The Upside of Unemployment

Even though most economic indicators show that the economy has been in steady recovery since early last year, ongoing unemployment figures continue to be less than optimistic. As I’ve noted before, history shows that full economic recovery after a recession happens slowly. For instance, it took about four years for businesses to return to normal after the recession of 2001. So I was not too surprised to see that unemployment reports from December and January were mixed.

This week’s Job Openings and Labor Turnover report from the Department of Labor shows there were fewer job openings in January for business and professional services, education, health, manufacturing, and construction jobs. On the other hand, there was an increase in retail, trade, transportation, and utilities jobs.

It’s true that job openings are slowly rising. But unemployment is still quite high, and employers are just not adding jobs quickly enough to bring unemployment rates down to anything close to what is considered normal. Right now, an average of 4.7 people are competing for every job that becomes available. Economists maintain that a healthy rate would be about 2 people competing for every open job.

It seems clear that the unemployment rate will continue to fall, but probably pretty slowly. How will this affect small- to medium-sized businesses? I see several ways that business owners can use the current employment situation to their advantage.

First, be sure to take advantage of the loyalty of your current employees. Everyone is aware that jobs are still hard to find. This discourages job holders from changing jobs over minor problems or just “itchy feet.” As a business owner, you can take advantage of the fact that your staff is probably not going anywhere by their own choice. It’s a great time to invest in training initiatives that strengthen and expand your workers’ skills, as your employees will probably be around for a long time, so the extra training will pay off.

The flip side to employee longevity is, of course, that workers who have been doing the same job for a long time can face boredom and stagnation. Be proactive about ways to increase job satisfaction in your loyal staff, so that they don’t feel trapped. Find new ways to challenge your top employees, so that their increased experience and dedication adds value to the company.

Second, realize that now is a very good time for hiring high-quality employees, if you are financially able to increase your staff. Take advantage of the much larger numbers of applicants who are looking for work. It’s likely you can hire better skilled and experienced employees, for lower compensation, in this economy than you could have in the past. Take the time to look carefully at those who apply for positions in your company, and be pickier about who you hire. But, also, try to overcome any bias against applicants who have been unemployed for a while, as they may be wonderful candidates based on their pre-recession job history. 

You can probably find hidden jewels among the pile of resumes on your desk if you are willing to do the work to uncover them. Today’s job applicants are highly motivated to offer their skills and expertise at lower salaries than they might have accepted in the past. You may not be able to offer them as much money right now as you or they would prefer, but you can offer other intangible perks to attract top-notch staff who will become long-term, valued employees.