The Return of the Strategic Hire: Unemployment Reaches 9.8%
From Forbes - Friday, December 3, 2010
By: Agustino Fontevecchia
Jim Hertlein, Managing Director of Boyden Houston discusses US Jobs Report in Forbes Economy Blog
While market reaction to Friday’s downbeat jobs report was tepid, the unemployment figure raises troubling signs for an economy attempting to pull itself back on its feet. A university professor from Georgetown and an executive recruiter for a top executive-search-firm give their opinions.
The Bureau of Labor Statistics announced that the economy added a meager 39,000 jobs in November, down from 172,000 in October and substantially below analysts’ optimistic forecasts of around 140,000.
Jim Hertlein is one of executive-search-firm Boyden’s top recruiters of elite talent. He explained that the report, and the general economic environment, point to the return of “strategic hiring.” Because firms are “looking longer term and on a global basis,” they are “looking to squeeze more and more from a smaller work force.”
Nothing new there.
But, Hertlein explains that “employment in the upper ranks is being dragged by a notion that there’s a shortage of talent” in the U.S. While European executives were forced to deal with foreign counterparts at earlier stages in their careers, the size of the U.S economy has reduced managers’ exposure to the “global marketplace.”
“This is caused by a changing profile for managers in the upper level, [especially as firm] shift operations in order to create stronger beachheads in emerging markets,” says Hertlein.
The mismatch between skills and jobs, or cyclical unemployment, has been floated as possible cause for sluggish job growth. The unemployment report shows that two possible measures of cyclical unemployment increased in November. Marginally attached workers, or those that haven’t looked for a job in 4 weeks but would work, grew to 2.5 million people. But more worrying was the measure of discouraged workers, or those who gave up on their job search because they don’t believe a job is available for them, which reached 1.3 million.
Professor Jim Angel, who teaches Finance at Georgetown University’s McDonough School of Business, agrees that there’s a shortage of talent in America. “[One of] the fundamental weaknesses of the [U.S.] economy is underinvestment in the up-and-coming generation’s education,” explains Professor Angel. “This could be a sign that the economy is slowing down,” he says, “and there is no immediate fix for these structural problems,” enumerating others such as the greying of the population, a massive trade deficit, and climate change.
Noting that he is skeptical of the jobs report, comparing it to casualty counts during the Vietnam War (“every Thursday we read upbeat reports and thought we were winning), Professor Angel believes that Friday’s job report “provides ammunition for those saying ‘cut taxes now, worry about the deficit later.’”
Professor Angel points the finger at policy and lawmakers. “[We have] a business climate that is not hospitable to job growth, [… and we have] an anti-business president,” he says. Angel asks Obama to “create certainty, [people need] to know what the rules are,” citing the case of the healthcare reform bill. “It only got half of [the problem] right, and didn’t manage to unleash American ingenuity” by increasing coverage but keeping cost structures obscure.
Hertlein gives another example. “You can question how effective some of the government’s policies really are,” he says, pointing out the consequences of the White House’s off-shore drilling moratorium. “Our clients just moved their equipment and investments abroad, and this hurts American jobs,” explains Hertlein.
With the expiration of unemployment insurance, due to political bickering and gridlock in Congress, many unemployed Americans will lose their primary source of income. Professor Angel, who noted that “we all know people who play the unemployment system like a well-tuned violin,” thought there could be also be some upside. “Some people will recognize the opportunity to become entrepreneurial.” But that will only happen, he notes, if the government gets on its A-game.