Since the Great Recession of 2008-2009 ended, U.S. employers have created an unprecedented 15 million new jobs. At a 4.9 percent national unemployment rate employers are experiencing a labor market phenomenon absent in the economy for 8 years—worker shortages. Employers and Chief Human Resources Officers must put strategies in place to retain and attract top talent. Human capital management technologies can help employers design their workforce for maximum effectiveness, particularly to increase productivity—a key objective for workforce management in a tight labor market environment.  

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Jobs Boom Sets Records: Worker Shortages Loom

Tue Sep 13, 2016

Like Olympic gold medalist and swimming sensation Katie Ledecky, the U.S. economy continues to set world records—for new job creation.

The Labor Department reported last week that employers added 151,000 jobs in August, averaging 182,000 new jobs a month so far in 2016.

Since the Great Recession of 2008-2009 ended, U.S. employers have created an unprecedented 15 million new jobs. Counting back to September 2010, employers have added jobs every single month for 71 consecutive months, “the longest streak of total job growth on record,” according to the White House.

And the headline unemployment rate, at 4.9 percent, stayed roughly where it has been for all of 2016, fully half the 10 percent peak hit in the recession in October 2009. While economists may quibble about whether the U.S. economy has reached the ideal of “full employment,” a 4.9 percent unemployment rate is unambiguously an extraordinary achievement.

While the August jobs number came in below the prior 12-month average of 204,000, strong forward momentum in new hires is striking given the headwinds facing the U.S. economy. April-June quarter GDP growth was weak at 1.1 percent and weaker still at 0.8 percent in the Jan-Mar quarter. Meanwhile, non-farm business sector productivity actually decreased at a 0.6 percent annual rate in the second quarter, continuing an anemic trend that goes back at least five years. Nevertheless, the U.S. jobs engine continues to set world records.

Implications for employers and HR professionals

At a 4.9 percent national unemployment rate employers are experiencing a labor market phenomenon absent in the economy for 8 years—worker shortages. Before this year’s string of sub-5 percent rates, the last time the U.S. clocked 4.9 percent unemployment was February 2008.

To be sure, today’s worker shortages aren’t ubiquitous; they typically reflect broad occupational and regional differences. The tightest labor markets exist in IT, healthcare, skilled trades and financial services. And states like Minnesota, Maine, Maryland, Massachusetts and Colorado, among others, boast unemployment rates well below the national average.

But the trend is unmistakable: the U.S. has shifted from a worker surplus job market to a worker shortage job market. In an April 2016 paper the Conference Board predicts years of tight labor markets due to the retirement of millions of baby boomers and persistent subpar productivity growth.

All this means that employers and Chief Human Resources Officers will need urgently to put strategies in place to retain and attract top talent. Such strategies are best buttressed by real-time human capital management solutions, including cloud-based HCM technology. These technologies will help employers design their workforce for maximum effectiveness, particularly to increase productivity—a key objective for workforce management in a tight labor market environment.

At a press conference last month in Rio de Janeiro five-time Olympic gold medalist and nine-time world champion Katie Ledecky said, “Four years ago, when I was visualizing my final, I never envisaged anything other than winning gold.” Four years ago, with the U.S. unemployment rate well above 8 percent and over 12 million people out of work, few visualized full employment and labor market shortages in 2016. It’s clear now that in the race to put people back to work, the U.S. can claim Olympic gold.