(October 23, 2003) - In keeping with the spirit of yesterday's piece, we've begun to place a couple of our fundamental assumptions under the microscope. For nearly a decade, we've been harping about the coming labor shortage. The past couple of years, with unemployment rates hovering around six percent, might have changed something in our original calculations in the early 1990's.

We're going to spend some time digging through Census and Labor Market statistics in order to re-examine the question of the labor shortage. In the process, we hope to provide tutorial and insight about the demographics and trends. At first glance, the data is confusing and contradictory.

The Bureau of Labor Statistics does an amazing job of tracking and analyzing the various changes in the domestic American workforce. In addition to unemployment statistics, they cover a broad range of statistics about the economy. We found the Job Openings and Labor Turnover Survey particularly revealing.

The chart shows a very interesting trend. Over the past 2.5 years, employers have become less likely to describe all of their hiring  as 'having job openings'.
In July, 2003, only 60% of hiring transactions were described as openings in the BLS survey. At the end of the boom, employers were reporting virtually all openings and hiring accordingly.

The following graph shows the same data, expressed as the percentage of hires reported as openings. The red trendline suggests that the likelihood that a new job will be reported  as an opening continues to fall. It's very clear that employers, in general, have lost their ability to plan effectively. Budget conservatism and economic gloom, coupled with pressures to radically improve productivity lead to (apparently) huge numbers of last minute hiring decisions. This chart can be seen as the degree to which workforce planning is failing in organizations today.

From a job hunter's perspective, the so-called hidden job market, declared dead in the dot-com boom, has reappeared with a vengeance. We have returned to a market in which a large minority (nearly half) of all jobs are not advertised or even understood as openings by the HR department.

Across the board, users of Applicant Tracking Systems must be experiencing pure chaos. The BLS data suggests that a huge number of hiring decisions are being made on the fly and outside of the bounds of the system. From a human perspective, it's a very understandable response to global events, layoffs, outsourcing and economic uncertainty. From a management perspective, it's a nightmare. There is no way that any ATS could be used effectively in these circumstances.

We believe that Job Board revenues and transaction volumes are probably directly related to the level at which employers say that they have openings to fill. If our analysis is correct (and we're pretty sure it is), Job Boards are leaving huge dollars on the table.

John Sumser

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