A new study by two economists presented to the recent Jackson Hole annual economic conference, and reported by The Economist, paints an interesting portrait of the evolving U.S. job market.
At that conference, Janet Yellen, the current Federal Reserve chair, and Mario Draghi, her European Central Bank counterpart, both spoke of “bifurcated” job markets in the U.S. and Europe. Let’s talk about what this means.
In their study, economists Steven Davis of U. of Chicago and John Haltiwanger of U. of Maryland divided jobs into two types, “predominantly skilled jobs” and “insecure, mostly unskilled;” and also divided employee turnover into two types, what they call “reallocation” which refers to the movement of workers from shrinking or failing companies to new or expanding companies, and “churn” which refers to hiring replacements for workers who quit, retire, or are fired.
One of the most prized attributes of the traditional American economy was labor mobility. A worker could start at the bottom and work his/her way up, potentially even becoming CEO someday, and many CEOs did exactly that. But Davis and Haltiwanger see a wall going up. The American labor market, they say, is becoming “less dynamic.” That means workers are more likely to find themselves stuck in low-level jobs with no ladder up.
The change appears to be “structural,” i.e. permanent, and not just a lingering outgrowth of the Great Recession. The Economist points to several factors: Licensing requirements that raise entry barriers to “occupations that once required little or no training,” erosion of the “employment at will” legal doctrine by court decisions finding “implicit contracts” between employers and employees, and “the information revolution: a job applicant these days could be undone by a criminal record, a poor credit history or even an impolitic Facebook posting, all of which are easy to find online.”
You can read The Economist article here: http://www.economist.com/news/finance-and-economics/21614159-americas-famously-flexible-labour-market-becoming-less-so-fluid-dynamics
It’s no secret that employers are combing the internet for dirt on job applicants. It’s so pervasive there have even been demands for legislatures to pass laws against employers demanding job applicants’ social media passwords as a precondition of being considered for employment. In such an environment, students and other future job seekers need to remind themselves that anything posted on the internet will be there forever, and anything that can be used against you will be used against you. In other words, be damned careful.
We lawyers went through this same thing after e-mail was invented. When someone starts a lawsuit against a corporation or other defendant, the first thing the lawyers do is subpoena the other sides e-mails. We’re amazed by what supposedly intelligent and well-educated people write about in their e-mails. Affairs, for one thing. And stuff like, “You won’t believe what I got away with …” which, of course, is what we’re looking for. E-mail archives have proved to be highly damning in countless cases. They have cost giant corporations untold billions of dollars in criminal fines and civil settlements. They have cost CEOs their jobs, sent people to jail, and broken up marriages. You get my drift … before you post, think about what a hostile attorney representing your worst enemy could do to you with what you just wrote. Then don’t post it.
The same thing is happening now with social media, except this time, not just lawyers but also employers are trolling the internet for evidence against you.
Your grandparents’ economy doesn’t exist anymore. In those days, if you worked hard and were loyal to the company, you were rewarded with lifetime employment and a decent retirement. And there was no internet to accumulate personal dirt against you. Now, companies come and go with the speed of passing meteors, and employment gigs wink on and off like fireflies in a summer night sky. The average worker, no matter how well educated and skilled and hardworking, will have to conduct many employment searches during his/her working career. And prospective employers will be gunning for every flaw that may exist in their background check. Any little embarrassing thing they ever did or said, if it makes its way onto the internet, will be discovered and used as an excuse to not hire them. You’ve got to be careful if you don’t want to be frozen out of employment opportunities.
The changing nature of the economy is making the internet more, not less, dangerous for job seekers especially among the young and ignorant who are more prone to use it with indiscretion: “Mr Davis and Mr Haltiwanger find that fluidity has fallen most for the young and least educated. This, they reckon, makes it harder for them to move to better jobs, change careers or win pay rises. For the unemployed, job opportunities come along less often, so jobless spells lengthen and human capital depreciates.” This raises the risk of being trapped in unemployment or low-paying and insecure jobs with little advancement opportunity.
Today’s younger workers have been told they need to be more flexible and continually expand their skills much more than workers in the past. This is true. But they also need to keep an eye on what can disqualify them from employment or make them undesirable to finicky employers. It used to be that horseplay at work got you into trouble. Now, employers are peering into your personal life, and looking at what you do in your off-hours. And this is occurring in a business environment where avenues of opportunity are closing. So be careful about what strangers can learn about you
. The safest thing to do is treat your Facebook or other social media page like a job interview, because it probably is. And once you’re hired, assume your boss is reading it.