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(November 15, 2007) In the 1970s, we experienced stagflation. Stagflation is a period of low economic growth, high unemployment and high inflation (Investopedia). So wages don't rise while prices do in a period of stagflation.
The alternative scenario I've been trying to get by arms around in this series might be called conflation. It would feature
Part of the core issue here involves the government statistics that track inflation. At the end of the Regan era, the CPI had housing prices removed from the numbers that make up the index. So, the recent run up in housing prices (no matter whose fault) did not impact this Cost of Living Index. This is in spite of the fact that rents and mortgages have spiraled to unbelievable levels. According to the US Government, those are not a part of "inflation".
That means that workers, throughout the economic spectrum, would suffer the impact of inflation. However, none of the statistics support the experience. So, there is going to be an increasing level of distrust of mainstream media as a result. The reliable sources (who have been cosnsitently failing us) are not reporting the obvious inflation that is already going on. When the media don't report the news that their readers experience, things get Orwellian.
It would be an interesting time for Recruiters on both sides of the equation. Raises would be hard to come by and inadequate. Jumping ship would work well for the top 30%. A wage gap would develop.
If this scenario pans out (and there's at least some reason to think that we're already in the middle of it), free agency would become a key topic. Financial services that help workers manage their retirement savings through an inflationary period might well become a part of the service provided by a headhunter. Job hunters would require unprecedented levels of discretion in the services that they use. Employers would be heavily in the market for tools that reduce the consumption of resources in the recruiting process.
It's easy to imagine a full court press on Recruiting productivity featuring six sigma and lean recruiting concepts. When attrition is caused by the external environment, the work has to be much more efficient than when internal growth is the cause of hiring requirements.
We're at one of these points in economic growth where everyone is pretty sure that the future will be more of the past. That's exactly when discontinuous events change the playing field.
John Sumser. - .© 2007
Two Color Hat Inc., San Rafael, CA
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