Tag: employment

The New Economic Reality of Unemployment


Hiring Gap A couple of weeks ago New York Magazine used  The Hiring Gap chart (see picture) as their Intelligencer topic.  It compares domestic employment powers of ten "most valuable" ( in terms of their market capitalization) public companies in America in 1964 (converted into 2011 dollars) and now.  Even though the numbers on their own are very striking and Andre Tartar's few-lines of commentaries and footnotes cut right through the fact that 

"being a top American business no longer… means employing lots of American workers,"

the data left my calculating mind somewhat unsatisfied; it begged for further interpretation.

First of all,  it's the damned "market capitalization" crap, which nothing more than a perceived value of the company by investing public – the very same public that cannot evaluate companies on its own and follows the leads of their brokers, WSJ analysts, CNBC (especially if they are doled out by sexy Maria Bartiromo or engaging Jim "Mad Money" Cramer), etc.  Thankfully, there is an instrument we can employ to make these numbers somewhat more real – Price-Earnings Ratio:

  PE Ration Here is the new ranking of the 2011 listing, based on the companies' earnings.

  The Hiring Gap Only three giants retained their places in this modified view: Exxon, Berkshire and Google.  And, by my standards, those three are overpriced anyway: any stock with P/E ratio higher than 11 is overpriced.  Google with 20 – ridiculous.  Of course, it's not as bad as some other stocks, like Wynn Resorts, for a example, with a preposterous 60.  It always shocked me that people buy stocks like that and then act all surprised when their savings go, "Bye-bye." 

Another interesting angle of the chart is its reflection of the fundamental changes in industrial mix of Large-Cap companies, which speaks volumes about this country's economic and social environment.  The only two companies present on both lists are GE and IBM.  In 1964 we did not have any financial institutions big enough to claim not just one, but two spots in the top 10.  The three tangible goods manufacturers that drove the US to its economic dominance in the 60s are gone off the list – GM, Dupont and Kodak.  So, is the telecommunication super-power of the time – AT&T.  Now, we have Apple and Microsoft, dividing the world into two camps of PC vs. Mac users.  And isn't it comforting to know that as far as our OIL-dependence is concerned, we are still at the same point as we were nearly half a century ago?

Now, the focal point of the piece – the dwindling number of the jobs infused by these companies into American economy.  In accordance with proper statistical rules, let's explain away the two companies with the highest and the lowest number of workers.  Walmart employs 2.1 million of people, but it is irrelevant, and not because their average salary rate is one of the lowest in the country, but because their expansion put out of business smaller chains and thousands of independent retailers.  Google, on the other hand, generates the majority of its revenue without any human participation, so I am surprised even by the 24K number.

Look at our beacons of stability, though – GE's number practically did not change and IBM employs nearly three times more people now than they did 47 years ago.  Holla to that!  The rest of them… well, we all know the story – there are three reasons for jobs going away and never coming back:

  1. Technological advancements contributing into increased efficiency.
  2. Outsourcing = jobs going abroad.
  3. Globalization of manufacturing and support services = jobs going abroad.   

At the time this issue of New York Magazine came out, the unemployment rate was at 8.8%.   Now it's 9%, and I believe that unless something changes fundamentally in our economic structure, it is only going to get worse.  The new reality is that we cannot look at the giants whose operations financed through their publicly-traded stocks as the source of new jobs.  

As long as investors listen to analysts' opinions and follow the "trends," the large companies' executives will continue applying their hardest efforts to minimization of costs in order to preserve their multi-million compensation packages.  The workload will continue being exported abroad and jobs will disappear.

At this point, we can only rely on small and midsize American business for the influx of new jobs.  That's where the efforts must be concentrated: helping the existing smaller companies' survival and stimulating creation of new entrepreneurial businesses.

Those who read this blog consistently know that I am developing a product that will help small and midsize businesses in their daily struggle for success, assuming I manage to solicit sufficient venture capital.

Job Search: Ageism


Age discrimination is an undeniable fact of our lives.  Young people are never taken seriously as customers, clients, health patients, philosophers, business developers, etc.  On the other hand, media, entertainment, advertising and marketing adore youth.  And one thing is sure: their "young" status is going to change.   Discrimination of older people even more pervasive and they don't even have a benefit of hoping for improvements. 

The problem is particularly acute in human resources.  The age discrimination is at its worst when you are searching for a job, or expecting layoffs, or know you may be deemed too expensive.  

 According to a research quoted in The Gale Group's  Small Business Encyclopedia, over 52% of surveyed executives admitted that age is one of the key factors in job searches for people 47 years old and up.  What do I think about that number?  The other 48% lied.  Age is ALWAYS a factor. For one or another reason, when we hire people we take their age into consideration.  So, we should accept that, when the tables are turned, we will be treated the same way.

I have to own up to the fact that while wearing the CFO's hiring hat, I automatically estimate the age of applicants.   I don't care about their age per se.  I do it to quantify their accomplishments against the length of their careers.  It helps with assessing their work ethics and personal ambitions.  

Other hiring managers and recruiters don't even have a justification like that.  They just go, "Too old," and send the resume into Trash.  With the job security becoming a myth of long-forgotten times, more and more middle aged people will be forced to enter the circles of job search hell.  This possibility practically hangs over everyone's head in the world of vulnerable small-size businesses.

Having that in mind, I would like to share with you an extremely useful The Ladders' article on adapting your job search, your professional "brand" and your resume to your age: Job Search in Your 20s, 30s, 40s, 50s and 60s.

By the way, is it just me, or have you also noticed the funniest thing (I am not laughing) that's happening in our media?  The "official"economists, major newspaper analysts and politicians are trying to convince us that the recession has ended months ago and we are "recovering".  Yet, every article or post related to job search and HR issues contains a phrase "especially in this economy" and you can almost hear the author's sad sigh.  

I think the old terminology of recession, recovery, economic conditions have lost their meaning.  People just don't want to admit it to themselves, because, as I frequently say, they are afraid of changes, especially changes for the worse.    The phrase "this economy" gives a false hope of a better future.  The truth is – we live in a NEW REALITY.  This is the "recovered" state.  Things are only going to get more difficult.  Everyone should be prepared to face job search ordeals in their 50s, 60s, and beyond.

Job Search: Is Industry Experience Really Relevant?


All of us have encountered this many times over – you read a job posting for a CFO or Controller position (this is particularly true about recruitment agencies' ads) and the responsibilities list is a perfect match to your experience: you've done budgeting, forecasting, treasury management, BOD reporting; you've designed KPI's and dashboards; you've managed and trained staff, etc…  Then, you get to the end and among mandatory qualifications you see: real estate experience (or broker/dealer, or manufacturing, or consumer products… whatever) "is a must."

Why?  Do hiring execs and managers think that there are some cult secrets separating one industry's accounting and finance from another?  That you can only absorb them through exclusive involvement with that industry's firms? That no one with  deep knowledge of fundamental principles of finance, GAAP, taxation etc. can adapt them to a new industry and quickly digest the technical specifics? 

And wouldn't they be more interested in hiring someone sophisticated enough to be willing and capable of diversifying their experience?  Do they really think that someone who knows Revenue Recognition Cycle in Technology will not be able to dissect standards for the same task in Financial Services? 

I can go on forever with these questions, but I guess you get my point: I don't think that industry experience is relevant for REAL CFO's and Controllers – those who possess broad and deep knowledge of accounting and finance, not just few repetitious tricks they have learned without understanding the underlying principles behind them.

Let me give you a simple analogy.  Multi-lingual children exposed to different languages through their residence, parental ethnicity, foreign nannies, etc. are known to add more and more languages to their arsenal with a greater success than their peers.  The reason is that their anatomical speech instruments become very flexible and can adapt to any new challenges.

The same is true about the professional expertise of those financial execs who were exposed throughout their career to a variety of industrial and organizational specifics.  They usually have deeper understanding of business, sharper commercial acumen and ability to adapt them to any new circumstances.

In yet another excerpt from Marc Cenedella's TheLadders book (Sell Yourself Short), he condecsends that recruiters are now more open to industry crossovers, but that you will have to accept lower salaries and positions. 

First of all, the supposed "openness" is a lie: the job listings are full of specific industry requirements.  Secondly, don't let statements like that lower your self-esteem: if you are capable to cross over without difficulties, it's your asset, not a shortcoming.

Let's not forget that the system of double-bookkeeping (still the foundation of all accounting the last time I checked) was created by the XIV century Venetian sea merchants and first outlined in proper structural manner by Benedetto Cotrugli around 1450 as a chapter in his "Of Trading and the Perfect Trader."  Subsequently, Lucas Bartolomes Pacioli devoted 36 chapters to the subject in his monumental tretese on mathematics.  

These were Renaissance men who also wrote on architecture, medicine, law, art, religion and broad business issues.  It is unfortunate that the employers of today have devolved to preferring the narrow specialization instead.