Is the Idea of Full Employment Outdated?

When the U.S. unemployment rate hit 4.9 percent in January 2016 – some of the best numbers since the start of the Great Recession eight years ago – it seemed like great news. A new discussion began among economists and the media as to whether or not the U.S. could be getting closer to what is considered “full employment.”

What constitutes full employment is when the economy reaches a point where all eligible people are able to find work at prevailing wages, and coincides with a time when the number of job seekers nearly matches the number of job openings. This does not mean that the unemployment level does not reach 0 percent, but rather the total number of unemployed will range between 4 to 6 percent.

While some sectors are still recovering, technology and changes in the labor market and skills needed within those markets are experiencing significant changes. Some economists and human resource professionals are wondering if the idea of full employment is somehow obsolete or even a realistic expectation today.

Is Freelancing the Way Forward?

Human resource consultants around the country believe that the idea of full employment as it is currently defined just doesn’t fit today. Many companies are relying more on freelance or on-demand workers. Many workers today like the idea that in such a situation they have far more control over their work by not being held to a traditional employer / employee relationship.

According to Pamela Harding, SHRM-SCP, principal of PH Consulting, an HR consultancy located in Enumclaw, Washington, technology has been the driver for the evolution of how work is done today. “The workforce is no longer constrained to a geographical area,” she said. According to Harding, that while the so-called Millennial generation makes up a larger proportion of the workforce, there still is portion of the workforce that challenges in updating their skill sets so that they can meet the needs of today’s job market and companies seeking more advanced skills.

What has happened, according to Nicole Dessain, founder and chief strategist for consulting firm, Talent Imperative in Evanston, Illinois, is that the U.S. job market has reached, “…a tipping point in how we account for the total workforce due to the emergence of what I call ‘talent as a service.’ Companies are increasingly hiring just-in-time workers, and talent is marketing their services to multiple employers at once. This trend has highlighted that the current model of defining and calculating categories of employment needs an overhaul. Much remains to be done at the organizational as well as the legislative levels to keep up with a trend that will only grow.”

Should What Is Considered ‘Employment’ Be Redefined?

Part of the problem is how the United States Department of Labor defines what is considered employment. Today, it can encompass regular, full-time work, part-time and even temporary work. Because companies are reluctant to add permanent employees to their payroll and only need someone on a contingency basis, finding candidates with the requisite skills who can fit the growing demands of the job market as well as being available when, where and however long they are needed can be a challenge. Today, companies are finding that there is a real shortage of such people and finding the ones with both technical and professional skills necessary to fill the positions that they need filled.

In this constantly changing environment, Corinne Jones, president and senior HR consultant for CJC Human Resource Services based in New York City said, “Those that are out of work at the moment and actively seeking employment should spend their time gaining industry-specific certifications.” Unskilled labor will find it more difficult since many positions such as those in retail and hospitality settings are becoming more automated.

“The only way we are getting to a decreased state of unemployment is through professional development, “Jones said.

There is no doubt that the U.S. economy and employment itself is undergoing major changes. It can be difficult to know how to fill a company’s employment needs today due to such constant changes. That is why many companies choose NetPEO to help them with their human resource needs. At Net PEO we offer a complete range of services that include payroll, management of employee benefits and liability management for employers, brokerage services, and employee leasing.

Contact us today to discuss your company’s current needs so that you can focus on running your business. Call to schedule a free assessment today. Let NetPEO help you with all of your employee needs.