Labor force participation: thoughts on hard to fill vacancies

Today’s post was inspired by this article I found on LinkedIn and in particular this opening quote “Today’s workplace should look more like a jazz band”.  The article is worth reading but it takes the usual route of dispensing advice about how to organize the ragtag group that typically make up the staff we have to work with.   The article suggests these are somehow unique to the youngest generation, but I don’t agree that the present day younger generation (so-called millennials) are any different from any other generation.

Actually, LinkedIn has lots of articles that focus on Millennials as a special challenge from multiple perspectives: recruiting, managing, and job-seeking.  My suspicion is that this is a fallacy.   Millennials happen to be what we currently call the younger generation entering the workforce.   They certainly had a unique developmental history.  For example, I envy their being able to grow up with easy access to Internet and Mobile communications.   Meanwhile, businesses are struggling in staffing positions with new hires, and managing those new hires.  As the same time, the young generation is having difficulty finding jobs.   The fallacy is to assume that some quality of this generation is causing all these problems.

The real problems is not the pool of workers, but the pool of jobs.  We should instead assign a catchy phrase to describe jobs or careers that are available in the current generation.  Job and career markets also experience generations marked by different macro-economic cycles.    We are in a peculiar job market cycle that is far unlike its recent predecessors.  I think the uniqueness of current job market is far more significance of the uniqueness of the developmental experiences of the so-called millennials.  I am not aware of any popular phrase to describe this current and unique job market environment.  I still hear a description that this is the Information Age, but this term has been used throughout my entire career.   Each year it seems the word gets re-used because today’s information so much unlike yesterdays.   I think we could be a little more creative than saying that now we are in the really real serious information age or something.

The challenges of the job market for the past decade or so sets it apart from previous decades.  We have a lot of talented individuals with abundant energy and ambition unable to find jobs while at the same time we seem to have lots of job openings that seem impossible to fill due to a combination of strict must-have qualifications and modest salary offerings.  This disconnect of jobs and labor needs an explanation.  Blaming the disconnect on the labor pool is probably wrong and certainly not helpful.   At least, I find this explanation to be unsatisfying.  I have no doubt the current pool of labor would have been quite at home in the job markets of past decades.  I also have no doubt that through similar magic of time-travel the previous decade’s labor pool would be uncomfortable in the current job market.

We should seek to understand what makes the current decade’s job markets so challenging instead of why the current labor pool is so challenged by it.   I believe the root of the problem is the job/career market itself.  It is fundamentally different from earlier markets.  Some differences include:

  • Jobs are extremely specialized so that new hires must present extensive training and experience in impossibly narrow specialties.  True entry-level positions have disappeared, everything is mid-level or higher.
  • Specialties (and thus job descriptions) have extremely short life spans.  Most if not all opportunities are not going to last a career and many will be lucky to last a decade.
  • The offered incomes are grossly undervalued for the specialization and short useful lifetime of the jobs.   Jobs are offering entry-level compensation for senior-level specialization.

There are many other qualities of the current job market that sets it apart from the earlier ones, and the items above can be subdivided to provide more clarity.   Also, the list is just off the top of my head.  The claims definitely need more justification. I am not going to provide any support for these claims in this post.  I merely assert that the current job market is challenging in the above ways that set the current market apart from earlier markets.  The labor pool is well suited for jobs that existed in the past: there is nothing particularly challenging about better information-connected workers.   The challenge is that today’s jobs are inaccessible.

The list above emphasizes the specialization the individual must present in order to fit into a defined job opening.   In my own experience as a manager, I recall having job openings for very specific qualifications and a narrow band of low salaries to offer.   These occurred because I had to fill a vacancy after someone left.   In effect, I was tasked to find someone to fit exactly the gap that the previous staff had filled and for that new hire to work for the same salary range the predecessor abandoned.   Even at the time I found this ridiculous, because the previous staff grew into the role and our merit increases failed to grow commensurate with his increased value as he got good at the job.   I had to find someone who was willing to work at the same rate but be immediately ready to everything required.

Many job openings are virtual replacement jobs.   Even job openings resulting from growth or new initiatives have qualifications that are very similar to those I had to fill following someone’s departure.   The job was very specialized, the new hire had to be ready to do the work immediately, and he had to accept the pay rate that equaled the typical merit-increase schedule from entry level positions.   We pretend that experience of 10 years has a market rate equal to 10 merit-increases (1-3% per year) over entry level.  In reality the qualifications we seek are many times more valuable.

Some of this disconnect has been solved by increased reliance on foreign workers (on work visas) or by outsourcing the jobs to countries that can offer the required skills for less money.  We started doing this outsourcing decades ago and we are at the point of exhausting that opportunity.   The skills we require today are so specialized that it requires a wealthy pre-employment education.   The supply of such education is limited even world-wide.

I have often wondered why many jobs are not compensated more like professional athletes or entertainers who typically enjoy very short careers if they enjoy them at all.   When they are stars, they earn a lifetime of earnings for the few years they are relevant to the job.   These professional athletes or entertainers are often extensively trained for their specialty, but due to fads or simple aging, their competitiveness to keep the job is short-lived.

In many ways, the current job market resembles these celebrity markets.   We need equivalents of celebrities to fill the very specific openings we have available, with salaries based on the unrealistic and outdated notion that the skills will be marketable for lifetime.

In the professional sports analogy, the select few professionals with the jobs come from a much larger pool of individuals competing for those positions.  Those pools involve training camps that improve their skills often with little or no income.   Only a few will make it into the big leagues due to having the best skills available at the right time when they are needed.   The rest will never enjoy the benefit.  At least in sports or entertainment, there is sufficient motivation in the prospect of making it big that encourages them to put up with the inadequately compensated training.

I see a similarity of the current job market with the professional sports market.   The job openings are similar to the big-leagues.   There are no entry level positions in the big leagues.  The ladder-climbing to reach eligibility has to come from individual sacrifice of training camps that are a net loss in terms of income.  Often the training offer no income possibilities at all but still insists on very high costs.

The reason why the jobs are hard to fill is that few are willing or able to obtain this junior-league training prior to qualifying for an entry-level position.   In most industries other than entertainment or sports, it is not legal to have an equivalent of a training league that train individuals for sub-minimum wages or no wages at all.   Instead, we expect each individual to invest in his own training based on his vision of what jobs will be in demand when he is finished.   There is no equivalent of a minor league or training camp for group motivation.   This reliance on individual initiative limits the pool of qualified individuals.

The challenge is even more acute because the jobs are insisting on nearly impossible experience requirements.  For example we may demand 10 years experience in some specialty that started just 10 years ago and probably will not be relevant for more the 5 more years.   Someone seeking to become qualified in the current openings will find the jobs to have disappeared by the time he is qualified.  The modern job market is nearly inaccessible to individual job seekers.

The problem of declining workforce participation is more the fault of the current job market than the current labor pool.  Although most theories about the current sluggish economy are due to financial issues, I suspect a big drag on the economy is actually this disconnect between the job market and the labor pool.   If we can find a way to match labor to jobs, we can return to historic growth levels.

I suggest the following theory.  We have reached a point where we can no longer match individuals to jobs.  This is a new era.  The job markets are not working like older markets.   The very concept of individuals having jobs or careers may have become an obsolete concept.

We need to rethink the definition of a job, or a career.   Labor needs of the modern economy can no longer be effectively filled by individuals who will show up to join a team at the job site.

The modern economy requires teams, not individuals.

This is what occurred to me when I read the above article that described work should look more like a jazz band.   Unfortunately the author misses the significance of this observation and instead imagines building jazz bands out of collections of individual who happened to be hired into an organization for specific job openings.   This is not how to create great jazz bands.

Jazz bands come together through voluntary associations of individuals who recognize complementary capabilities.  They then practice together to build up their skills and more importantly to build a tight team where everyone knows what everyone else is doing or is about to do.   A jazz band is only hired after they have practiced to the point of being able to demonstrate they can do the job as a team.  When hired, the band is hired as a all-or-nothing band.   We don’t hire the drum player of a successful band to fill our drum-playing vacancy.   Instead when we encounter a situation where the currently hired band lost their drum player, we replace entire band with a completely different band that does have a drum player.   The fired band will have to reconstitute itself before it can re-enter the market.

I imagine a collective-hiring approach can offer a solution to the problems of the modern job market.  Instead of recruiting individuals, we could recruit complete teams of individuals.  The individuals on the team would have trained together to do the a particular type of service.   As soon as a team lacks any key player, the entire team is replaced with another team.

Replacing the notion of hiring individuals with hiring squads can make it easier to meet business needs.   Just as different jazz bands can be successful with different mixes of talent and capabilities, the job-squads may have different mixes of capabilities.

For instance in my field of data science, different teams may solve the same problem depending on their internal strengths: some may use custom software development, others may rely on scripts with commercially available modules, and others may exploit complete vendor solutions.   Each team can get the job done as long as the team is prepared to work together with a shared objective.   The problem occurs when the current team loses a key member.  It is very difficult to find a replacement who can perfectly fill the vacancy for the skills and attitudes to properly complement the team.   I suggest that it would be easier to fire the entire team when they experience a single vacancy, and replace the team with another that has the full team prepared to work together and allow them to solve the problem their own way.

We could offer jobs to squads instead of individuals.   The hiring is of the entire squad as an all or none proposition.   This works both ways: the employer has to accept the entire team no matter what the mix, and the team loses the job if they lose a key player making the team unable to deliver the service.  The squad-employment would compensate the entire squad instead of the individuals.   The squad will come up with its own way of dividing up the money based on the finite money available instead of the number of hours worked.   It is the sole discretion of the squad as to how to fairly distribute the pay.  The employer pays only for the successful performance of the entire squad.

This model enables the possibility of training positions, perhaps even unpaid internships, where the funds makes possible the equipping of training space and extra equipment that the interns can use.   This training activity itself is different from the current definition of employment.

There is no requirement to pay salaries and benefits for training activities just as there is no requirement for a training-businesses to offer me a salary if I sign up for their educational programs.   The squad approach opens new and attractive opportunities for entry level positions to join into the training of a future squad base on broad objective instead of precise individual qualifications.  The team approach does not negate the need for qualifications, but it does allow those qualifications to be distributed across the team based on who is actually available to join the team.

There is also no explicit requirement for individuals to serve specific roles.   The squad as a whole has to be able to accomplish the task.   Different squads can satisfy the requirements with different mixes of talent they have available.  Instead of seeking out specific talents, they will learn to work with the talents they already possess in order to bring them together to deliver a useful capability.

Companies will cease to offer job openings defined by skills and experience.  Instead the openings will describe the actual problem that needs to be solved.   These descriptions have the expectations that an entire team will be needed to deliver the service.

The actual mix of individuals required to deliver the solution is up to the squad to figure out, and they will already know this answer because they have already trained together.

This also answers the concerns I raised in an earlier post where modern jobs thrust new people into an existing job environment introducing the problems of discovering only then of conflicts where there is not a good match: the new hire is not right for environment, or the environment is not right for the new hire.   The team is built first so this interrelationship already is worked out before starting the task of getting work done.

Finally, the cost of the job will be based on the value of the solution provided instead of the biased notion of what each individual should be making.   The actual compensation to individuals within the squad is a matter of dividing up the available funds.   This is of course a difficult problem, but it is a problem for the squad to figure out, not the entity that hires the squad.  But there is an advantage that the lump sum for the team’s service may be larger in the first place because the company is paying for the perceived value of the actual service instead of paying individual salaries based on some perception that the salary is commensurate with the individual’s experience.   The company compensates instead based on the value of the service.

After writing this, I realized this is not a new thought for me.   Instead the initial article reminded me of an idea I played with a decade ago (or more) ago to solve the exact same recruiting problem I’m describing here.   Even back then, I realized that it was very difficult (or at least I had little success) in filling the openings I needed to fill.   I imagined it would be easier if I were able to somehow create a farm team to develop skills to so that entire team can come in and deliver a marketable service.   I imagine the problem I experienced then is even more acute today.

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