The next job boom
New studies say everyone's out looking. The latest data says everyone's hiring. Here's what workers (and their bosses) need to know.
SAN FRANCISCO (Business 2.0 Magazine) - An unusual convergence of economic factors has made this moment the best time to look for a job since the most dizzying days of the dotcom boom.
The first, most telling piece of evidence: The number of workers who are delivering take-this-job-and-shove-it speeches and bailing for more rewarding, less spirit-crushing work is at a five-year high.
In sector after sector, from health care to advertising to retail to accounting, pent-up demand for workers is now boiling over, strengthening employees' hands -- and emboldening them to jump ship.
"We've been in a buyer's market for labor, the buyers being employers," says Ed Montgomery, a former U.S. deputy secretary of labor and dean of the University of Maryland's College of Behavioral and Social Sciences. "That's over. Workers have options. That's a big deal."
The forces behind this transformation aren't altogether obvious -- indeed, at a time of slowing GDP growth, massive deficits, war, and other dark clouds, it can be difficult to swallow the idea that we're in a golden age for job-hopping.
Underlying job creation remains lackluster, but the newly inviting job market has surprisingly little to do with job growth. It is instead the result of a collision between low unemployment and collapsing productivity.
In March the unemployment rate fell to 4.7 percent, widely considered full employment. For college-educated workers, the figure has dropped to 2.2 percent.
Meanwhile, productivity -- a measure of the amount of work done by each employee -- actually declined in the last quarter of 2005 and is expected to post its worst showing in almost a decade this year.
Strip away the economic wonkery, and the upshot is clear: Bosses can't squeeze more work out of existing workers, and there aren't many new workers, particularly skilled ones, out there.
It's a dramatic reversal from the recent downturn. Since employment peaked at the height of the bubble economy at the end of 2000, bosses have held an unusually lopsided share of power. They've subjected employees to downsizing, productivity squeezing, outsourcing, and myriad lesser indignities.
For most workers lucky enough to escape the mass layoffs, there was little choice but to hunker down and take whatever the boss dished out. Even as the economy took off in 2003 and corporate profits -- and CEO paychecks -- ballooned, the job market languished. The "jobless" recovery was for many beleaguered workers the "joyless" recovery.
But something had to give, and now, it's increasingly workers giving notice. The Bureau of Labor Statistics's so-called quit rate, a measure of, as the name implies, people who have quit, has swelled by a third since 2003. There are now about 2.6 million people leaving their jobs each month, the same level as in the pre-9/11 economy.
Job openings, meanwhile, have increased by almost half a million positions since last summer. Nigel Gault, the U.S. economist for forecasting firm Global Insight, expects the quit rate to rise further during the next several months. "A lot of people really weren't happy where they were but had no choice, so they toughed it out," Gault says. "Now they're making moves."
Striking while the job market's hot
As workers move, of course, bosses make countermoves, and the result is a volatile labor market that teems with opportunity for employees -- and peril for companies trying to hang on to them. But if you're contemplating a move, move fast. This period of optimal conditions is likely to be fleeting.
"There's a dynamic in the labor market now that you don't usually see," says David Huether, chief economist of the National Association of Manufacturers. For workers, he says, "the time to strike is now."
How long will workers keep the edge? It's impossible to know, and there are economic scenarios under which power could quickly revert toward management. Another external shock on the order of 9/11 or, say, $100-per-barrel oil could swiftly put workers back at the mercy of their bosses.
Some economists also worry that, even absent such events, the U.S. economy could be headed into serious trouble because of towering fiscal and trade gaps, high consumer debt, a slowing housing market, and anemic overall wage growth.
But the more likely scenario is that employees will maintain their big advantage for at least another year. That's because, if GDP growth cools as is widely expected, productivity is also expected to decline, keeping the pressure on managers to hold on to their workers and hire new ones.
What it means for many companies is that the cycle of losing workers weary of the post-bubble grind is far from over.
This is an excerpt from Business 2.0's May cover story, "The Next Job Boom." To read the whole story, click here.To send a letter to the editor about this story, click here.