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The Effects of High Unemployment

By Peter Lyle DeHaan , PhD

Author Peter Lyle DeHaan

Ten years ago, the unemployment rate was running high. Businesses needing to hire found themselves in a “buyer’s market.” This was what I wrote back then:

There are plenty of people looking for work. This results in more applicants to pick from for each opening. High unemployment has also served to limit employment options, thereby reducing worker mobility. The result is that employee churn rates are—or at least should be—decreasing. Having more applicants to pick from and fewer staff leaving by choice should be indicative of stable work forces. Unfortunately, this may not be the case and even if it is, it affords a false security.

Consider the following employees. Although their names have been changed and some details obscured, all describe the true plights of real people:

Chuck worked in a small satellite office of a large organization. The staff in his office were close and worked together well. They cared for each other and were like family. They helped each other to complete their work and serve clients, regardless of job description and title. Sadly, this idyllic reality ended when corporate closed Chuck’s office to save money. Some people were let go, but Chuck was told that he could work remotely from home. Then Chuck got a new boss, who rescinded that promise. Chuck now commutes 120 miles each day to work. The corporate office is nothing like his old office. Teamwork has been replaced by finger-pointing and blindly following job descriptions; no one cares about the clients—or about each other. One by one, Chuck’s coworkers have quit or are being let go. He fears he is next and is frantically looking for comparable work closer to home.

Carly is a college graduate whose chosen profession currently has a 40 percent unemployment rate. Unable to find work, she went to grad school. Her summer employment offered her a full-time position when she graduated but has been frustratingly vague on the details (right now she is relegated to computer work no one else wants to do). Unfortunately, this job is not in her field of study, nor does it interest her. However, out of necessity, she may be forced to take this job. Even if she does, she doesn’t expect to remain long.

Danielle also recently graduated from college. Her college internship continued after graduation, with the promise of a promotion when the economy turned around. She is now doing the work she was trained for—but without the title, recognition, or pay. This has been going on for a year. Although she is now working full-time, it is at her part-time hourly internship rate—or 40 percent of what is typical. She has polished her resume and is looking for better paying alternatives.

Karl has a full-time job in his chosen profession. At first, he liked his company and earned stellar reviews. However, in his latest review, he scored the lowest in each category. Last year, after their busy season, a coworker was abruptly fired. Karl fears that this year he will get the axe as soon as the seasonal peak is over. He is salaried and was initially told to expect working an additional twenty-five hours a week during the busy season. However, his employers recently tacked on an additional ten hours. He desperately wants to find a new job but has no time to pursue it. As soon as things slow down, he will begin his job hunt in earnest.

Larry greatly enjoyed working in his chosen career, finding it rewarding and fulfilling. However, after a planned move out-of-state, he was unable to find work at his level of experience and education. He eventually acquiesced to a much lower position at less than half the pay. The company promotes from within, so he hoped that he would eventually move into a position matching his skills and have his compensation level restored. Unfortunately, because he was performing a low-level position, he was looked down upon and demeaned by those who should have been his peers, in spite of the fact that he had more experience than some of them. The circumstances became so dreadful that he left, taking an even further pay cut in the hopes of finding a nicer place to work. Once again, he has the expectation to be promoted and, although feedback on his performance is very favorable, there are no current openings, so he could find himself repeating the process.

These people share two common characteristics. First, they do not like their employers or their jobs. Some have been lied to, others have been treated badly, two are significantly underpaid, and all are unhappy. The other commonality is that each of them desperately wants a different job and is working to make it happen. Since they have stellar qualifications and employable skills, their job expectations are not unreasonable. When the economy turns around, they are sure to find better work.

From this we can interpolate that:

  • Employees are unhappy, but they continue to endure difficult work situations—for now.
  • Many people are underemployed; they will correct that as soon as companies start hiring again.
  • Some people are working outside their fields of expertise. For many, this is not a choice but a short-term necessity.
  • When an entry-level employee sticks around after graduation, it may not mean that they like the company, but that there aren’t any other options.

What does all this mean?

  • When the economy turns around, many employees will immediately seek to improve their work situations. Some reports indicate that one third of the workforce is waiting to change jobs.
  • The most employable people (likely the best workers) will be the first to switch; those who lack skills or drive will stay.
  • There is pent-up worker frustration, which employers will be confronted with when alternative employment options emerge.

What can employers do?

  • Begin thinking and behaving as though unemployment is low and it’s a “seller’s market.” Treating employees better now, when you don’t have to, will keep them working for you later, when they don’t have to.
  • Recognize that with downsizing, layoffs, hiring freezes, and consolidations, employees have been stretched and pushed to a near breaking point. Look for ways now to relieve stress and reduce their pressure now.
  • Talk to employees and really listen. Perhaps there are slights that can be amended, injustices that can be corrected, and oversights that can be righted.

You can take steps now to keep the employees you have, or you can wait for economic recovery and take steps then to find and train their replacements.

[Update: As predicted, all five found new jobs once the economy turned around. Three found success quickly, but the other two required a bit more time—because the recovery was a tepid one.]

Peter Lyle DeHaan, PhD, is the publisher of Article Weekly. In addition to being a publisher and editor, he is an author and blogger with 30 years of writing and publishing experience. Check out his book The Successful Author for tips and insights.

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Business Articles

Three Reactions to Economic Conditions

As businesses ponder future economic conditions and how it will affect sales and their bottom line, there are three ways to respond:

  1. Hunker down and hope tomorrow will be better.
  2. Take a deep breath and maintain business as usual.
  3. Increase marketing and promotional efforts to increase sales now and fill the sales funnel with prospects for later.

The first response is a quick path to disaster.

The second option, while a viable consideration, may not be the best one.

It’s the third possibility, however, that holds the most promise for the present and the most potential for the future.

Progressive business owners and managers will pursue the third choice. As they do, they will zoom past their competition while they hunker down or hold their breath.

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2012 Advertising Outlook

The January issue of DM News (Direct Marketing News) had some interesting commentary about the advertising outlook for 2012.

They note that overall advertising expenditures are expected to outpace the US economy this year.

They also proclaim that online ads are expected to thrive in 2012, growing 11.2% to lead all forms of advertising. (This stat was shared by Stuart Elliott of The New York Times, citing Vincent Letang, executive VP and director for global forecasting at the MagnaGlobal unit of Mediabrands.)

This is good news. Advertising today paves the road for sales tomorrow. The overall economy will surely follow.

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Business Articles

Would You Go Double or Nothing on Your Advertising?

I remember reading a notable case study in my college marketing class.

It was about cereal rivals Kellogg’s and Post. Prior to the Great Depression, their marketing efforts and corresponding market share was comparable. But when hard times hit, Post reacted by pulling their advertising, whereas Kellogg’s doubled their efforts. When the economy rebounded, Kellogg’s market share surged ahead, while Post’s languished, never to again catch their rival.

While I would never tell someone to double their advertising, I am most willing to advise businesses against scaling back. When advertisers stop advertising, readers notice. (I know, because they often ask me about it.)

The absence of a regularly appearing ad where there once was one sends a negative message. It also fails to build and re-enforce the advertiser’s brand to potential buyers – and even places doubt in the minds of existing customers.

You never know when someone will be in the market for new equipment, software, or services, but when they are, you want them to contact you first.

Consistent advertising is the key to making that happen.

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Archives

Two Print Publications Set Revenue Records

In the November issue of Folio magazine, Matt Kinsman reported that two print publications recently hit records for advertising revenue.

One was Premier Guitar, a relative newbie on the print scene at only four years old.

However, for the other magazine, The Atlantic, the record is much more impressive — given that they’ve been around for 153 years.

Imagine that, hitting a 153 year high in print revenue — and at a time when the economy is less than ideal.

Just imagine what will happen when things actually turn around. I’m ready — are you?