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It is better
to not be on
the web than
to be on and
not know why

John Sumser

is more
it seems.
John Gall


The Electronic Recruiting News is a Free Daily Newsletter For Recruiters, HR Managers, Advertising Agencies and Clasified Advertising Operations

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Like Money
(February 10, 2003) -
- The functional reality of the recession is that investment capital, scared away from the markets by wild fantasies and bad experiences, has retreated to the sidelines. We all know of the stories of venture-backed enterprises and what happened when their capital 'dried up'. The same exact thing is continuing to happen in large operations.

Without ready access to capital, businesses cannot grow. Capital is the fuel for the growth process. Often, without access to capital, the vagaries of cash flow are more closely experienced by organization members. Decreases in 'capital spending' are the symptom of organizational assets being diverted to cover cash flow needs.

The labor supply is exactly like that although we've been shielded from the realities by a couple of generations of massive labor surplus. Labor is required for growth. Access to labor is a critical (if often unmanaged) variable in the continuation of operations. When organizations run out of labor, they will squeeze the existing resources as tightly as they are squeezing cash these days. Call someone in Fargo and ask them what it's like.

Recently, we read something that suggested that the rise of capitalism was a direct consequence of the Bubonic Plague. That was the last time there was a sustained labor shortage. Until then, the mercantile economy barely existed. Rather than stores, the local 'lord' managed the distribution of food and other goods. Everyone was a part of the 'principality' and limited work was done outside of the bounds of the local dignitary's purview.

The plague was so severe that it resulted in the first ever labor laws. Wages were frozen by the king so that workers were unable to take advantage of the change in circumstances. With a large percentage of the population gone, people had to rethink the way that things got done.

Although the so-called 'gypsies' occasionally brought spices and other goods from far-away, little infrastructure existed to ensure that a given 'store' had the pre-made goods and foods required. It took some time for a real mercantile economy to grow in the wake of the plague. The foundations of the world as we know it have their roots there.

Similarly impressive changes are about to happen as the result of the impending labor shortages. We know of a fellow in the industry who is certain that what will happen is the extreme eco-view....constrained growth, an emphasis on sustainability, reduced consumption and a simpler life. While we doubt that the outcome will be so idyllic, we agree that the changes will be incredible.

The 20 year olds who are entering the labor market have life expectancies that have been calculated as high as 120 (on average!). Facing 70 years of work before retirement and a long life of paying off the deficits we are currently creating, they are in no hurry to join a workforce where a promotion depends on the death of the 60 year old boss.

Access to labor will require the same (if not more) level of attention that is currently offered the investment community. Smart companies get close to the capital when it is abundant and closer still when it becomes tight.


- John Sumser  

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Materials written by John Sumser © TwoColorHat. All Rights Reserved.
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