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HR Capitalist Economics - Why Unemployment Numbers Matter...

I know, I know... Who cares about the unemployment numbers right?  Today's Labor Department report shows surprisingly strong performance in an economy that has otherwise shown signs of sluggishness recently, with unemployment nationally dipping to 4.4%.   If nothing else, take solace in the fact that your 401k should trend up on the news...  And I get to use a picture of Greenspan since we are talking about economic indicators (ps - I know he is retired, I just like this type of picture when talking economics shop)...Greenspan

Of course, the continuing trend of low employment means a lot to the average HR Generalist, and not just because it makes recruiting harder.  Unemployment has been low for awhile, and you'll get the people.  It's the after effects or hangover of low unemployment that makes the average HR Manager job more difficult.

Here are my top hangover effects of low unemployment for HR Pros:

1.  You will destroy your internal equity to get people - Want the same talent as you have now?  As unemployment goes down in any sector, you'll pay more to get it.  You can spin that and get the budget, but the resulting skew in internal salary equity causes issues that you will pay for for years.  Johnny and Jenny compare pay stubs and talk about it openly.  Nice - have fun dealing with that one for the next three years.  Maybe you even have a manager that will manage people making more than they do - perfect!

2.  Your Talent will go into "free agent" mode - Nothing is nicer than seeing some of your talent (good and bad) have their resume posted internally on Monster.  They may not be actively looking, but they will have their line in the water in case the perfect 30K raise comes along.  Great!  You'll also get the opportunity via this one to determine if you are going to confront them with the fact you know.  Have fun with that consideration....

3.  You'll consider contract labor more, with all the issues that comes with it - Contract Labor can mean a lot of things to a lot of people.  In low end call centers, it means using more temp to perm arrangements to drive the cattle call to fill seats.  In high-end software shops, it means using contingency search to locate talent or off-shoring to meet the labor needs.  All of these alternatives create legal and employee relations issues that create more work for you, the HR Pro...

So - the savvy HR Pro has become kind of numb to unemployment numbers.  Recruiting's tight, yadda, yadda, yadda...  The real impact is on the Employee Relations front, which is a person in your door with an (at times) unsolvable issue.    That's what I think of when I see Labor Department reports with tight employment numbers, or in true Pavlov fashion, even when I see a picture of Greenspan.... 



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