Finding the Cure for Low Unemployment

With a historically low unemployment, it is a sign that there is lots of work out there and the economy is strong. That’s a good thing, right? Eh, well, sort of. Many industries are at capacity and losing business. With low unemployment, the number of folks looking for work almost matches up with the number of jobs available (full employment). What’s wrong with that?

What’s wrong is that what is available in the labor pool isn’t the quality that employers need. I’ve spent much of the past year wrestling with this problem. Many positions sat open for a year or more because so many people are working. Manufacturing jobs are particularly hard to fill. While politicians complain about overseas manufacturing, US manufacturers struggle to find people.

From an employer’s perspective, the problem is simple: The labor pool is just too shallow.

So… how can we address the real problem? There are many things companies can do with pay, benefits, culture, etc to be more competitive and attractive to potential employees. Those are incredible and should happen. Eric Chester is producing great content (particularly for recruiting and retaining millennials) to help us with that.  I want to focus on something different.

The official unemployment rate is often politicized and manipulated. There are several criteria used to calculate the number. While the unemployment rate is depressingly low for employers at less than 4%, there is another number tracked by the US Department of Labor which is less depressing and less political. That number is the employment-population ratio. Simply put, that’s the number of people working divided by the population over 16. At over 60%, that means the unemployment rate is really around 40%. Yes, there are some very valid reasons many of those 40% don’t want to work or cannot work, but there is a glimmer of hope that some place in the gap between 4% and 40% we can find some good people.

If the problem is that the labor pool is too shallow, then what can we do to make the pool deeper? What other pools are available?

Here are a few other pools to explore to have the labor pool appear less shallow:

Flexible Pool
Many choose not to take part in the labor force for various quality of life reasons, but have a lot to offer. I don’t have to look much farther than my own home. With a Masters in Business Administration, my wife would rather spend time raising our five children, but she has a lot to offer. With five kids, there isn’t much room to offer more, but not everyone is crazy enough to have five kids, even though they make the same life choice to be home. Maybe it’s just a few hours a week, but by cobbling together a few part-time employees, you may get the equivalent of an awesome full-time person.

No doubt there will be some accommodations. Maybe they can’t come into the physical workplace, but can work at home. Maybe the hours are weird where they can do early, late, mid-day, or even a couple of split shifts. Marcel Schwantes, founder and Chief Human Officer of Leadership From the Core writes, “Any time leaders and managers have the opportunity to be flexible with an employee, they should not hesitate. Nothing builds trust more than a leader’s ability to flex when people’s lives get crazy and unpredictable. In the end, this gift is worth more than cash.”

If you want to be greedy and read between the lines, to an extent, folks want flexibility more than money. You can get these rock stars at a lower rate, but you need to compensate them with flexibility.

There is a great site dedicated to matching flexible employers to flexible lifestyles. Check it out at https://www.flexjobs.com

Non-Traditional Pool
In the 40% of the population, there are many you can’t work. Maybe a 95-year-old isn’t healthy enough to drive a delivery vehicle all day. Maybe you can’t put a 16-year-old on a forklift, but there are creative options. Many of the older generations would love a simple, part-time option to help them keep busy and

While traveling on vacation this summer, I was walking back to our hotel room to do that last sweep of the room before we left. Before I rounded the corner of our hallway, I heard a commotion ahead. As I came around the corner, the hall was full with people. As I got closer, I noticed that it was a group of mentally disabled folks that were working. While cleaning a room might require more cognitive skills than many of them had, they were doing the cleaning that never gets done. They were wiping down the doors, baseboards, light fixtures etc. I don’t know the details of how they were paid, or who set it up, but I do know when I looked them in the eyes, I saw joy and a sense of accomplishment.

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The next three pools are cheating. They are outside of that 40% of folks who are not working.

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International Pool
A fun thing about many seasonal vacation spots is that you will often meet lots of service professionals from around the world. The waiter at the restaurant might be from Romania and the maid from Cambodia or a million other combinations. Many of them are here on H-2B seasonal worker visas. This works best for businesses like a resort or a farm that are seasonal in nature. Most businesses can make some argument for a level of seasonality.

There are other work visa options as well, but they will often have more strict criteria.

Efficiency Pool
Do you even need that position? Companies with a focused implementation of Lean and Six Sigma initiatives often report 50% or better efficiency gains. While these concepts get more exposure in the manufacturing world, lean, in particular, is doing great things in offices and service industries. In the computer programming world, lean is re-branded as agile development. Insane efficiency boosts like that mean you can do more with less and maybe you don’t actually need to fill that open position.

Automation Pool
Kiosk, robots, apps…that’s horrible! Replacing a man with a machine. When $2 or $3 extra an hour makes a product line unprofitable, that’s exactly what happens. We can debate all day if that takes away jobs. I recently faced an automation overhaul requiring a $1 million investment. It eliminated approximately 10 positions. So who did we eliminate? We eliminated the 10 people we couldn’t find. In other words, no jobs were eliminated because we couldn’t fill the jobs anyway.

Businesses need to take a hard look at what new toys can do. A word of caution, if we don’t also mix automation with the efficiency pool mentioned above, we will just be automating waste. The shiny new toy is likely only part of the answer.

What other pools do you find out there?