Human Resources

Michael Schrage on HBR.org (commenting on an NYTimes article) argues “U”, “L”, “V”… it dosen’t matter the shape of the recession — this is not a “jobless” recovery, it is a “hireless” recovery.  Instead of asking “where all the jobs have gone”, a better question might be “where did all the employers go?”

Executives and entrepreneurs aren’t asking “Who should we hire?” They’re asking, “Why should we hire?” World-class firms are still looking for world-class people. But when world-class people aren’t what’s needed, world-class firms will consider world-class alternatives. Most people looking for a job today aren’t competing against each other. They’re competing against alternative ways to getting that job done.

He rightly suggests that this is a structural, not a cyclical shift.  Necessity is the mother of invention — as the recession lingers, companies are becoming more efficient at finding alternate methods of value creation and, as a result, these jobs are not likely to come back anytime soon..

For most organizations, people are a means and medium to an end. They’re not hiring employees, they’re hiring value creation. If they can get that value — or most of it — from contingency workers, outsourcing, automation, innovative processes or capital investment, why wouldn’t they? If tweaking a process or program empowers three people to do the work of five, then tweakonomics is the way to go.

Along these lines, Robert Reich on Business Insider talks about “The Great Decoupling of Corporate Profits from Jobs”.

Second-quarter earnings reports are coming in, and they’re making Wall Street smile. Corporate profits are up. And big American companies are sitting on a gigantic pile of money. The 500 largest non-financial firms held almost a trillion dollars in the second quarter, and that money pile is growing larger this quarter.  Profits that plummeted in the recession have bounced back. Big businesses have recovered almost 90 percent of what they lost.

He suggests that hiring is not happening for three reasons: 1) profits are coming from overseas operations (so that is where investments are going) 2) companies are investing in labor saving technologies and 3) companies are using their money to pay dividends and buy back stock.   According to Reich, this leaves us with huge paradox:

Big American companies may never rehire large numbers of workers. And they won’t even begin to think about hiring until they know American consumers will buy their products. The problem is, American consumers won’t start buying against until they know they have reliable paychecks.

So where does this leave the American worker, particularly the unemployed?  What opportunities are out there for progressive companies?