Making Sense of the Murky Market

It seems every week we're presented with a new economic report, a fresh set of statistics, or a compelling headline about the state of the job market. One day, a report on GDP growth signals a booming economy. The next, headlines scream about layoffs in a key sector. For those of us who follow the world of job creation and economic health, it's becoming increasingly difficult to get a clear picture of what's really going on.

The challenges in understanding today's job market aren't new, but they've been amplified in recent months. We are navigating a period of significant flux, where traditional economic indicators don't always tell the whole story.

One of the most significant hurdles is the discrepancy between job openings and hires. Companies are still posting a  number of open positions, yet many are struggling to fill them. This isn't just a simple skills gap; it's a more complex issue involving shifting worker expectations, geographic mismatches, and a re-evaluation of the hiring process. The labor market is hot, but the "thermostat" seems to be broken—it's signaling high demand without the corresponding rise in employment.

Another factor is the rise of the gig economy and remote work. Traditional economic data, which often focuses on full-time, salaried positions, can miss the nuances of this new reality. Are independent contractors and freelance workers a sign of economic dynamism or instability? The answer likely depends on the individual, but their growing numbers complicate how we measure a healthy job market.

Finally, we must consider the impact of technology and automation. As certain jobs are automated, new ones are created. The question remains, however, whether the new jobs are being created at a fast enough pace and with the right set of skills to absorb those who have been displaced. Are these being tracked properly and keeping in mind not just displacement but transfer and retraining?

These factors create a narrative that is both contradictory and difficult to interpret. The job market isn't failing; it's changing in profound ways. To truly understand it, we must move beyond the simple numbers and dig into the "why"—why are workers moving, why are companies hiring differently, and why are traditional metrics no longer sufficient? Only then can we hope to navigate the murky waters of the modern job market and foster a more robust and resilient economy for everyone. The goal of this blog is to always get to a clearer understanding, so standby as we do just that in the years ahead.

New Project

Keep an eye to this space everyone, as we rebrand to our new company!  Name coming soon!

Hiatus, obviously

The blog is currently on a hiatus while we deal with a happy expansion of our family, the arrival of our son.

Tune in later this summer for more coverage of job creation issues.  Thanks for reading!

The Future Won't Look Anything Like What We Thought It Would

Over at CNN Money there is an article that explores the concept of the tech talent shortage in a very unique way.  Rather than poll a bunch of experts and throw out some stats, they brought together business leaders and had them do a thought expirement on how their companies would react to a fake near future article on this issue.

While some of the common solutions were brought up, the group began to focus in on what one of the larger tech firms, Google, would do to confront this priblem. This groups interesting hypothetical conclusion is below:

"Thus, the group concluded that Google, faced with talent scarcity, will innovate its way to success -- living with less talent and even thriving despite this shortage.

This future-scape discussion taught these executives one very important lesson: Today's critical growth issue -- immigration reform, for example -- may fade into the background as the truly creative, inventive companies find ways to overcome obstacles."

This is a lesson more job creators should remember.  The problems today are really the challenges smart businesses will overcome tomorrow.

Read the full article here: http://tech.fortune.cnn.com/2014/05/13/americas-tech-talent-shortage-is-it-just-myth/?iid=HP_River

A Roll of the Dice for Jobs

In Upstate New York there is a lot of commotion over allowing casinos to be built with full Vegas style table gaming.  The law has imposed a limit to where and how many can be built, so developers are fighting over the opportunity.  Each one is crafting their pitch on how many jobs they would create and what economic impact they would have on the region. The areas proposed for these casinos have seen local groups rally to oppose them due to the problems they can bring as well.

That casinos will create jobs while they are being built and will need staff to run them is not in question, but what kind of jobs they require to operate is. Fortuitously, there was an article in the local paper, The Times Union, originally appearing in Salary.com, which explores this very concept.

The article, which you can view here, http://www.timesunion.com/jobs/salary/article/Casino-Jobs-Are-Becoming-a-Safe-Bet-5392398 , has a good overview of the casino industry and an examination of two types of jobs in Pennsylvania casinos.  These are blackjack dealer and surveillance staff. The article talks about how with only a few weeks of training people can easily apply to jobs that pay from the low to mid 30s to the 40s, and how there is a lot of possible advancement. It is a pretty good introduction to the casino industry and well worth a read. 

I have some concerns with the facts and figures discussed in the article, and their applicability to the situation in Upstate New York with the pending casinos, but we can use them for a back of the envelope thought experiment. The parallels between Pennsylvania (specifically where the casinos are, such as Allentown) and Upstate New York are pretty strong, as both are economically depressed areas struggling to come out of the deindustrialization phase.  Jobs are always welcome, but one must ask if the societal costs that come with a casino (gambling addiction, crime, etc.) are balanced by the jobs created, or would these areas be better assisted by similar type of job creators, with less baggage. Let’s examine using data from the article and data from salary.com

The two jobs in question pay between 31,000 for a casino surveillance operator to 35,000 to 40,000 for a black jack dealer as a starting wage.  Combined with health insurance and other benefit packages these sound like fairly decent jobs for those with little more than a high school degree.  But let’s look at another easy entry field, retail.  Retail stores share some commonalties with casinos.  They are both focused on encouraging people to spend money, have employees dedicated to facilitating that process (sales people and dealers), worry about theft, and have higher paying positions as you advance in the industry.  The retail industry also does not require more than a high school degree for most entry level positions.

Looking at salary.com's own numbers for the Albany area illustrates that some of the potential jobs created by the casino, could have been created by a retail company as well.  For surveillance, which the article lists at $31,000, you can draw an easy comparison to a store detective, which the median salary and bonus is about $31,000.  While this is median versus starting salary, the societal ills attached to the gambling industry might outweigh the small differences in salary.  Source here: http://swz.salary.com/salarywizard/

For black jack dealers it s a little bit more of a stretch in terms of skills but a comparable function is a retail store customer service representative (both interact with the customer and facilitate the transfer of funds).  Here the median salary in the Albany area is lower than the mid 30's to 40,000 range cited in the article.  The median salary and bonus is bout 33,500, which would indicate that the casinos are bringing in better jobs in this case, as even the starting salary is higher then the median salary.  Source here: http://swz.salary.com/salarywizard/

Choosing to utilize casinos as part of an economic development strategy has been a tough choice all over the country.  While they do create many jobs and some of them quite high paying, (especially as you enter upper management) the same could be said for other industries that bring less social costs like retail.  What is a good sign is that many of the proposed casinos in the Upstate area are planning on being more resort than casino in many cases, with features like indoor water parks and luxury golf courses.  It still remains to be seen what jobs are created, but hopefully our business and political leaders will make every effort to ensure the economic benefits are enhanced and the societal ills are mitigated.

Pew Portrays Population Prognistication Perfectly

There is a great and truly beautiful graphical illustration of the changing demographics of our country that Pew Research put together. There upcomng book, Next America, should provide a lot of great details on where the trend lines are going.  Demographics play a key role in understandingbroader economic trends and jobs trends, so this is fascinating reading. The way they present the data (on my ipad at least) really draws you in as well.

If you have 15 minutes check it out here: http://www.pewresearch.org/next-america/

Capital Expenditures: Big Boom or Too Soon?

In Fortune, Shawn Tully has a great piece about how some economists are starting to see a solution to our current economic malaise: Capital Expenditures or "capex" for short. Capex is the major investments and purchases businesses make like building a factory, buying equipment like a plane, or investing in new product lines. You can read the article for yourself here:

http://finance.fortune.cnn.com/2014/04/02/hold-on-to-your-hard-hats-a-capital-spending-boom-may-be-coming/

In the article Mr. Tully talks about how some economists see capex as poised to rise and that this increase could have a huge impact on the economy. He says that "A resurgence in capital investment is what America's been waiting for. It would create a virtuous, self-reinforcing cycle of growth."  While I have some concerns with the evidence of the economists he cites (one being improving CEO confidence, which could be due to other factors), he is correct that such a resurgence could pull our economy out of the funk we are in.   Earlier in the article he points out that capex "Now stands at just over 12% of national output, compared with around 13.5% of GDP in 2007". If it were to grow by even half to its normal output it would have an outsized impact on our feeble economy.

The fear that I have though is that if this is occurring too rapidly that it might prematurely drive up prices as resources are bid up to meet business needs.  The jump in prices might reduce the size of an investment (the company builds one less plant as prices eat into the budget) or it could reduce overall demand in the economy (price shocked consumers pull back on purchasing discouraging other companies from investing).  Combine that with a summer that may already have high energy costs due to geo-political turmoil and a frigid winter in the US and the capex recovery could be over before it gets started.

On the other hand, businesses may invest regardless of the winds of economy.  Many organizations think in 5 year business cycles, and while the recession may have thrown a wrench into the best plans times are different now.  The recovery is occurring, albeit slow, and domestically our politics are in a relative tranquil period and may be for months to come.  If there was ever a time to invest in aging infrastructure or new products, that time is now.

Hopefully the latter wins out over the course of the year, although only time will tell.