens Point is proposing:

One university doesn’t think its students need to pursue English as a major anymore. Or philosophy, history, or Spanish.

The University of Wisconsin at Stevens Point has proposed dropping more than a dozen majors currently offered through its humanities and social sciences departments. The university would instead offer programs with “clear career pathways.".

Included in the list of majors to be dropped are the above mentioned history, English, and philosophy as well as programs in geography, (who needs that when we have GPS?), political science, (that seems like it would be in demand these days), and American studies, (that actually sounds really interesting to me).

Other programs to be expanded or created in this effort to better align the University's programs with what is or at least seems to be happening in the job market include chemical engineering, finance, marketing, (Is there really a shortage of marketers?), and geographic information science, (sounds like geography).

While this is not really a remarkable or surprising bit of news, I do find it interesting when thinking about what many smart folks seem to say about how work is changing, how automation and AI are replacing (or augmenting), many kinds of labor and roles, and what are the true skills all workers will need to be successful and employable in the robot future.

And by that I am talking about the kinds of human skills and traits that can't easily or perhaps shouldn't be replaced by machines or algorithms - creativity, empathy, emotional understanding, appreciation of (yes I am saying it), history and philosophy. Sure, the kinds of 'hard skills' and technical programs that this university wants to emphasize are currently in demand, but like many (or all) kinds of technology and science roles, the likelihood of automation and more advanced AI tools replacing them (or at least reducing the need for some human labor) in them is pretty high.

I am not totally sure what 'Geographic information science' is, but I would be willing to bet that technology will be able to perform lots of what that role requires much sooner than any kind of technology would be able to think, reason, assess, and communicate like a talented philosophy graduate.

And by the way, if I was looking for new marketing talent, I might prefer a philosophy major or a sociology major anyway.

Figuring out what kinds of skills are going to be needed and in demand in a changing and dynamic labor market is certainly not easy, and I understand that universities also have practical challenges and have to produce and offer programs that will attract students, (and parents).

But while there is a lot of data and science that shows where the (current) jobs are there is also some art to producing the kinds of talent that will best be able to help the economy thrive.

And we probably can't do art, at least not well,  if we stop teaching art.

Have a great weekend!

Is every company soon to be an 'Artificial Intelligence' company?

A few years back the quote 'Every company is a technology company' made the rounds on social media and in presentations on the workplace, the future of work, and in probably too many TED talks to try and compile.

But while some work and workplace sayings, at least to me, don't necessarily become any more true just because they are repeated all the time, ('Culture eats strategy for breakfast', I am looking right at you), this notion of just about every kind of organization becoming much more reliant, dependent, and committed to more and more advanced technologies as a means to survive, compete, and thrive still seems valid to me.

Can you think of any business, small, medium, or large, that has not had its processes, products, services, communications, administration, customer service, and marketing significantly impacted by new technology in the last decade? Aside from perhaps a few of the very smallest, local service businesses, I can't really think of any. And even those kinds of places, say like a local barbershop or pizza joint, are likely to have a 'Follow us on Facebook' or a 'Find us on Yelp' sticker in the window.

I thought about this idea, of every company being a technology company, again recently when I saw this piece on Business Insider - 'Goldman Sachs made a big hire from Amazon to lead its Artificial Intelligence efforts'. While it isn't surprising or revealing at all to think of a giant financial institution like Goldman being transformed by technology like so many other firms in all industries, this specific focus on AI technology is I think worth noting.

Here's an excerpt from the piece:

Goldman Sachs has hired a senior employee from Amazon to run the bank's artificial-intelligence efforts.

Charles Elkan has joined Goldman Sachs as a managing director leading the firm's machine learning and AI strategies, according to an internal memo viewed by Business Insider.

Elkan comes from Amazon, where he was responsible for the Artificial Intelligence Laboratory at Amazon Web Services, according to the memo. He previously led the retailing giant's Seattle-based central machine-learning team.

"In this role, Charles will build and lead a center of excellence to drive machine learning and artificial intelligence strategy and automation, "Elisha Wiesel, Goldman Sachs' chief information officer, wrote in the memo. "Charles will work in partnership with teams across the firm looking to apply leading techniques in their businesses."

The key element I think to the announcement of Goldman's new AI hire is meant to work with groups across the entire business in order to find ways to apply AI and Machine Learning technologies. Almost as if Goldman is not looking to create the 'AI Department' akin to the classic 'IT Department' that exists in just about every company, but rather to find ways to infuse specific kinds of tech and tech approaches all over the company.

And thinking about AI in that way, much differently to how most companies have looked at most of the major technological advances in the past is what leads me back to the question and title of the post. If the Goldman, (and plenty of other companies too) example of looking for ways to embed AI technology and techniques all across their businesses, then it is not really a stretch to suggest at least in some ways they are seeking to become 'an AI company' at their core.

What's been the most significant single technology advance in the last 25 years or so that has done more to change how work and business get done?

Email?

The web?

Mobile phones?

Probably some combination of these three I would bet. And has any company you have known decided to 'brand' or consider themselves 'an email company?' Or a 'mobile phone' company? 

Not really, these were just tools to try and get better, more efficient, more profitable being whatever kind of company they really were.

So I think the answer to the 'AI question' for Goldman, or for anyone else going all in with AI at the moment is 'No', we aren't really trying become an Artificial Intelligence company. We probably should just consider AI and its potential as just another set of tools that can be leveraged in support of what it is we are really trying to do.

Even if it is tempting to try and create the latest management/workplace axiom.

Have a great week! 

What the Toys R Us meltdown reminds us about workforce trends

By now you probably have seen the sad news that Toys R Us is in bankruptcy, and is facing the likely closure of its 700+ stores in the US in the coming months.

Definitely a sad day for many, especially for the thousands of Toys R Us employees soon to be out of work, and for the let's say 'traditionalists' among us who still enjoyed shopping for toys and games and the like in the 'real world', and not just from an Amazon app.

Of the many reasons that have been blamed for Toys R Us demise, competition from Amazon (and others) is frequently cited, along with the pretty staggering amounts of corporate debt and debt service payments that Toys R Us has been burdened with since its acquisition by Private Equity companies in 2005. Other post-bankruptcy analyses have pointed to Toys R Us failure to modernize its shopping experiences, inability to grasp digital commerce trends, and the fact that they lost touch with their most important customer - mothers shopping for their kids.

But there is one other factor that has contributed to the toy retailer's plight, one that has not been mentioned as much in the coverage, and one that has much wider implications in work and workplaces as well. And it is this: people in the US are having fewer children, thus creating fewer of Toys R Us' prime 'end customers', and, eventually, fewer entry-level workers for all US firms to recruit.

Here it the thing, the folks running Toys R Us maybe couldn't figure out what to do about this trend, but they did see it coming. Here is an excerpt from their most recent 10-K financial filing from April 2017:

"Most of our end-customers are newborns and children and, as a result, our revenues are dependent on the birth rates in countries where we operate," the filing reads. "In recent years, many countries' birth rates have dropped or stagnated as their population ages, and education and income levels increase. A continued and significant decline in the number of newborns and children in these countries could have a material adverse effect on our operating results."

Data from the CDC in the US backs that up - the most recent data available from 2016shows the US birth rate hitting a record low, and with no obvious sign of this trend changing, retailers like Toys R Us are going to face continuing pressure. Longer term, if this trend does continue, all kinds of employers will face pressure too - a different kind of pressure perhaps, this one stemming from relatively fewer entry-level or younger candidates, as well as the need to create workplaces that are more open, accommodating, and available to older workers too.

Since I love charts, I will close with this one, from our pals at FRED - a look at the increase in the 65+ labor force in the US over the last 20 years or so.

I will spare you trying to squint at the small print, but the total number of workers aged 65+ has more than doubled since 2000 - with almost 10M people in that group as of the latest data. And even if you can't read the small print, it is easy to see the 'up and to the right' trend in the data.

Fewer babies and young kids means trouble for Toys R Us in 2018. It could mean recruiting problems for your organization too, in a few years. Don't wait until it is too late, like our pals at Toys R Us, to know how to react.

Have a great week!