Unemployment Is At Its Lowest Point In Decades And An Expert Says It Could Drop Even More
The unemployment rate hit 3.8 percent in May, tied for the lowest monthly rate since 1969, and could drop even lower if companies learn to exploit hidden pools of talent in the labor market, an employment expert says.
The unemployment rate surprised economists last week when the Department of Labor released the May jobs report, revealing the unemployment rate had fallen for the second month in row. Experts predicted the economy would continue to add jobs, however, another drop in an unemployment rate thought to be near its floor left most “stunned,” according to Genesis10 CEO Harley Lippman. (RELATED: 223,000 Jobs Added In May, Unemployment Falls To 3.8 Percent)
Lippman runs one of the largest professional IT services and staffing firms in the U.S. and believes that employers are beginning to understand how to find hidden talent in the labor force that has been come up through the advance of technology.
“As impressive as it is in terms of the health of the economy that there is such a low unemployment rate, I think it could actually be much lower,” Lippman told The Daily Caller News Foundation. “If companies were a little more flexible in hiring women that were out on maternity leave, people who are retirees or people who want to work a little more flexible hours,” employers can gain an advantage in an increasingly technologically driven economy.
In order to tap into those pools, though, companies need to move positions back to the U.S. from countries like India, Ukraine and the Philippines. (RELATED: Manufacturers Confident That Trump Can Deliver On Promises)
In the past, companies would move jobs wherever the lowest labor rate, within reason, could be found. That reasoning fails to account for a host of other costs that often add up to much more than the difference in wages between the U.S. and less developed countries. Higher rates of turnover, miscommunication, lower productivity and less stringent protections on intellectual property rights place additional costs on firms moving jobs overseas.
“Everyone measures one thing: the labor rate. I hear this from lawyers to Fortune 100 companies with IT departments. They’ll say, ‘Harley, the labor rate in India is $20 an hour, and you guys are going to charge $45 an hour,'” Lippman told TheDCNF. “It’s remarkable that they don’t drill down, and, in fairness, it is hard to drill down, … but I think if they do that, they will quickly find that it is cheaper here.”
Moving jobs to other countries also involves taking on more geopolitical risk.
“In Ukraine, Russia took half the country so data there, even on the freer part, is not safe from being hacked into,” Lippman said. “And in the Philippines, you have [Philippine President Rodrigo Duterte] who is now cozying up to China. The Philippines have always been viewed as a country friendly to the United States. Not anymore.”
Many jobs at all levels of the economy are requiring increasing proficiency with technology and data, and that proficiency is readily, if not obviously, available in the U.S. Companies transitioning from overseas labor markets back to the U.S. are finding talent in pools previously thought too much of a business risk to pull from, such as military veterans.
“You know, with veterans, some people stereotype. They think of a veteran as somebody with a gun, their best strength would be as a security guard,” Lippman said. “They don’t realize that the military is so technology-ed up that they’re better than the general population, by far, when you consider how much they’ve learned of technology. But people have not adjusted to that view, which is a more honest and accurate view.”
“When that view catches up, it would make the [unemployment] numbers look even more impressive,” Lippman told TheDCNF.