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Employment

Avoid Ivy League Schools. Think Oil League…

In years past, it was assumed that a graduate with an Ivy League degree was assured a lucrative job and a promising future where they would easily payoff any accrued student loans in short order.

Those days are past. Ivy League grads face a tough and uncertain job market, just like their state school peers.

If I had a child headed off to college and looking for a lucrative career, I would steer them toward the Oil or Mining schools instead of the Ivy League.

Shale operators are having a lot of trouble finding workers, particularly engineers and geologists, according to a workforce survey by the Marcellus Shale Coalition. Most of the respondents in the poll cited a need for more schools to offer four-year degree programs in petroleum technology and engineering.

So what schools are in the Oil League? (One hint, they are nowhere near Harvard.) Here are few noted schools offering petroleum engineering degrees and as you can see, most are in the west.

US Petroleum Engineering Programs

School

City

State

University of Texas at Austin

Austin

Texas

Texas A&M

College Station

Texas

Colorado School of Mines

Golden

Colorado

Stanford University

Stanford

California

New Mexico Institute of Mining and Technology

Socorro

New Mexico

University of Southern California

Los Angeles

California

University of Oklahoma

Norman

Oklahoma

Texas Tech

Lubbock

Texas

University of Louisiana at Lafayette

Lafayette

Louisiana

University of Alaska

Fairbanks

Alaska

While the arms race among universities focuses on the addition of new programs in Law, Nursing, and Pharmacy, they might have more success by adding new petroleum related programs.

Instead of starting or expanding programs focused on alternative energy sources and environmental sciences, there are a lot of opportunities in fracking, geology, and other area of natural gas and oil drilling for young graduates.

Operators in the oil and gas industry are continually trying to fill positions in engineering and construction which represent a golden opportunity for young graduates looking for a promising career in a difficult employment market and for administrators looking for new degree programs.

What’s The Key Issue Facing Small Business? Access To Capital

Cash-flow issues continue to plague America’s small businesses, according to a survey of 300 members of the National Small Business Association.

Forty-three percent of small-business owners reported being shut out of funding during the past four years and nearly one-third had to reduce payroll.

We have seen this pattern in survey after survey. While access to capital has always been a challenge for small businesses, the “great” recession has made it more difficult than ever for small businesses to gain access to the capital they need.

In our work, we have found that the small business community includes 6 million small employers with 43 million employees.

Small business owners want to create jobs, innovate and grow the economy. Improving their access to capital will be a key to increasing employment growth in the U.S.

Is Household Debt To Blame For The Employment Collapse? Well…Sort Of

Does Household Debt Contribute to Unemployment?  That’s the argument of Professors Amir Sufi and Atif Mian who claim that weakness in household balance sheets and the associated pullback in spending are directly responsible for 65 percent of the U.S. job losses from 2007 to 2009.

Using county level retail sales data, they attempt to show that the large accumulation of household debt prior to the recession in combination with the decline in house prices has been the primary explanation for the onset, severity, and length of the subsequent consumption collapse. They argue that the decline in consumption was much stronger in high leverage counties with large house price declines and is directly linked to high levels of unemployment in the U.S.

The author’s findings, which they detailed in Bloomberg this week, has generated a lot of discussion (see Calculated Risk) including a posting of the author’s summary presentation at Business Insider.

Here’s where I think they missed the boat.

The "accumulation" of debt was not the trigger or key factor in the slowdown. It was the lack of access to debt that contributed to the consumption collapse.

Easy access to debt kept the economy going from 2002-2006. In 2007, access to debt became more and more restrictive which led to a steady decline in consumer credit card balances.

Card-issuing banks tried to rein in risk amid rising delinquencies and charge-offs and before new legislation and regulations were implemented.

US consumers did not become frugal, they no longer had access to easy debt. Both consumers and small business owners with stellar credit scores felt the sting of reduced credit limits and closed accounts.

Starting this past summer, new credit card account originations began to rise and U.S. consumer revolving credit rose indicating that the sustained pullback in consumer lending has started to ease.

Since personal income in the US remains stagnant, much of the economic growth that we have seen over the past few quarters is probably the result of the increased availability/utilization of consumer credit. While this can fuel a strong third and fourth quarter of 2011, I would expect a slow start to 2012 when credit card statements begin to hit consumer’s mail boxes or email.

The Coming Divorce Boom

During a recession, consumers typically build up their savings and hold off on purchases due to uncertainty about the economy. Following a recession, we often see a burst of economic activity thanks to an increase in consumer confidence and spending.

Pent-up demand can cover everything from auto sales to home purchases to travel. It can also lead to a surge of activity in areas outside of consumer products or services.

One such area is divorce.

As you can see from this chart, divorce rates typically fall as unemployment rates rise.

US Unemployment and Divorce Rates 2000 to 2009

As we begin to see improvement in the economy, we will probably see increased rates of divorce as consumers become more confident in the stability of their incomes, the outlook for the economy, and their ability to form a separate household.

The relationship between labor force participation and divorce has been studied by economists for many years. The prevailing wisdom among most economists (explained in more detail in this 2004 AEJ paper) theorizes that female labor force participation increases income, financial independence, and consequently, the probability of divorce. Financial independence is generally regarded as the strongest of these factors.

As we see continued improvement in the economy over the next couple of years, we should see a pickup in home sales, rentals and probably household formations as current single households become two households.

This has implications for many industries outside of divorce attorneys. We should see an uptick in home sales, cosmetic surgery as newly singled couples prepare for finding new mates, and stronger traffic for dating websites. This also impacts fashions and apparel styles since singles and divorcees tend to be more fashion conscious than married couples with children. Apparel sales should benefit from the coming boom as well.

This also has implications on voting and elections.

Ending a marriage is a stressful process that frequently disrupts familiar routines, including voting. Married adults are more likely to vote than those who have never been married; in turn, previously married people are the lightest voters.

Because voting requires two considered routine actions (registration and turnout), divorce negatively impacts voting. Married partners have help with household tasks and also most of the chores associated with voting: not only registration, but also locating polling places or obtaining absentee ballots.

After the 2012 elections where turnout should be relatively strong for a myriad of reasons, we should start to see decreasing levels of voter turnout over the following few cycles as the economy continues to recover from the great recession, and unfortunately, due to an increasing number of dissolving households.

 

Economic Outlook For 2012: Not Rosy, But Optimistic

Despite our dysfunctional government, continuing debt issues in Europe, and a schizophrenic stock market, it doesn’t appear that we will have another recession in the next few quarters. In short, corporate earnings are just too strong for another recession. While unemployment and a weak housing market continues to plague the economy, companies continue cost reducing investments and if we can get some relief for the consumers in the form of lower gas prices and perhaps an extension of the payroll tax cut we should see some consumer strength going into 2012.

Granted, this assumes that our friends in Washington avoid making any substantial mistakes that could damage the economy (a big if) and that we don’t see a run-up in commodity prices (mainly oil and gas).

While there is plenty to worry about and the current economic numbers remain troubling, my outlook going into an election year foresees modest growth and continued improvement in the economy. Typically, we see economic improvement in an election year and without any negative legislation coming out of D.C., I remain cautiously optimistic going into 2011.

Bad Bosses: 5 Types That Drive Employees Away

Entrepreneur’s Daily Dose Blog looks at an OfficeTeam survey, which shows that nearly 40% of workers have quit a job because of a horrible boss. The survey breaks down the five most common types of bad bosses and how to identify them. Any of these sound familiar?

  • Micromanager: Just can't delegate, and when you do, you're double-checking the work just to make sure it's being done the way you would have done it.
  • Poor communicator: With little or no direction offered, workers waste time as they fumble about trying to guess what you want.
  • Bully: Easily frustrated? Lose your cool with employees and start yelling? Is it your way or the highway?
  • Saboteur: You're taking credit for workers' ideas and successful projects. On the other hand, if things go wrong, a worker is getting the blame.
  • Mixed nuts: I had one boss like this once -- happy and laid back one minute, snapping orders the next.

Payroll-Tax Cut Would Not Boost Jobs, But Extending The Payroll Tax Cut Would Boost The Economy

A proposal to cut payroll taxes in an attempt to help increase hiring has drawn criticism from some economists and business owners, but it is likely one of the few stimulus proposals that could pass a sharply divided Congress.

If Congress wanted to make a difference, an extension of the two-percentage point reduction in Social Security payroll taxes paid by employees would go a long way helping to avoid a recession in early 2012.  Cutting payroll taxes for employers would not spur any new hiring, but putting more money into consumer’s hands would help avoid a slowdown in growth in the first quarter of next year.

Jobs Are the Number One Issue on Voters’ Minds

According to 13 issues Gallup measured in their March poll, 71% of Americans say they worry about the economy "a great deal," more than they worry about 13 other issues. 64% worry a great deal about federal spending and the budget deficit. Gallup has tracked 10 of the 14 items measured this year every year since 2001, except for 2009.

Federal spending/the deficit as well as the size and power of the federal government are new to the list this year.

The economy and unemployment were top-ranking concerns for Republicans, Independents, and Democrats and will undoubtedly be the number one issue for any elections held in the next 12 to 18 months. Having completed several focus groups with likely voters over the past few weeks, I can definitely attest to the strength of the jobs issue and its potential impact on the next cycle of elections.

Cautiously Optimistic: Outlook For 2010

On the heels of Christmas, all eyes turn to the economy and the outlook for 2010. This time of year, organizations big and small look to implementing, or in some cases, completing their business/operational plans and this year’s outlook is significantly brighter than last year.

Last year, I bet that the economy would improve in the 3rd and 4th quarter. Fortunately, it did begin to rebound in the 3rd quarter. There was simply too much money pumped into the system for it not to improve.

So what can we expect from 2010?

Improvement. Despite the recent negative employment news, it definitely looks like the employment market has hit bottom and by February we should start to see signs of an improving labor market. Based on the Fall numbers, auto manufacturers should start to become profitable again, but overall consumer spending will remain weak and choppy. Too much wealth has been destroyed in this recession and it will take some time for real income to rise, which is necessary for strong retail growth.

The dollar remains weak giving strength to exports, local and state government continues to struggle, and commercial real estate continues to tank.

On the plus side, the first half of the year looks positive, especially for stocks. However, inflation or fears of inflation and higher rates becomes the story of the second half of the year.

2010 looks positive. It is 2011 that I’m worried about.

On Demand (Free Agent Society)

Face it, we are all free agents.

iTunes and iPods forever changed the music industry. You can use Shazam to recognize a song playing on XM in a restaurant and download it immediately.

We can go to Hulu and watch 30 Rock or Family Guy whenever we want.

We can download movies to our DVR from Direct TV anytime we desire.

Thanks to the Kindle, books are now on-demand and Apple’s tablet PC will only fuel the market for digital readers and book downloads.

And now, like Major League Baseball players, workers are now realizing that they too are free agents and on-demand.

The New York Times small business blog offers up some great advice on managing a career. In short, manage it like a small business. With so many people unemployed or fearful of being laid off, human resources experts are recommending that workers think of their careers as small businesses because the market for temporary and contract work has picked up.

Social-networking sites, "cloud computing" and mobile communications likely will produce a "surge of entrepreneurs," says Jim Jonassen, head of Jim Jonassen & Associates Venture Search.

Just like a baseball team in need of a left-handed hitter who can hit with power, employers in need of PHP programmer with banking experience or a sales team that needs a specialist in selling to government agencies are signing players who fit their needs for a finite amount of time and just when they need it.

In the new world order, growing and cultivating employees for the long-term is going the way of AOL. Developing your personal brand and product, is now the new norm.

For baseball players, salaries and revenues exploded especially for those with exceptional or specialized talents. The new job market along with everything we buy or consume is quickly becoming on-demand and at the whim of buyer.

It will be interesting to see if salaries increase and how much movement occurs as the economy improves. I’m betting it will for workers who find their niche and realize their true value.

A Slow and Steady March Up

The latest Rasmussen Employment Index finds that only 26% of American workers now say their employers are laying people off. That’s the lowest number reporting layoffs since last November.

However last week’s ADP survey suggested that job weakness was still high and the Labor Department’s employment report indicated that more jobs were lost in September than in August.

I think it is safe to say that a V shaped recovery is out of the question. There is just not enough consumer strength or wealth to sustain a quick improvement in consumer expenditures. Until real wages grow faster than inflation, we will not see any major upticks in growth.

A slow, steady, but uneven march upward is the most likely scenario. Think 2% growth for next year. Not strong, but enough to keep us steady.

Postive Economic Signs Ahead

Looks like the economic turn has started. Here are a few signs that July may be the turning point.

First, owners of small businesses say they see signs of economic improvement. The Discover Small Business Watch, the card company's monthly survey, found that 30% of small businesses believe the economy is getting better, up from 26% a month earlier.

Second, the “clunker credit” has done more for auto sales than I think anyone expected. Who knew that the program would be this effective at wiping out excess auto inventories?

Third, while we are facing a jobless recovery, it looks like the continuing losses are beginning to ameliorate. More people are being recalled to work and we should start seeing lower new claims for unemployment in the next few weeks.

I’m guessing that we will see positive 3rd quarter economic growth. The clunker program virtually confirms positive news. It looks like we can mark July or August as the inflection point for recovery.

I do have a feeling that this will be one of the weakest recoveries in history. Employers will squeeze out significant productivity gains (read longer work hours) and try to hold down wages ( read continued losses in personal income) to bolster improved profits. The economy is about to grow, just a slower than we all would like.

Fall Is For Football And Growth

Last week’s jobs reports was a shocker to many. We lost more jobs in June than during any month in the previous two recessions. The size of the jobs loss was discouraging and more than anyone thought.

While it appears that we are starting to recover from a near financial collapse, we still have to dig ourselves out of a very deep hole. A lot of household wealth has been destroyed in the past year and most economists are forecasting another 1 to 2 million more job losses, about the size of the last two recessions.

Things are starting to improve and corporate earnings are beginning to improve. But it will be a few more months before we see the signs of good times and significant growth.

Hopeful Signs, Just Not At The Pump Or On Main Street

In case you haven’t notice, energy prices are up. Some of this is the result of a weaker dollar. But a lot of this is the result of an increase in consumption. Gasoline inventories are down and Saudi Arabia’s call for $70 to $75 dollar oil appears to be a target price for years, not just weeks or months.

While the weaker dollar impacts oil prices, it provides a positive outlook for exporters who should benefit from a lower dollar in the coming months.

Housing appears to be close to a bottom and hopefully the worst is over for a beaten industry. Consumers are still very cautious, they are not buying cars and savings continue to rise. Most of the latest surveys indicate that the consumer feels better about the future, but that may not translate into sales until later this fall.

On the downside, ADP reports that businesses with fewer than 500 employees dropped four times as many jobs as larger businesses did last month. With consumer spending down and continued tight credit, small businesses that might otherwise be growing are still having to cut back and cut staff.

It looks like the economy may not be in recovery mode yet, but the recession is definitely moderating. Employment growth will probably lag for most of this year particularly for small businesses. But the consumer should be back soon and that would be welcome news to everyone including those who own businesses on Main Street.

100 employers they swoon for on campus

According to a recent survey by the National Association of Colleges & Employers, college students would rather work at -- where else? -- Google than any other company. Disney and Apple placed second and third, just like last year. Meanwhile, though, federal agencies are rising in desirability. The Energy Department, not even on the radar last year, nailed 22nd place.

Here’s more at Business Week.

Is The Worst Behind Us?

A lot of economic news over the past couple of weeks indicates the worst is probably behind us. Computer orders are up, machinery orders have at least temporally rebounded and it appears that durable goods orders are beginning to improve.

Here’s one overlooked story that indicates things are definitely turning. Operating profits in nonfinancial corporations rose from 7.7 in the spring to 8.7 by the fall. Overall operating profits dropped 10.7%, but the vast majority of the decrease can be attributed to the $184 billion plunge in profits from financial services. While the financial sector has struggled, the remainder of the economy is ahead of the curve in managing their resources.

Most margin rebounds appear after a recession ends. We should all remember that a lot of enterprises are handling this difficult period in a very pro-active way and that the troubles of the financial sector are not representative of the entire economy.

If the troubles in the financial and auto sectors can be somewhat resolved in the next few weeks, the worst should be over. The performance of the stock market over the past couple of weeks is a reflection of this optimism and the growth in the money supply (up an astounding 22% over the past 6 months) will push the economy and the stock market into positive territory.

Spring brings renewal and it definitely appears that the economy is beginning to show signs of new life as well.

The Song Remains The Same

It now appears that two thirds of the stimulus bill will not impact the economy for two to three years. This is eerily reminiscent of Jimmy Carter’s stimulus bill. The maximum impact of Carter’s program hit three years into the administration. By that time, inflation and high interest rates were a larger concern than the unemployment rates that initially spurred the program.

Granted, a third of the current program will quickly aid the economy and we will begin to see growth later this year. Yes, the employment situation is dire and hopefully employment losses are at the bottom or very close to it. The real concern is what the impact of this spending will have on the economy in 12 to 18 months. Commodity prices went through the roof during most of 2009. CPG marketers looked for manufacturing and supply chain efficiencies to help combat the increases and we incurred significant amounts of package shrinkage (i.e. Shrinking the size of the package while maintaining prices).

Having a strong grasp of brand value, brand equity, and tying those values to pricing models will be absolutely critical for CPG marketers in the next few years. Increases in commodity prices will be back with a vengeance in a few years. Putting processes in place now to address these increases will pay huge dividends next year.

2009? It Could Be A Good One

Despite current wisdom, I remain quite bullish on 2009. I think we have hit bottom economically and the last half of the year will significantly improve. While all of the money pumped into the system will lead to inflation and higher prices down the road, there's no doubt that real economic activity will be stimulated and we will begin to see an improvement later this year. Economist Dr. Donald Ratajczak at Morgan Keegan points out that the Friedman hypothesis says that we should have a real response to all of the stimulus in about 6 to 9 months and an inflationary reaction in 18 to 25 months.

Job losses have peaked and we should see improvements in the employment numbers over the next few months. As this occurs, operating profits should begin to improve. Since most industries will be going against lower year to year numbers, the last half of 2009 looks like it will be positive.

So what does this mean to marketers? It means you have six months to prepare for what could be a profitable 2009. Ad and marketing budgets severely lag the economy (which is a post for another day), so back loading your budget for the last half of 2009 is probably a good idea. Granted, it is not uncommon for organizations to cut the budget at midyear. So, I would highly recommend that plans be locked in before mid year for a late year push.

Those who get their programs in place and budget effectively will have a great 2009. Those who don't will be playing catch up. By the time they do catch up, those ahead of the curve will be will on to the next problem: inflation and increasing consumer and producer prices.

Employment outlook positive? It is for small for business

New research from Entrex indicates that many small- and medium-size businesses expect to increase the size of their work force next year. Despite woeful economic conditions, midmarket companies are still looking to take on new staff.

Tom Kruczek, Executive Director of the Center for Entrepreneurship at the Crummer Graduate School of Business at Rollins College, offers this observation at his blog site:

As we watch the news or read the newspaper, we see examples of large corporations cutting back on everything from staffing, to marketing to R & D, which opens up opportunities for the entrepreneurial company. Now is truly a great time to launch a business.

When conventional wisdom turns completely negative, we are probably at the bottom. I would agree that now would be a good time to start a new business or as the study suggests, go to work for a small business.