How the Talent Crisis and Unemployment Coexist

We continue to hear mixed messages regarding unemployment.  In one month, the Unemployment rate goes down, but it’s because more people gave up and left the market.  Another month it goes down, but not as much as expected.  It’s hard to tell the good news from the bad news.

Yet, a talent crisis

Meanwhile, in my industry, IT Consulting, I get regular contacts from headhunters – who prefer to be called recruiters – saying that they have “immediate openings” for someone like me.  They call my team members with similar frequency and similar offers.

It would be hard to believe except that my firm is in constant recruiting mode.  They talk to us about incentives for referring highly qualified developers, project managers and consultants in general.

How can unemployment be so high at the same time firms are in such dire need of employees?

I took a look recently at some statistics from US Bureau of Labor Statistics  (http://www.bls.gov/news.release/empsit.t14.htm) and it tells a tale of two extremes.  The average unemployment rate for Financial, Information and Education & Health Services industries is approximately 4.8%.  Contrast that with the average for Leisure & Hospitality, Agriculture and Construction at approximately 13%.

Haves and have nots

This is clearly a case of the haves and the have-nots.  People in the former industries categories have jobs.  People in the latter have not. The housing industry has shown some signs of improvement which may help the employment levels in the construction industry.  But that industry will remain tepid until foreclosures reduce the supply of homes in the market.

The difference points out the effect of our transition from a service economy to a knowledge economy.  People who remain in the service industry will continue to compete with the oversupply of fellow job-seekers in a market who’s demand is dwindling.

On the other side of the economy, greater and greater demand for the smaller supply of information workers in information technology, financial services and health care will continue to limit the growth of industries that could provide the steam to get the economic locomotive running at full speed again.

Another factor has influenced a trend towards consulting, which has experienced an increase in demand in the top three industries – financial services, health care and information technology.

A different business world

The internet has changed how the world does business.  Not only does the consumer, armed with more information than he’s ever had, have much more power to make decisions, barriers to entry have been obliterated in many industries.  Want to write a book?  Who needs a publisher?  You can have it published as a Kindle ebook available on Amazon.com within minutes. Want to sell your creations to a world-wide market?  You can have your own micro-site on Etsy, eBay, Amazon and any number of other global sites today.

See my related post: What Are the Benefits of an MBA?

If the world can change that quickly, why should a company make the long-term commitment of hiring full-time employees, when their needs could change in a matter of months, leaving them committed to employees with obsolete skills?  Sure they can downsize them.  But that comes at huge costs – both tangible and intangible.

Why consulting?

Instead, the company can turn to consulting.  Consulting firms can provide short-term staffing for surgical strikes, as well as a full project team for larger efforts.

Need a marketing expert to help solve a problem?  Contract with a consulting firm for an expert for as long as you need her.  They go on their merry way when they’re done.  No severance, to nasty layoff, no morale issues.

Need to bring in a project team to develop a new website?  Have a consulting firm provide the full team of business analysts, designers, developers, testers and a project manager.  When they’re done, you can swap them out for a team to optimize your SEO.

The great recession and the new economy have created a significant change in the way we do business and the way we work. There is a shortage of jobs for people with certain skills.  There’s also a shortage of skilled workers for certain jobs.

It’s not the government’s responsibility.  It’s not industry’s responsibility.  Unemployed workers need to retool to meet the demand of the new economy.

If you would like to learn more about working in consulting, get Lew’s book Consulting 101: 101 Tips for Success in Consulting at Amazon.com

As always, I welcome your comments and criticisms.