Monday, November 1, 2010

Anticipating 2011

I deal every day with people who are struggling just to get by.  There are the IT professionals who years ago entered a profession that was supposed to be a sure thing with respect to job security.  Now they feel disillusioned as they watch their jobs get shipped overseas where corporations spend pennies on the dollar compared to what they might otherwise spend here in the US.  (Note you generally get what you pay for.)  I also know somewhat more fortunate professionals who have contract jobs here in the US, but no access to benefits.  I know someone who is probably one of the most highly skilled individuals in his field in the city where he resides, who can earn an exceptional hourly rate by most people's standards.  His family recently lost their home, because a member of his family has a chronic medical condition and they became overwhelmed by bills. 

Not only do I hear it from others, but my family has felt the pinch as well.  Back in 2007, anyone who was alert who worked in the staffing industry could see the writing on the wall.  Clients abruptly stopped hiring contractors.  Then they stopped hiring full time employees.  Then they started laying off employees.  Then some went out of business altogether.

I was very fortunate in early 2008 to reconnect with some former coworkers with whom I had worked in HR, and learned that they had a number of unfilled IT positions, and needed help on a contract basis.  I was even more fortunate in that while I was there, one of the full time recruiters went on maternity leave.  I was able to remain on contract for the duration of the year, and even logged a few hours in January.

Unfortunately, the work ran out, and the contract ended.  In February of 2009, there were no real opportunities for senior recruiters, full time or contract.  So, I hung out my shingle and eSearch Associates was born.  I had no clients and no candidates, but was informed by someone at the unemployment office that I wasn't eligible for unemployment because I was working.  ... IE - No income at all for some time to come, but plenty of start-up expenses.

I had to laugh some time later when my parents showed me a letter they were sending to some friends stating that I had realized a lifelong dream of owning my own company.  (Sorry Mom and Dad if I didn't get the wording quite right.)  Honestly, nothing could have been further from the truth.  I knew full well that starting a search firm in the thick of the nation's worst recession in years was not the ideal business plan.  If there had been a great corporate job available, I'm sure I'd have taken it.

So here we are, nearly 2 years later.  When I say to job seekers "I feel your pain," it isn't because I'm running for office.  It's because when a hiring manager is too overwhelmed by his or her workload to take the time to really read your resume, when I know you'd be perfect for the opening, my financial hopes were pinned on you getting that job too.  By the same token, I understand the stress of the business owner or manager who has a very tight budget and has to be very cautions about making sure that the next person who is hired is a really good fit. 

Yes, I get all of that.  We are all cumulatively stressed out, worn out, and operating on considerably tighter budgets than back on the "good old days" just a few years ago.

Having said all that, I am very optimistic about the prospects for 2011. 

Before I go further, I want to say that even though this is being posted on the even of the election, this post is not about politics.  Both major parties can shoulder their fair share of the blame for events that led us to the near collapse of the economy, and both can make some claim to having done some things to help stimulate the (admittedly lukewarm) growth we're seeing.  For the record, I think that any president in power had to do something to bail out the banking system, regardless what his or her philosophy might have been, and I think that any president would have felt that finding "shovel ready" projects to spend money on would have been a very pragmatic way to create a lot of new jobs quickly.  But rather than focus on what was done, and what should have been done (because both parties also can be criticized for their failures to do more over the past 2 years) I'd like simply to look at where we were and where we are.

Back in 2007, reports started coming out about a looming crisis relating to commercial paper.  I'm not a finance expert, but the short of this was that companies, big healthy companies, were having trouble getting overnight loans for things like paying their employees.  This was a really big deal.  I remember hearing about this somewhat after the fact, in 2008 and starting to put the pieces together.  A small business owner I knew, owed someone a pretty sizable sum of money.  He had enough money in the bank to pay the debt, but couldn't pay the debt because he couldn't get any bank loans to make payroll.  He had clients that owed him significant sums of money, but they weren't paying their bills because they couldn't get loans from the banks to make payroll...  In mid September of 2008, lending completely locked up, and the stock markets tanked.

Regardless of what could have or should have been done differently in the years and months leading up to September 2008, at that point, we were in a crisis.  If nothing had been done, I really can't imagine how bad things would have gotten.  I'm sure that somewhere there are plenty of articles on the topic.

Where we find ourselves now is that we're seeing some improvements.  We have gone from headlines describing a state of crisis to headlines that discuss modest job growth.  (Do a Google search for "job growth" and modest) over the past 12 months.)  There are increasing stories of companies accumulating large stockpiles of cash (not necessarily a good thing) and also stories of pent-up demand for hiring.  Headlines like this would have been unheard of even a year ago.

I personally think that companies are waiting to see the outcome of the election, simply because any election presents an element of uncertainty, which companies don't like.  I think that regardless of the outcome, the level of uncertainty will go down after the election, and in early 2011, we'll start seeing more job creation.  (Stay tuned, I'm working on a separate article relating to the mobile device and mobile applications industries and why I think they will stimulate job growth.)

Here in the US, we still have huge challenges to face:
* Expect another hit to the housing market as financial institutions foreclose on a lot of houses next year and those homes have to get absorbed into the market. ... It would be great if Republicans and Democrats alike could work together to promote some assistance for regular folks who are trying to make their payments, but have gotten behind due to job losses, lack of healthcare coverage, or other factors.
* We still have some long term challenges relating to the flight of manufacturing jobs overseas. 
* Congress and the president still need to tackle the 500 lb gorilla that nobody will face - huge expenditures on Medicare and Social Security.  Some sort of graduated benefit seems a no-brainer, but neither party will let the other party discuss the issue without bashing them.
* Rather than just extending the Bush tax cuts, reallocating them and offering cuts to payroll taxes seems like another no-brainer that would stimulate job growth and help companies and individuals across the board.
* Finally, there are stimulus funds that have been allocated and not yet spent.  Despite those who are concerned about long term deficits, I believe that growing the GDP in the short run, thereby increasing tax revenue and decreasing federal and state program expenses.  In the short run, this should still be a major priority.  This doesn't take into consideration any potential multiplier effect on jobs.

Despite considerable heavy lifting that ideally needs to be done by our leaders, I think there are still indications that some recovery will take place regardless of what they do.  (Because the cynic in me isn't confident that they will collaboratively do anything that requires bipartisan teamwork or courage.)

Aside from the clear differences in the news of the day that point toward reasons for optimism, I'm also feeling very upbeat because others in my industry also appear to be feeling the same way.  Those in the search and staffing industries were among the first to know that we were in a huge recession, and (because prevailing thought is that jobs are a lagging indicator of recovery) unfortunately also the last to see signs of improvement. ... There are signs of improvement though.  I'm seeing them firsthand, as are my peers, and I'm very hopeful that circumstances will be even better in 2011.

Best wishes to all of you.  I hope you find this to be encouraging.