The economy increased unemployment in this country to a U6 high to over 16% from mid 2009 through the third quarter of 2011. What is the U6 figure? It represents the unemployed, and those “marginally employed”- those working part time because they cannot find full time work, and those that want to work but have given up hope. To me, it is the truer picture of employment, and it tells a different story than the politicians and the press tell. Today it stands just above 12%.
This helps explain a couple of phenomena I have come across recently. The U3 unemployment rate (the one you hear about) has dropped from a high of 10% to just above 6% nationally. In some areas, like Charleston where I live it has dropped to 4.3%. There is an old joke that when you get below 4% you are interviewing the chronically unemployable. When you reach that point, there is upward wage pressure. You are competing for the better employees, and you will have to pay them more.
Indeed we are seeing some wage pressure – wage trends for nonsupervisory personnel have risen to annual increases of 2.3% (up almost a full percent) in the last year. interestingly, the trend for management is 1.3%.
How do you explain, then, the more than 100 applications received at my friends Chiropractic office for one position as an assistant? Easy – U6. There are ALOT of people looking for a better job, now that companies are again hiring. People who gave up are throwing themselves back into the arena. Many people, unable to find a job, have gone for technical training to improve themselves- and are now looking for work in those fields.
How does this affect your business? There may still be plenty of qualified applications coming in the door, and wage pressure is still low. You might want to think about this – how are you treating your employees? Are they happy? Paid a competitive wage? OR- are they in someone else’s pile of applicants looking for a “better job.”