Do Employers Secretly Like High Unemployment Rates?

I was reading my alumni magazine the other day, and there was pretty good article on job hunting (you can read it here, if you want). It wasn’t so much of a “here are tips for looking for work.” Rather, it was more about the way businesses in the U.S. have changed in terms of what they want from current employees and future hires.

Some highlights…

“Home Depot Syndrome” If we need a new part for a broken appliance, we go to Home Depot to find the part we need. The same mindset is common for those who are hiring. They are looking for specific skills and seek to replace the missing part of the machine, and will overlook any “part” that doesn’t fit.

“Apply online” Anyone who has been on the job search in recent times knows that most companies want you to apply for jobs through “their website.” Here’s part of the problem, these companies contract with companies like Teleo that provide application screening services. Often times, their algorithms are written so narrowly (think “replacement part”) that unless your resume has the right amount of keywords in it, well congrats, your application will enter The Black Hole Zone.

HR? What HR? Yep, the much maligned human resources departments are shrinking into extinction. HR department used to be a butt of employment jokes, but at least they were human beings who actually worked for a company that was trying to recruit new talent, promote existing talent, and deal with all those gritty compliance things that keep employers from getting sued.

And then…

Companies (especially publicly traded companies) realized one way to boost their stock prices was by reducing overhead. If you guessed “layoffs are good for the bottom line” you’re right!

With large-scale layoffs, companies now have a large pool of skilled and unskilled talent looking for work — and grateful when they find it. If workers are looking for a gig during high unemployment (or work in an industry where there are few jobs, but lots of workers for said jobs), it means the price of their labor goes down. Factor in globalization (where you can get a comparable worker to do the same job for a fraction of the cost), automation (a computer can now do your job), younger people willing to work longer for less money, and you see why HR departments are gone. Why bother retaining talent when there’s so much talent out there who are hungry for work.

What’s going on now?

Companies hire recruiters to find replacement parts, and job notices have “apply online” stamped all over them to weed out anybody except the exact fit.  Yet despite all this narrowing that supposed to find the right match for an employers needs, many jobs go unfilled for months and months. Employers cite that there’s a skills gap (not true). The real gap is in the wages offered for a job. As employers have pushed wages down, people look at what’s offered, work for a short time and try to move on.

Why? Because wages and benefits aren’t keeping pace with the cost of living. And the system of job hunting and employer needs that’s built up for decades is at a point where high unemployment may persist.

Now, to answer my question if employers like a high unemployment rate, the answer is sort of. For a company’s bottom line, it’s good to have low labor costs. For a company’s customers, it’s not so good. That’s because with lower wages come lower disposable spending. And in a consumer economy such as ours, it’s integral for people to buy things. You can push labor costs down, but if you do it for too long, those lower paid workers won’t spend their cash in the amount that needs to get the economy in a virtuous cycle.

Not all is lost for those looking for work, however. In the article (which you should read), there are tips for beating the application software that prevents some companies from finding qualified applicants in a pool of 25,000 people.