Why It Matters
The United States is again at a major crossroads in history. The current “jobless” recovery is a consequence of the economy’s rapid evolution from a natural resources- and manufacturing-based economy to a knowledge-based one. We are witnessing the first economic recovery in what has become a full information economy.
For most of the twentieth century, a recession was a cyclical decline in demand-the result of excess inventory that needed to be sold off. People were temporarily laid off-inventory backlogs were reduced and demand would snap back quickly. As product demand increased, workers returned to their pre-existing positions in factories, or they found an equivalent job with another company.
Over the past few years, dramatic advances in information technology have allowed companies to establish tightly integrated demand and supply chains, and outsource manufacturing and low-end service jobs to save money. Rightly or wrongly, many of the jobs that have entirely disappeared from North America have reappeared in India, China, and Latin America. Rather than furloughs, many people were let go, forcing them to switch industries, sectors, locations, or re-skill to find a new job.
If job growth now depends on the creation of new positions, you should expect a long lag before employment rebounds. Employers incur risks in creating new jobs and require additional time to establish and fill positions. Investment in new capital equipment is no longer a pendulum swinging from recession to recovery and back again.
Instead of resources or land, today capital means human capital.
With a radically smaller pool of skilled workers and the increased demand for profits, the original War for Talent of the late 1990s has morphed from a quantitative to a qualitative one, best described as the War for the Best Talent by author Peter Weddle in Generalship: HR Leadership in a Time of War (Stamford, CT: Weddle’s, 2004). The old “bums on seats” mentality of many employers is quickly being replaced by “brains on seats.”
Faced with stiffer international competition and tougher hiring requirements, companies are becoming single-minded about productivity and bottom-line performance. Consequently, competition for jobs is increasing as management seeks and hires only those persons who appear to have the most potential for helping to boost the company’s profits. For many companies, employees are now viewed as a variable cost-hence the term human capital-to remain “on the books” only as long as they continue to produce. Looking for an old-fashioned job like the one “Dad used to have” is a waste of your time-Jobs are temporary in the new economy-henceforth you always need to be looking for the next opportunity.
The people who market their talent the best will win!
