Monday, July 19, 2010
Strategic Knowledge: Hidden Unemployment and Its Impact
Well after having made that statement in class I went home and was reading some news where I discovered an article The Jobless Effect: Is The Real Unemployment rate 16.5%, 22% or ...? Author Pallavi Gogoi reports on surveys that have shown that the real unemployment rate may be 22% or even higher. This has led the researcher to question the accuracy of the Department of Labor Statistics numbers and, as the writer reports, this is not the first time. A number of researchers, writers, academics and others have long thought that the government "cooks the books" when it comes to unemployment figures. However, at this time it has potentially devasting consequences. One of these is that lawmakers base their legislative actions on a picture that is less grim than it actually is. Additionally, businesses may ramp up based on such figures only to be disappointed because consumer demand is not there due to the fact that more people are unemployed than was reported. One writer suggest that one of the reasons that unemployment benefits have not been extended is the much "rosier" 9.5% reported than the actual, near depression level, of 22%.
The research shows that 50% of workers in the US report they have lost a job or suffered some financial impact due to the recession. We all know someone who is out of work and probably know someone who is part of this "hidden unemployement". As part of the response to this another impact on the laborforce is that many seniors have returned to work, often taking positions that would normally go to teens. As a result unemployment among teens is running two or three times the level of the rest of the workforce. The impact of this has been a reduction in teen spending, a large part of the consumer market. However, another impact is that teens are not learning workplace skills, like showing up on time, that will be necessary for them to be successful in the future.
I am not sure of the appropriate solution or solutions to this problem. When you have politics, social influences, education and money all wrapped up into a problem there will be no easy solution. However...
The lesson for HR professionals is to be aware of what is going on and how it will influence what you and your company do in the coming 6 months to 2 years. How does hidden unemployment, teen unemployment, lack of trust in government reporting, lack of consumer spending and the political arena impact your organization? Being aware of these issues and guiding your company through the minefield will improve your worth and help you avoid joining the ranks of the unemployed.