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Labor Market Could Be Back to Normal in 2018, CBO Predicts
 

By Joseph Coombs  3/6/2014
 
“What, four more years of this?”

That’s often the disgruntled voter’s refrain in a presidential re-election year. But it also fits quite well with a new finding of the nonpartisan Congressional Budget Office (CBO), which says the U.S. unemployment and labor force participation rates should be “back to their average values,” or similar to levels experienced in previous economic recoveries, in 2018.

The CBO report The Slow Recovery of the Labor Market, released Feb. 4, 2014, examines the labor market’s woes from December 2007 to December 2013. The pace and nature of the economic recovery have been “difficult to predict,” the report notes, but the agency estimates that the nation’s unemployment rate will fall to 5.8 percent by the end of 2017 and to 5.5 percent in 2024.

No word, however, on when, or if, the unemployment rate will drop to 4.8 percent—the level at the onset of the Great Recession in December 2007.

According to the CBO, the country’s unemployment problem is largely due to weak demand for goods and services and, to a smaller degree, the result of structural factors.

“An exceptionally large number of people have been unemployed for long periods, and the stigma attached to their long-term unemployment, along with a possible erosion of their job skills, has made it difficult for them to find work,” the CBO reports.

Short of making the economy speed up to create more demand for jobs, it can be argued that addressing the structural/skills gap side of things could be a faster solution to getting more people back to work. And data from a new survey by the Society for Human Resource Management (SHRM) show that many employers would welcome that scenario.

Early results of the SHRM survey, to be released this spring, reveal that companies continue to struggle to find properly skilled candidates for their open positions. Nearly half of the responding 3,000-plus HR professionals reported that their company has new vacancies that require skills that are new to the position or to the organization. Respondents represented a variety of publicly owned for-profit, privately owned for-profit, nonprofit and government entities.

Two-thirds of those surveyed reported some difficulty in finding qualified individuals for new jobs. The problems cited most frequently were:

  • “Candidates do not have the right technical skills.”
  • “Candidates do not have the needed work experience.”
  • “Competition from other employers.”

When asked in what areas applicants are coming up short, respondents most often pointed to deficiencies in the following:

  • Basic computer skills.
  • English-language fluency (both oral and written).
  • Critical thinking/problem-solving.
  • Professionalism and work ethic.

Another factor had nothing to do with skill sets: More than one-third of respondents said qualified applicants rejected their organization’s compensation package. This result could spur new debate about whether employers are offering too little money or whether too many job seekers are holding out for a perfect gig.

There may be a little truth to both, according to one HR consultant.

“Companies are still trying to do more with less and not spend the money and make long-term employment commitments,” said Tom Darrow, SPHR, founder and principal of Career Spa LLC, a Smyrna, Ga.-based consulting firm that assists the unemployed and the underemployed. “Many companies are relying more and more on contractors, so they can get ‘talent on demand’ and get rid of it on demand, too.”

Still, some job seekers should learn to settle in order to land a bigger prize down the road, he advised.

“Very few are getting their dream job these days,” Darrow said, “but at least one can identify what one looks like and then seek to get a ‘bridge job’ that gets them closer to that dream job.”

So while the country waits for the much-anticipated return to normal for its labor market—be it in 2018 or beyond—the onus is truly on the job seeker to make things work, Darrow concluded.

“For too long, workers looked to their company for stability. One positive of [the Great Recession] is that it’s clearly putting career management back in the hands of the worker. Each person needs to work to optimize their skills, network and reputation to intentionally manage their career, instead of just hoping that things will work out.”

Joseph Coombs is a senior analyst for workforce trends at SHRM.

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