NASHVILLE - What Happens When An Employment Market Becomes Too Cool For School....

If you know anything about the Southeast US where I live, there's a couple of big realities from a lifestyle/work perspective:

--Atlanta is the capital

--The Southeast is booming in general

--There's no hotter market than Nashville, or as I like to call it, #Nashvegas

Since I travel a lot for work, I tend to measure how hot a market is for business, employment and cultural gravity by the general availability/price of hotels in the market.  By that measure, Nashville is red hot.  It's hard to find a business class hotel that won't make you cringe for less than the high $100s or right at/above $200.

That's a lot.  Compare to the market to Atlanta, where great rooms can be found from $110 to $140, and it's clear that Nashville is booming.  Because of the boom over the last decade, inventory on the hotel and Nashvegashousing front hasn't caught up to the demand yet.

Why is Nashville so hot?  Many would tell you that the growth is a function of multiple factors - including a centralized metropolitan government that generally allows the metro to work together (see more about the government setup here), a unique cultural pull with origins in country music (expanding beyond that taste, but still the flagship) and an emerging hipster dufus vibe ITP (inside the perimeter).

Add it all up, and employers have been flocking to Nashville for the last 10-15 years.

But with great growth and a lagging housing market comes a few problems - namely what it costs to live "comfortably" in Nashville.  More from the Nashville Business Journal:

"It is obvious that living in Music City is starting to add up, and now a study shows the city has seen the greatest year-over-year cost of living increase in the nation.

Released by financial planning website GoBankingRates, the study compared the change each of city's cost of living index from Numbeo to GoBankingRates's metrics for how much annual income it takes to "live comfortably" in a city. For instance, it takes a salary of $70,150 to live comfortably in Nashville today, according to the study.

Local home prices have skyrocketed recently, with the median single-family sales price in Nashville in June of this year at more than $293,000, according to the Greater Nashville Realtors. For comparison, Nashville’s median sales price hit $200,000 for the first time in June of 2013.

Last year, a Nashville Business Journal analysis of wealth data from researcher Esri found the average net worth of Greater Nashville’s most affluent areas had increased by 48 percent, increasing the Greater Nashville's inequality ratio to 5.7. That means the wealthiest 20 percent of ZIP codes in the region have an average net worth that is 5.7 times larger than the average net worth of the bottom 20 percent. This gap has climbed from an inequality ratio of 4.47 in 2013."

If you click through and dig in, you'll find some gems related to how much income you need to live comfortably in Nashville compared to some other cities of note:

Los Angeles - $76,047

Seattle - $75,283

Nashville - $70,150

San Diego - $69,958

Atlanta - $62,184

Dallas - $57,984

Austin - $54,631

Louisville - $48,897

Want some analysis of those numbers?  It's now cheaper to live comfortably in Atlanta than it is in Nashville.  Also, if you ruled out the west coast as a professional living in Nashvegas, you might want to look again, because your standard of living is similar to those who live in San Diego, Seattle and yes, Los Angeles.

Of course, you won't see Dolly Parton pulling through a Jack's in Seattle like I did in Nashville in 2006.

Final note - Austin is widely thought to be an incredibly hot market with many similarities in cultural pull and hipster vibe to Nashville. If you were buying stock by the measure listed above, you would sell on Nashville and buy Austin.

The market never lies.  Nashville's a great town, but these numbers show it may have heated to the point where it's going to level off from an employment perspective soon.

 

 

 


PEOPLE STAT OF THE DAY: Jobs in The Steel Industry & Automation...

I'll just leave this here...

14 people make 500,000 tons of steel annually at a location in Austria.

Not a typo.

From BusinessWeek on automation in the steel industry:

The Austrian village of Donawitz has been an iron-smelting center since the 1400s, when ore was dug from mines carved out of the snow-capped peaks nearby. Over the centuries, Donawitz developed into the Hapsburg Empire’s steel-production hub, and by the early 1900s it was home to Europe’s largest mill. With the opening of Voestalpine AG’s new rolling mill this year, the industry appears secure. What’s less certain are the jobs.

The plant, a two-hour drive southwest of Vienna, will need just 14 employees to make 500,000 tons of robust steel wire a year—vs. as many as 1,000 in a mill with similar capacity built in the 1960s. Inside the facility, red-hot metal snakes its way along a 700-meter (2,297-foot) production line. Yet the floors are spotless, the only noise is a gentle hum that wouldn’t overwhelm a quiet conversation, and most of the time the place is deserted except for three technicians who sit high above the line, monitoring output on a bank of flatscreens. “We have to forget steel as a core employer,” says Wolfgang Eder, Voestalpine’s chief executive officer for the past 13 years. “In the long run we will lose most of the classic blue-collar workers, people doing the hot and dirty jobs in coking plants or around the blast furnaces. This will all be automated.”

From 1,000 jobs in the 1960s, to 14 FTEs today. Sounds like a post for Labor Day weekend rather than the 4th of July.  Too good to wait until 2 months for, however.

Mamas, don't let your babies grow up to be Cowboys labor that can be automated...

 


Sleepy HR Pros Won't Spend More than 30 Seconds On This Post... (The Mary Meeker Slides)

Only the true players will spend 5 minutes or more with this post and it's referred content...It's deep, but pure gold...

Kleiner Perkins general partner Mary Meeker launched the 22nd edition of the Internet Trends Report at the Code Conference in Rancho Palos Verdes, California, on May 31, 2017. Dating back to 1995, when Mary was still an equity analyst at Morgan Stanley, the annual report compiles and analyzes data from a wide range of sources, providing insights on the state of the Internet Economy. The deck covers a broad array of topics, including global internet user trends, advertising and e-commerce, gaming, online media, digital health, and much, much more. This guide is intended to highlight some of the key topics of discussion in this year’s edition – and to help media navigate the report.

It's deep.  I can guarantee if you spend 10 minutes with it, you'll find 4-5 things to share with you team and you'll look smart as hell.  A trend-spotter, if you will...

Highlights of the 300 slide deck from ReCode (full deck below from Slideshare, click through if you don't see the slides):

  • Global smartphone growth is slowing: Smartphone shipments grew 3 percent year over year last year, versus 10 percent the year before. This is in addition to continued slowing internet growth, which Meeker discussed last year. (editors note - what's next?  Apple needs a new product)
  • Voice is beginning to replace typing in online queries. Twenty percent of mobile queries were made via voice in 2016, while accuracy is now about 95 percent. (editor's note - holy ****)
  • In 10 years, Netflix went from 0 to more than 30 percent of home entertainment revenue in the U.S. This is happening while TV viewership continues to decline. (editor's note - holy ****, even with all those shared passwords?)
  • Entrepreneurs are often fans of gaming, Meeker said, quoting Elon Musk, Reid Hoffman and Mark Zuckerberg. Global interactive gaming is becoming mainstream, with 2.6 billion gamers in 2017 versus 100 million in 1995. Global gaming revenue is estimated to be around $100 billion in 2016, and China is now the top market for interactive gaming.
  • China remains a fascinating market, with huge growth in mobile services and payments and services like on-demand bike sharing. (More here: The highlights of Meeker's China slides.)
  • While internet growth is slowing globally, that’s not the case in India, the fastest growing large economy. The number of internet users in India grew more than 28 percent in 2016. That’s only 27 percent online penetration, which means there’s lots of room for internet user-ship to grow. Mobile internet usage is growing as the cost of bandwidth declines. (More here: The highlights of Meeker's India slides.)
  • In the U.S. in 2016, 60 percent of the most highly valued tech companies were founded by first- or second-generation Americans and are responsible for 1.5 million employees. Those companies include tech titans Apple, Alphabet, Amazon and Facebook.
  • Healthcare: Wearables are gaining adoption with about 25 percent of Americans owning one, up 12 percent from 2016. Leading tech brands are well-positioned in the digital health market, with 60 percent of consumers willing to share their health data with the likes of Google in 2016.

Daaaaamn.  There's a lot here.  This one's for the true players. Enjoy...


If I Were Starting A Union, Here's What I'd Do...

I'm spent a lot of time over the last week thinking about the challenges of the budgeted merit increases - you know the drill - 4% across the board, and you need to get "pay for performance" out of that.  Which got me thinking about this ...

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If I Were Starting A Union, Here's What I'd Do...I'd rip a page from the player's unions in the major sports leagues and focus my bargaining on the establishment of a salary cap.

Once the cap was established as a percentage of company revenue, the deal would be pretty simple from an economic perspective - members of the union would get more cash as revenue grew, and they'd be at risk if revenue didn't grow or decreased (I'd have to figure out how new headcount impacts that - there would have to be some way to protect a certain % of growth for the incumbents).

Of course, membership drives for my union would be challenged - mainly because the majority of workers in America have no interest in that kind of risk, or at least see little value in the upside. They'd rather take their 3% annually.

Which means I'd have to attempt to unionize high performers and Linchpins only.  Of course, that's problematic since this group really doesn't need representation and can increase their compensation on their own, both within the same company and via the free market.

Crap.  Back to the drawing board...


ECONOMIC MOBLITY CHART: The Older I Get, The Less I Judge People...

As tax time approaches, I find myself searching for a little balance.  Why do I have to pay so much in taxes?  I'm sure a lot of Americans feel like that up and down the tax bracket.  

The alternative, of course, is to not earn enough to pay high taxes. We all know that the global economy, the advent of technology eliminating jobs and more has conspired to make the gap separating the haves vs have nots larger.

A secondary question to that reality is economic mobility.  Can people born into poverty actually bootstrap their way to the American Dream?  The answer is yes, but it doesn't happen as much as we'd like it to.  Check out this great chart (enable images or click through if reading via email) based on a study from the Federal Reserve Bank of St. Louis:

Economic mobility

 Here's a run down from Business Insider:

"The notion of an American Dream can be boiled down to a simple concept: a meritocracy in which place of origin and social status do not preclude success for hard workers.

Talk of that dream fading has been present since the Great Recession sucked 9 million jobs out of the economy and knocked down already-depressed wages for millions.

Now, a study published by the Federal Reserve Bank of St. Louis has found a way to measure that decay. It does so by coming up with a simple, mathematical definition of the American Dream as represented by social mobility defined as "the probability that a child born to parents in the bottom fifth of the income distribution makes the leap all the way to the top fifth of the income distribution."

In the US, children born to parents in the bottom fifth of the income distribution have a 7.5% chance of reaching the top fifth, according to Stanford's Raj Chetty, the paper's author.

Hmm. It's one thing to say that 7.5% chance of starting from the bottom and arriving at the top is low.  But when you think about it, that's almost 10% - probably the hardest working, smartest and most gifted 7.5% for sure.  That kind of follows the bell curve and seems reasonable.

But - and there is a but - the older I get, the less I judge people for being different than me related to language, behavior, values and more.  That's especially true for children and young adults.  The stats related to presence of 2-parent families, education and more are scary when you look at the bottom fifth of this same distribution.  If you didn't have the same level of access to resources, education and yes - parents being unyielding in what they value, provide and expect - you can't be expected to have the tools to bootstrap yourself to the top fifth.

That means that kids with the raw gifts to make the leap get left behind through no fault of their own.  That sucks.

A more important measurement might be the probability the same citizens in the bottom firth can bootstrap themselves to the median of income distribution.  That's another version of the American Dream that might look pretty good to someone starting in the bottom fifth of income slotting.

I can't solve any of the red in the chart above.  But I've long since stopped judging most of the people who start in the lower fifth.  The next step for people like you and me is to try and impact a couple of kids who start there and make sure they have what they need to arrive at the top fifth - or even the middle fifth - based on their own merits rather than where they started.


Amazon's Getting Ready to Crush Another Industry Near You (aka Call Center Services Killer)

When you think about how the business world is changing and how those changes affect the workforce and talent issues, a good place to look first is Amazon.

First, the great marketplace in the sky made shopping online easy.  Then, it made shopping online preferable for many to shopping locally in a store through it's bundle of value called Amazon Prime. Amazon_one1

In the background, it's a been a hub of innovation through it's rollout of corporate services (look up Amazon Web Services to see how it's crushing cloud competitors) and consumer products alike (Kindle, Alexa).  It's so into investing for the future and innovation that it basically keeps it's profitability at zero by reinvesting all earnings into forward-looking ventures (click that link to see the chart).

Sometimes we forget that the advances cause big shifts in the workforce.  The giant sucking sound you hear is the slow implosion of the retail sector, with a lot of jobs going with it.

Next up after retail?  How about Amazon rolling up the call center industry?  More from GeekWire:

"Amazon Web Services is developing a suite of cloud-based tools to sell to enterprises that would help them manage their call centers, based on technology the online commerce giant developed for its own retail call centers, according to a report from The Information. 

According to the report, citing a person briefed on the plans, the programs will incorporate Amazon’s digital assistant Alexa to answer some questions on the phone as well as via text message. The report claims the service will also employ Lex, a chatbot building service that uses the same deep-learning technology as Alexa, and text-to-speech program Polly. All these aspects together paint the picture of a suite of tools that allows customers to build their own customer service programs using bots and voice control with the ability to learn and adapt to specific industries.

The Information reports that the new products could be announced as soon as mid-March and could jolt the call center software industry. It’s a market that features many players such as Seattle-based Spoken, as well as other companies like Cisco Systems, Avaya and Genesys.

Amazon Web Services has been in the news a lot lately for new products that it has announced and others it is considering. Amazon’s cloud service arm is reportedly considering bundling its email, file storage, and video conferencing apps into a productivity suite that would compete with Google G Suite and Microsoft Office 365."

If there's any good news in this for current call center outsourcers, it's that Amazon seems intent on owning the technology part of the call center business model rather than owning actual call centers.  Of course, at one time it didn't have any interest in the shipping business either, and it's now getting ready to ramp up it's own fleet of planes and hub.  

Thanks for the memories, Fed Ex and UPS.  I'm sure Amazon will name a conference room after you to commemorate what you meant to each other at one time.

The good news for HR?  Amazon doesn't seem to have any interest in rolling up the HR industry.

#yet

 


Jobs in the USA - Coal Miner/Trump Edition...

One of the things that's fascinating about the Trump presidency is some of the promises - direct and implied - he's made that the jobs environment is going to improve for the blue collar American worker.  The Trump jobs platform is a cocktail of trade policy, economic policy, protectionism and more.  

To be fair, there's no such thing as an easy solution to any of this, but one of the dirty little secrets is that a lot of the jobs are never - and I mean never - coming back.  Whether it's automation, robots, Solar_worker global trade or societal changes, a lot of jobs are gone for good.

Which means the unspoken truth for a lot of blue collar workers is that their prospects won't improve with retraining and possible relocation.  Consider this coal/solar/wind energy jobs rundown from Fortune:

"According to a recent report from the Energy Department, the coal electric generation sector employed just 86,035 people—57,325 of them miners—in 2016. That’s far fewer than the number who now work in solar: 370,000, up 25% from 2015. The wind-energy workforce, meanwhile, ballooned 32%, to 101,738, and the Bureau of Labor Statistics pronounced “wind turbine service technician” the nation’s fastest-growing occupation, projecting 108% growth between 2014 and 2024.

Compare that with the fate of coal miners, whose number dwindled by 24% last year. There are lots of reasons for that—the shale gas boom, declining demand, Obama-era regulations, and automation. Even for those in the industry, it’s hard to imagine all those coal jobs coming back. Luke Popovich of the National Mining Association has upgraded the industry outlook from “not great” to “improving,” in light of Trump’s early days in the White House."

My dad was a telephone line guy for years, and looking back, I'm proud of the adjustments he made when the business he was in become less POTS and more data and video.  He embraced that OK, but didn't have to change companies to get retrained - and certainly didn't have to relocate for the job.

West Virginia coal miners can't get a job in solar or wind without retraining, looking for a different company to work for, and yes, moving somewhere else.  And they're really going to hate the arid climates over Morgantown.

Many of the jobs aren't coming back.  Retraining is key, but as the economy shifts, relocation is another dirty little detail.  

God help us all when semi-trailers become automated and take out millions of jobs that blue collar Americans migrated to over the last 30 years.


The Real Workplace/Economic Issue at the Core of the Trump Presidency...

Lots of polarizing stuff going on across both sides of the political aisle right now.  As always, I'm drawn to views that ponder the center - and to the ones that are all about the workforce we have in the United States.

With that in mind, I offer up the following from Joe Klein of Time (who conservatives view as a dangerous liberal and liberals don't seem to fully own - which makes him someone I'd like to listen more to).  In the February 6, 2017 issue, Klein painted Trump economic policy as a test to long held free market ideas in the following way:

"In addition to a loaded slogan--"America First"--and a questionable demeanor, it is now apparent that President Donald J. Trump actually has a governing ideology. His Inaugural Address, the strongest and most coherent speech he's ever delivered, was a clear statement of that Wal mart
philosophy. It may change the shape of domestic politics. It may overturn the international order that has existed for 70 years. It certainly deserves more than the "divisive" dismissal it received from liberals--and more than the puerile crowd-size diversion that its perpetrator stumbled into during the days after he delivered it.

The traditional argument against free trade is myopic and simple: American jobs are going to Mexico and China. The traditional counterargument is more abstract: the price of children's clothing at Walmart is much lower now that shirts are made in south China instead of South Carolina. Free trade, it is convincingly argued, has been a financial net plus for the U.S. But there has been a spiritual cost in a demoralized middle class, which leads to an existential question: Is the self-esteem inherent in manufacturing jobs long considered obsolete--think of those grand old steel mills--more important than the lower prices that the global market provides? Have we tilted too far toward market efficiency and too far away from social cohesion? Is there a middle ground? Trump's insistence on changing the equation brings a long-neglected issue to the center of our political debate. He may be wrong, but the alienation that seems like a by-product of globalization needs to be addressed. A happier people may be worth the cost of higher prices."

When you really start to think about it, having goods made in America - and they higher costs that would be passed along to consumers - is really just another tax.  With that in mind, I've written before that I'd love to see America's willingness to pay more for good made here tested in the marketplace.  Of course, I wrote that at a time before we had a president that seemed hell-bent of penalizing and tariffing goods made elsewhere.

As Stein asks, is the self-esteem inherent in manufacturing jobs long considered obsolete--think of those grand old steel mills--more important than the lower prices that the global market provides?  To me, that's a crazy interesting question that I don't know the answer to.  To hear a liberal ask it and note that the time has probably come to at least test whether the ultra free-trade is the best path probably gives a lot of conservatives pause.

Hmm.

And yes, Alice, I'm aware that robots are replacing people in factories all around the world. But accounting, engineering and countless other professions are increasingly being shipped to talent bases willing to work at fraction of the cost.

I have to agree with the liberal Klein.  We really don't know the answer related to free-trade vs higher cost American goods, and it sure seems like Trump is hell bent on providing the environment to test those ideas for the first time in 70 years. 

As Klein states at the end of his column: "These are crucial questions, without clear answers. It is good that Trump has raised them. It is unfortunate, however, that he is such a defective messenger."

Truer words were never spoken.


KNOW YOUR HR STUFF: The Difference Between U3/U5/U6 Unemployment Rates

The economy is hot and the 2008/2009 recession feels distant, right?

That means now is a pretty good time to review the types of unemployment rates that are available out there for consumption. As it turns out, the one we usually hear about is an incomplete picture.  Here's a primer on unemployment rates that are available from the government and a chart that shows where we've been since 1995:

U3 is the official unemployment rate.

U5 adds on discouraged workers and all other marginally attached workers. These people are still unemployed, but not in the market for a variety of reasons.

U6 adds on those workers who are part-time purely for economic reasons.  

The U6 unemployment rate counts not only people without work seeking full-time employment (the more familiar U-3 rate), but also counts "marginally attached workers and those working part-time for economic reasons." Note that some of these part-time workers counted as employed by U-3 could be working as little as an hour a week, but they prefer full-time employment but haven't landed it yet. And the "marginally attached workers" include those who have gotten discouraged and stopped looking, but still want to work. The age considered for this calculation is 16 years and over

The current U6 unemployment rate as of December 2016 is 9.20, almost double from what's normally reported as the official U3 rate.  See historical chart below:

Unemployment rates

If you consider U6 "real" unemployment, it reached almost 18% post recession in 2009-10.  Damn.

I'd expect the gap between what's reported (U3) and the U6 rate to grow in the future, as the gig economy forces people to become part-time in an increasing variety of ways.

 


TODAY'S JOB MARKET: Peak Economic Cycle Edition

If the chart below were an investment chart, you'd be looking to start scaling back tech stocks in your portfolio right now.

Take a look and let's talk about this visual after the jump (email subscribers click through for image):

PeakEconomicCycle

What this chart tells us is that over 50% of businesses are reporting they have few or no qualified applicants for job openings today.  Look at the chart closely, and you'll also see that percentage is higher than at any point between the 01 and 08 recessions (gulp). You'll also see that the latest spike has us reaching recruiting difficulty at its highest level in 20+ years.

That seems like a picture that tells us we are at what I like to call "peak economic cycle" right now.  Here's what that means for your recruiting/people/talent function:

--It's going to be harder to find people. You'll need to spend more on recruiting than you traditionally have to acquire talent in 2017.

--At times, you're going to have to buy candidates with expensive offers to get the talent you need in key positions.

--If you have compensation issues, now's the time to be aggressive to do equity increases in key roles that are under-comped vs the market.  Make those adjustments and you can buy yourself another year.  Refuse to do it in key roles, and there's a great chance you'll lose experience AND pay more for the talent you ultimately recruit to replace the great people who leave.

Peak economic cycle = Turd Sandwich for the companies who don't like to spend much on recruiting and have a "trail" strategy related to compensation in key roles.

That's right - "turd sandwich".  You won't see that in the reports from economists, but that's what it is for a lot of you.

Take this chart to your CEO/Ops lead and get some more money.  You're going to need a bigger boat until this thing cools off.