Human Capital Intelligence - 12/11/2023
Labor market's 'soft-landing' | Talent imbalances arise | Older workers stay productive | AI creates recruiting challenges
Welcome to the latest edition of Human Capital Intelligence. As always, we would love to hear from you at ken@stibler.me with news ideas, feedback and anything else you find interesting.
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By Ken Stibler; Powered by Reyvisum Analytics
What’s Working
Labor market data signals ‘goldilocks’ scenario, but skills-based risks abound
The latest U.S. jobs report was widely seen as just what the economy needed. Despite falling job postings, November figures showed a slight drop in unemployment to near historic lows came while wages continue to compress. Labor economists see this situation as the labor market coming back into balance as more people re-entered the job market and available opportunities fell in line.
The impact of the robust jobs report reverberated through financial markets, with major stock indexes reaching their highest levels for the year. The Dow Jones Industrial Average saw a 0.36% increase, closing at its peak. The positive data challenges expectations of immediate interest rate cuts by the Federal Reserve, indicating increased odds of a ‘soft landing’ for the economy and setting the stage for continued job growth into 2024.
November’s jobs report is boring in all the right ways. Jobs growth was in line with expectations and the unemployment rate stepped back from the edge, showing that we'll be exiting 2023 without a recession."
—Daniel Zhao, Glassdoor
However, despite the rosy aggregate figures, several states are increasingly seeing a perplexing combination of rising underemployment and unifiable vacancies that hints of structural skills mismatches. Demographic trends, digital transformation, and undesirable working conditions in recovering sectors are driving wedge between available workers and open positions. As this gulf widens, it threatens to undermine enterprise productivity and competitiveness over the longer term.
The jobs being created by older employers retirements and by booming demand for technological solutions are not being matched to equivalent skills and qualification from younger cohorts of employees, leaving employers and employees to both struggle in states like New Jersey, New York, and California.
Left unaddressed, such imbalances will hamper business output in multiple ways. Vacant positions in key areas like healthcare and technology may stifle productivity-enhancing innovations or revenue-generating services. Turnover from unsatisfying job conditions and short-staffing increases burnout while raising hiring and training costs. And with specialized knowledge concentrated among retired Boomers, younger workers struggle building the human capital needed for higher-value-added roles.
Avoiding this will require businesses to take a longer-term view on addressing skill mismatches within their workforces. Businesses should embed on-site training into career ladders, unequivocally signaling to workers that specialty skills acquisition brings rewards. And improved wages, benefits packages and flexible work options are equally vital for attracting and retaining talent in roles plagued by shortages. Failing to invest now in correcting skill imbalances though risks competitiveness over the coming decade.
AI use drives a wedge between employer expectations and employee means
In a job market matchup that pits overwhelmed hiring managers against increasingly desperate applicants, divides over acceptable technology use are becoming more material for recruiting trends. 97% of employers rely on applicant tracking systems (ATS), using algorithms to filter resumes based on keyword and skill alignment with job descriptions.
While job applicants can potentially leverage AI to optimize their resumes and align them with these systems, there is a growing divergence in expectations regarding the use of AI in the hiring process. On one hand, employers benefit from streamlined and efficient applicant screening, while on the other, job seekers face the challenge of standing out amid the algorithms.
In response, job seekers trusted with the lack of responsiveness from employers and the rising number of applications required to land a role have turned to generative AI tools. While the use of such tools gets some candidates up to hundreds of applications per day, recruiters bemoan that GPT generated applications have proliferated and stripped many application of custom tailoring.
Keith Spencer, a career expert at Flexjobs, emphasizes the importance of customization and suggests that while AI tools offer convenience and time-saving benefits, they risk stripping away the individuality that sets a standout resume apart. There's a delicate balance between leveraging AI for efficiency and ensuring that the personal touch and effort put into tailoring applications are not lost in the process.
Employers often perceive resumes created entirely by AI as lacking the individual effort and genuine interest in the company. However, the ubiquity of generative AI tools means that such a blanket line of ai generated content is likely not sustainable as tech-savvy generations shoot towards half of the US workforce.
Older employees come with no decline in productivity
As older adults increasingly choose or need to work longer, recent research by the Center for Retirement Research found no evidence that older workers reduced profitability or productivity. The study comes as the labor force expected to include around 41 million individuals aged 55 and older by 2024. The study emphasizes that the growth rates of those 55 years and older are projected to outpace other age groups, offering reassurance to hiring managers about the positive impact of older workers on businesses.
The study underscores the positive attributes of older workers, including a strong work ethic, lower absenteeism, and extensive business knowledge. It also highlights their role in mentoring younger generations. With society aging, the findings offer a positive perspective, suggesting that employing older workers is not a burden but an asset to society. As companies navigate an aging workforce, the study encourages confidence among hiring managers regarding the contribution of older workers to business success.
The research counters prevailing stereotypes about older workers and addresses the growing demographic shift in the workforce. Between 2000 and 2020, the share of employed workers aged 60 and over doubled, and projections suggest that by 2030, the 75-year-old and older cohort will experience a growth rate of 96.5%. Despite the Age Discrimination in Employment Act protecting older workers, discrimination in hiring persists, making the study valuable in allaying concerns about the impact of hiring older adults.
HR Reading List
In the midst of budget constraints, employees are seeking alternative forms of compensation beyond traditional salary increases, according to recent workplace reports by Linkedin. A separate survey found that employees see the top non-monetary benefits include greater schedule flexibility, flexible vacation time, home office stipends, and updated job titles. Alternatively, opportunities for mentorships, professional development support, new challenges, internal networking, and volunteer support align with growing yet unaddressed employee needs. (Employee Benefits News)
Many developed economies in Asia and Europe are facing demographic challenges with declining birth rates and aging populations. In turn, the region’s businesses are facing perpetual labor shortages and resultant business stoppages. Countries like Japan, South Korea, Germany, Italy and others have come to rely on immigration as a crucial source of labor to keep businesses running, yet anti-immigration policies have undermined this release valve. Though the U.S. remains more demographically vibrant than many other developed countries, immigration is likely to become an even more vital lifeline for American businesses in sectors like agriculture, construction, healthcare and technology. Attracting and integrating working-age immigrants will be critical for the country to sustain robust economic growth as the native-born workforce shrinks relative to the size of retiree population. Despite this many small and medium sized businesses still lag behind larger peers on experience with increasingly important capabilities like managing multi-cultural workplaces and navigating visa complexities. (Ken Stibler)
As MBAs lose their luster in the job market amid overproduction and poor job placement, leadership turnover at top tier b-schools has surged. At least eight admissions directors from schools like Harvard, Stanford, and Colombia and have departed in the last two years. Fluctuations in enthusiasm for MBA degrees, which initially surged during the pandemic but sharply declined after 2022, have underscored the difficulties school leaders face in adapting to a changing landscape of smaller budgets and reduced enrollments. (Bloomberg)
New York State finalized a law protecting freelance employees effective May 2024. The law mandates written contracts between employers and freelancers, specifying details such as names, addresses, services, compensation rates, payment timelines, and service submission deadlines. Employers must pay freelancers within 30 days of service completion, and retaliation against freelancers for exercising their rights is prohibited. The law mirrors 2017 New York City legislation, and similar regulations have been enacted in Illinois and are being considered elsewhere. Despite the legislation undermining some of the labor cost benefits of gig work, professions from nursing to people managers are increasingly going the gig route. (HR Brew)
In contrast to the common trend of layoffs in the tech sector, Procurify preserved human capital and loyalty without raising costs or resorting to hardships. In the face of financial uncertainty, the tech company avoided layoffs by implementing a 20% pay cut for the entire staff and introducing a four-day workweek to align expectations with the reduced compensation. The approach averted burnout but also significantly increased productivity, prompting Procurify to maintain the four-day workweek even after reinstating normal salaries. (Employee Benefits News)
Stat of the Week
In Other News
Corporate training sessions tackle presentation skills shortage. (WorkLife)
Hiring your next CEO? How to recruit executives that will stick around. (Employee Benefits News)
France Peru, and Mexico explore forcing companies to share profits with employees. (FT)
It will take years of sustained, sufficient funding to recover from a workforce and service crisis that was years in the making at the Social Security Admin. (New York Times)
Most HR pros see disconnect between their job title and the actual work they do. (HR Brew)
Contrarian View: Persistent employment misery is a myth, higher quit rates come down to compensation. (The Atlantic)
This company pays its employees to socialize outside of work. (HR Brew)
Half of workers take zero breaks during the day. (WorkLife)
The benefits of employers providing financial wellness strategies. (HR Brew)
Talking to Chatbots Is Now a $200K Job. (WSJ)