Return of the qualified applicant
The slight rise in the unemployment rate has been a boon for small businesses struggling to fill vacancies.
Slowly but certainly, the "Help Wanted" economy of the late 1990s is ending.
Dan England of C.R. England trucking can see it from his Salt Lake City office, where he's getting so many applicants to drive his 18-wheelers that he's had to back off recruiting efforts. In Boston, Paul Woods of Garber Travel is finally getting qualified applicants for job postings.
After years of labor shortages, in which unemployment sank to its lowest levels since the Vietnam War era, the economy has now cooled to the point where companies no longer have to offer bonuses and BMWs to attract workers. They can actually pick and choose the employees they want.
It is one of the overlooked benefits of a slowing economy. While corporate layoffs continue to proliferate, adding to fears of a recession, many companies are simultaneously taking advantage of the deepening labor pool to fill long-vacant positions - or to simply upgrade the staffs they have.
"For the first time in quite a while, those hard-to-fill jobs are finally filling up," says
Diane Swonk, chief economist at Bank One Corp. in Chicago. "One reason is that qualified applicants are showing up to fill those jobs."
Mr. Woods of Garber Travel is certainly seeing that. Many high-tech workers, disillusioned by the failure of dotcom startups and plummeting IPOs, are seeking security. Travel companies can offer that - along with work increasingly tied to websites and the wired world.
The downturn "seems to make qualified candidates more open to the travel industry," says Woods, director of human relations at the company. "Now we get people from high tech who are more willing to consider us."
In many ways, it's the same sort of labor-market churning that happens every time a boom cycle wanes: The biggest companies drop marginal employees, who are scooped up by smaller businesses. This time, however, the trend has been amplified by the acute shortage of high-tech workers during the past few years. Some Silicon Valley workers have found work just hours after they were laid off.
But that shortage may be disappearing. Last month, a Federal Reserve report noted signs of the high-tech labor crunch "easing" in areas such as San Francisco and Atlanta.
"What's happening is that the labor market is beginning to get into balance," says Joel Namoff of Namoff Economic Advisors in Holland, Pa. "Businesses are finding that the workers laid off are some of the workers they need."
At this point, unemployment remains low. Last month, the jobless rate rose to 4.3 percent, but that was only fractionally higher than October's 30-year low of 3.9 percent.
Still, for small businesses in particular, every little bit can help. In Colorado and Utah, for example, the outlook for small businesses has actually improved as unemployment has ticked upward, according to one economist.
To tabulate his small business index, Jeff Thredgold looks at a variety of factors, but employment levels are most important. "In Colorado, you had one of the lowest unemployment rates in the US" at 2.1 percent in December, says Mr. Thredgold of Thredgold Economic Associates in Salt Lake City. "If you were a small business, you were having trouble hiring, and you were scared ... of losing your top talent."
To some degree, those fears have abated. The rampant job hopping of the past few years has become less common. Moreover, laid-off workers are having to settle for less than a six-figure salary with stock options, full health benefits, and a pension plan.
"Now, small businesses can hire again," says Ms. Swonk.
In some cases, the new hires are falling into companies' laps. During the past few months, Mr. England has had a flood of truck drivers applying for jobs.
"Usually, it's always a struggle to find enough drivers," he says. "Since the first of the year, we've had an abundance. It's clearly a reflection of what's going on" in the economy.
The situation has forced him to send some recruits home before they've finished their training, but it's also allowed him to replace marginal drivers.
Whether the rise in unemployment will continue to be a benefit to some businesses, though, remains uncertain. To Swonk, the fact that the unemployment rate started its upward trend at such a low number means that joblessness may never get that bad.
But others are making more dire forecasts. Historically, hiring always goes up at the beginning of a downturn, says Ian Morris, chief US economist at HSBC Bank in New York. That, however, won't save the economy from a hard landing, he says.
Already, the March payroll report shows that the total number of jobs in the US declined for the first time in seven months. It's a trend, Mr. Morris says, that will only accelerate, with unemployment peaking perhaps next year at roughly 6 percent.
"At some point," he adds, "you'll get more layoffs than hirings, and we're at that point now."
(c) Copyright 2001. The Christian Science Monitor