Meltdown 101: When Unemployment Last Hit 10%
The last time unemployment climbed past 10 percent, "The A-Team" was one of the top 10 TV shows and Michael Jackson was about to release "Thriller." Much has changed since the jobless rate hit 10.1 percent in September 1982, including the composition of the nation's labor force. American workers are now older, more educated and more Latino. The elderly are more likely to be working. Fewer teenagers are in the work force.
After the last time the unemployment rate entered double digits, it stayed there for several months, through June 1983. By the time the rate got above the 10 percent mark again - hitting 10.2 percent last month - the proportion of workers employed in health care and education had nearly doubled since 1982, and manufacturing employment had shrunk by more than half.
Lawyers make up a bigger slice of the work force now. So do people who work in restaurants, hotels and other parts of the leisure and hospitality industry.
Here, by the numbers, are some other ways the work force has changed since September 1982.
More People, More Workers
- 110.7 million: Size of the work force in September 1982
- 154 million: Size of the work force in October 2009
The "He-Cession"
- 10.7 percent: Adult male unemployment rate in October 2009
- 8.1 percent: Adult female unemployment rate in October 2009
- 27.6 percent: Teenage unemployment rate in October 2009
- 9.5 percent: Adult male unemployment rate in September 1982
- 8.4 percent: Adult female unemployment rate in September 1982
- 23.6 percent: Teenage unemployment rate in September 1982.
ANALYSIS: The greater disparity between men and women in this recession reflects the heavy impact of layoffs in male-dominated fields, such as construction and manufacturing. Industries with higher female employment, namely education and health care, have actually added jobs during the recession.
Education Matters...
- 15.5 percent: Unemployment rate in October 2009 for those without a high school diploma
- 11.2 percent: Rate for high school graduates
- 4.7 percent: Rate for college graduates
- 3 percent: Unemployment rate in March 1982 for college graduates (at the time, figure was reported once a year)
... But is No Guarantee
- 6.8 percent: Proportion of unemployed with college degree in September 1982
- 14.7 percent: Proportion in October 2009
ANALYSIS: College graduates still have much lower jobless rates than those with less education, but they are more likely to be unemployed than in 1982. Job cuts in the financial industry and in high-skilled manufacturing, such as the aerospace industry, have caught up with them, according to Gary Burtless, an economist at the Brookings Institution. And companies in all sectors are more willing to cut middle managers than in previous recessions, he added, which also affects college graduates.
Longer Joblessness
- 16.6 weeks: Average length of unemployment in September 1982
- 26.9 weeks: Average length in October 2009, a record
ANALYSIS: More than a third of the jobless in October were unemployed for 6 months or more, compared with less than 18 percent in September 1982. One reason is that layoffs were more likely to be temporary back then, as manufacturers furloughed workers until demand returned. But last month only 10.9 percent of the unemployed were on temporary layoff, compared with 22.2 percent in 1982.
African American
- 15.7 percent: Black unemployment in October 2009
- 19.7 percent: The rate in September 1982
ANALYSIS: While unemployment among African-Americans is higher than the nationwide rate, it is much lower than in 1982. That reflects both good and bad trends, according to Roderick Harrison, a senior research scientist at Howard University. On the positive side, there is a much larger black professional middle class that is less subject to layoffs than was the case 26 years ago, he said. But on the negative side, more African-American men have dropped out of the labor force after giving up looking for work, Harrison said - that means they aren't reflected in the unemployment statistics.
More Latinos in the Work Force
- 22.5 million: Number of Hispanics in work force in October 2009
- 6.7 million: Number in work force in September 1982
- 13.1 percent: Hispanic unemployment rate in October 2009
- 14.4 percent: Hispanic jobless rate in September 1982
Highest Unemployment States, September 1982
- Michigan: 15.8 percent
- West Virginia: 15.6 percent
- Alabama: 13.8 percent
- Ohio: 13.1 percent
- Illinois: 12.2 percent
Highest Unemployment States, September 2009
- Michigan: 15.3 percent
- Nevada: 13.3 percent
- Rhode Island: 13 percent
- California: 12.2 percent
- South Carolina: 11.6 percent
ANALYSIS: Manufacturers in the rust belt were hit particularly hard in the early 1980s, putting Midwestern states such as Michigan, Ohio and Illinois in the top 5. While Michigan again has the nation's highest unemployment today, states like Nevada and California are suffering from the housing bubble. (The Associated Press, 11/9/2009)
Most Companies Not Ready to Restore Executive Pay Cuts
Most U.S. companies are not planning to restore executive pay cuts or freezes made during the economic crisis anytime soon, according to a survey by consultancy Watson Wyatt. As they prepare for continuing increased public scrutiny of executive pay, many are avoiding further short-term changes and focusing instead on long-term shifts toward better pay-for-performance and assessing their compensation programs within the context of risk management.
The survey, Executive Pay and the Economic Recovery, was conducted in late September 2009 and includes responses from HR and compensation executives at 187 U.S. companies. Among the findings:
- 63 percent of U.S. companies are not planning to reverse or restore changes made to executive salaries in the next six months.
- Fewer companies are considering short-term changes such as reducing salaries (2 percent were considering it, compared with 10 percent in March 2009).
- A vast majority of employers (92 percent) are not planning to reduce bonus opportunities or eligibility requirements.
However, large numbers of respondents did indicate their intention to make the following changes:
- Three in 10 companies are raising performance goals relative to 2009's actual performance (29 percent), and changing metrics (31 percent) in their annual incentive plans.
- 39 percent have changed or plan to change long-term incentive vehicles. Of these companies, 42 percent plan to put more emphasis on performance-based shares and 25 percent on performance cash plans.
Long-Term Focus
"Companies have moved beyond the short-term frenetic activity that we saw at the beginning of the year," says Andrew Goldstein, North American co-leader of executive compensation consulting at Watson Wyatt. "Now, companies are looking at how they can best address more long-term concerns with structural changes to pay programs."
According to the survey, 94 percent of companies expect more scrutiny of executive pay in the next two years as a result of new legislation, Securities and Exchange Commission regulations and public pressures, with almost three-quarters (72 percent) expecting the relationship between pay and performance to improve.
Sixty percent of companies reported having little concern regarding proposed say-on-pay requirements, under which companies would be required to offer shareholders a nonbinding vote on executive compensation packages. The majority of respondents appear to be already taking steps by improving their required compensation discussion and analysis (CD&A) disclosure to explain their pay program rationale and appropriateness to shareholders (70 percent) or identifying potential executive pay issues/concerns in advance (67 percent).
Still, almost half (42 percent) of companies are concerned about potential legislation assessing executive pay for "excessive risk." Most have taken action to address the issue of risk:
- 54 percent have or plan to add a formal risk assessment process, up from 30 percent in March 2009.
- 50 percent have or plan to certify in the proxy that a risk assessment has been performed, up from 31 percent in March.
"Companies recognize that changes to executive pay programs will be needed to stand up against growing criticism and increased pressure," says Ira Kay, global director of executive compensation consulting at Watson Wyatt. "However, this change will be a long-term process and one that will require companies to focus on strengthening performance-based incentives, balancing risk and rewards, and meeting proactively with key stakeholders to discuss their pay program rationale."
Other survey findings include:
- Only 12 percent plan to decrease their next fiscal year's long-term incentive (LTI) grant dollar value, down from 33 percent in March 2009. Almost half (45 percent) do not expect their LTI grant values to change.
- Companies report moderate-to-significant concern about caps on incentive compensation (53 percent), expanded CD&A disclosures below the top five executives (53 percent) and elimination of the section 162(m) performance award exemption (53 percent).
- 19 percent of companies have eliminated their golden parachute tax gross-up provisions, and 44 percent have or are considering clawback policies.
(SHRM's HR Week, 10/19/2009)
Mid-Atlantic Hiring Trends Survey, November 2009
Our friends at DoubleStar, a nationally-recognized thought leader in recruitment and talent optimization consulting based in West Chester, have just released results of their 3Q hiring survey of HR decision makers at leading organizations in the Mid-Atlantic area. Here's the Executive Summary that provides important trends about the general condition of the regional labor market while focusing on quarter-over-quarter changes in employment, hiring, headcount and recruiting budget levels.
Executive Summary
- Overall, more employers are planning slight increases in recruiting and hiring activity as we move into Q4. This is the first positive movement in hiring plans all year, and it could signal the end of the downward hiring trends that have depressed the employment market over the last two years.
- Although hiring remains weak in the Mid-Atlantic Region, there is some reason for optimism. For Q4, only 16%of companies are forecasting a decrease in hiring,and they describe that decrease as 'slight." Nearly 58% are forecasting no change in hiring, and 27% are forecasting an increase in hiring. These trends are significantly more positive than reported in the Q3 survey.
- Corporate recruiting functions have been shrinking all year, but the pace of that reduction is slowing, with only 4.5% of companies reporting a decrease in the ranks of their recruiting staffs.
- Recruitment budgets remain relatively stagnant, with 77.5% of companies reporting no change in recruiting budgets between Q2 and Q3. 83% have no plans to change their budgets in Q4.
- 16% of companies reported a reduction in headcount in Q3, down significantly from 37% in Q2. Equally as significant, about 16% of companies reported increasing headcount in Q3, compared with 11% in Q2.
- Fewer companies are citing attrition, layoffs, and decreases in business as the driver of headcount change. More companies are reporting increases in business, merger and acquisitions, and restructuring as their key drivers.
For a pdf of the full survey please contact your Alstin Communications Account Executive or email powerofdone@alstin.com
Holiday Hiring Off to Slow Start
Holiday hiring is off to a slow start, with retailers filling just 63,500 jobs in October, according to Bureau of Labor Statistics data. That's up slightly from a year ago, when retailers added 59,100 jobs.
"Retailers are taking a wait-and-see approach, and could decide to bring in extra workers at the last minute," Challenger, Gray & Christmas CEO John A. Challenger said in a news release. He noted that retail employment grew by just 384,300 jobs between October and December of last year, making it the worst hiring season in 19 years.
This news comes on the heels of a report that the jobless rate jumped to 10.2 percent, the highest in 26 years. Challenger noted there is one glimmer of hope: Employment at temporary employment agencies grew by 33,700 jobs in October, the third consecutive increase in this category and the largest since October 2007.
"This is significant because temporary employment is typically where we see the first job gains in a recovery," he said. "As the economy improves, these temporary workers are converted to full-time, permanent workers." (Philadelphia Business Journal, 11/9/2009)
Go Northeast, Young Job Seeker
When looking at the job market from a regional standpoint, next year's college graduates would do well to look to the Northeast. Research from the National Association of Colleges and Employers (NACE) finds federal government agencies located in the Northeast remain a source of hiring growth. Meanwhile, other companies in the region, especially financial firms, indicate they expect to increase hiring of college grads in 2010. (Forbes, 10/28/2009)
Responding to Criticism on the Web
Employers seeking to respond to workers' negative comments posted on the Internet should be careful not to violate the bloggers' rights under state and federal laws. And with the number of bloggers increasing daily, employers should consider adopting a social-networking policy.
In today's society, Internet communication is essential for running a successful business. However, when used by employees as a means to comment on their workplaces and colleagues, Internet communication can cause employers serious harm. Unfortunately, the law has been slow to evolve in addressing the many workplace challenges associated with social networking -- thereby leaving HR professionals unclear about how best to address issues related to employees who blog.
Question: What options does an employer have if an employee makes negative comments about the company or criticizes the company via a blog, Web page, etc.?
Answer: Employers have long dealt with problems associated with employees voicing criticism to others. Clearly an employee's criticisms can damage a company's competitive advantage, reputation, recruitment and retention efforts.
What some of us may not so quickly appreciate, however, is the potential for employees who are critical of their employers to cause additional harm by either intentionally or unintentionally disclosing confidential employer information or trade secrets through their negative comments.
Add to this, the fact that, when disseminated over the Internet via a blog or chat room, negative employee comments can be exponentially damaging because they can be viewed by millions of people the instant they are posted, and are difficult, if not impossible, to retract.
Given this reality, it is unfortunate that the law in this area is not yet well-developed. Nevertheless, it is critical that employers refrain from rushing to action when faced with negative comments posted by employees on blogs. This is because, depending on the issues addressed in the blogs, and where, how and when the comments were uploaded, certain state and federal laws may protect employees from adverse employment action in response to the blogs.
Taking action without properly evaluating important practical and legal issues will leave employers vulnerable to claims of discrimination, wrongful discharge and retaliation brought by affected employees under state statutes, labor relations laws and whistleblower protection laws. (HREOnline Legal Update, 11/5/2009)
