Want to win the competition on talent? Follow these 3 rules
Numbers don’t lie, but they don’t always tell the truth you think they are telling.
We saw GDP growth at an unprecedented 4.4% in third quarter – double what it was in April 2018. At the same time, unemployment is at an all-time low – 3.9% nationwide in the month of July. Unemployment has dropped a full percentage point since 2012. Job growth continues to increase at a steady pace.
But don’t let your rose-colored glasses fool you. If the GDP is up and unemployment is down, we might want to look twice. Hang with me and I’ll try and walk the dog on this… it took me more than a minute to see this perspective.
First – why was 2012 important? Among other things, Baby Boomers started to turn 65 in 2011. It’s not a coincidence that with 10,000 baby boomers leaving the workforce daily that unemployment has steadily decreased. Fewer workers (supply) + job growth (demand) = more vacant jobs. Herein lies the problem: there’s not enough workforce availability in the right skill sets to fully pick up the slack of all those who are leaving.
Second – this decrease in unemployment causes wage inflation as fewer people compete for more jobs. It’s the law of supply and demand. If you want quality people, you’ll need to pay more for them. In a recent article by Kurt Knutson, he says, “diminishing ‘labor market slack’ leads to higher wages and higher demand, which leads to higher inflation.” Higher inflation, continuing interest rate increases, lower unemployment combine to make it challenging for companies to maintain access to capital they need for continued growth.
What does all of this mean?