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Liquidity in Job Markets

For the past month or so, I have been  looking at job postings in my field of specialization – Geotechnical Engineering – across the US and Canada. During my searches, I noticed some general trends that the companies exhibit when it relates to the expectations and/or qualifications of the candidates they want. Most are what is to be anticipated for the corresponding position. But of all the different expectations listed, one particular aspect has many interesting collateral impacts for the overall job market. And that is the requirement of Experience.

2006-378p-skills-shortage

In general, I noticed the following breakup in the job postings (I do not have hard numbers, but a constant exposure to the postings will pretty much confirm this):

  • Senior Geotechnical Engineer (40% of available positions): 10-15+ years of experience.
  • Intermediate Geotechnical Engineer (30-35% of available positions): 5-10 years of experience.
  • Junior/Entry Level Geotechnical Engineer (25-30% of available positions): 0-3 years of experience.

At first glance, the above description appears to be rather innocuous. A direct correlation between seniority of position and expected level of experience from the candidate is fairly obvious and definitely warranted. But this does not provide the complete picture. What needs to be looked at is that about 70% of jobs in the market are only for candidates who have experience in the range of 5-15 years or more. So what does this imply?

First, we have to understand where the labor supply – all experience levels – comes from and where they are currently and where they will be in the future. In the field of Geotechnical Engineering, I can think of a few hundred people graduating with a Master’s degree every year in the US, and a Master’s degree is pretty much a requirement for a career in Geotechnical Engineering. So that means there is a constant supply of maybe 200-400 eligible candidates every year for the Junior/Entry Level positions. For the sake of discussion, let us assume that all these graduates get an entry level job. (From my own experiences in trying to hire entry level candidates for my company, I can say that the demand exceeds supply. So this assumption is valid). And let us also assume that most, if not all, of the demand for the entry level/junior Geotech positions is fulfilled. So far, so good.

But this is where the fun starts. Because you see, unlike the constant supply of eligible graduates for Junior/Entry level positions, there is absolutely no such supply for the Intermediate and Senior level positions. The people graduating from colleges are unemployed and actively looking for entry level jobs. Companies are also actively looking to fill their junior/entry level positions. So there is a constant match between demand and supply for the entry level jobs.

But there is no such connection available between eligible candidates and the Intermediate/Senior positions. The ‘eligible’ candidates for these positions are typically already employed and lack any incentives to change jobs. The lack of incentive only increases with a person’s experience. That is, the longer a person spends time in a city or a company, they are unlikely to move away from either or both. People develop professional connections, drop roots in a community, buy houses, start a family and get settled in one place as they progress in their career.

If anything, the factors listed above only contribute to a ‘cost’ for the person if they were to consider changing companies and/or cities. And any company looking to hire for an Intermediate/Senior position will have to ‘compensate’ for that cost in some visible form – higher salary, higher position, faster career growth, better living/working conditions, etc. And it is not sufficient for the company seeking to hire the candidate to be just ‘better’ than the candidate’s current employer. They will have to be ‘significantly better’ since they will have to provide additional compensation for the ‘cost’ the candidate has to pay to change jobs.

All this points to a job market where the entry level positions are continuously filled and the intermediate/senior level positions are hard to fill. Most of the intermediate/senior level jobs typically stay open for a long time (several months). Anyone can login to any job platform and see this for themselves. In spite of this, one cursory look at the tone and content of the job posting requirements for intermediate and senior level positions reveals such a sense of idealism on part of the company seeking the candidates. There are typically such a large number of specific requirements listed for a candidate in these positions, one has to wonder exactly how successful are these companies in hiring people for this level?

And that is not even a rhetorical question from my side. I am genuinely interested to know what the success rate is for companies seeking to hire intermediate and senior level positions in a specific high skilled profession. What percentage of these positions actually get filled? How long are they typically open for? Do the recruiters ever relax their requirements? Do they promote someone from within the organization and/or give them additional responsibilities? Are the recruiters even aware of the nature of the job market? What do they do when they absolutely need someone?

Or in other words, exactly how liquid is the job market at the intermediate and senior positions for high skilled professions? 

These questions take me to yet more interesting aspects/impacts on the overall job market. In an illiquid job market, what does job creation even mean? Exactly how valuable is experience for a given role? How would/should one define skills shortage? And how should this be addressed? What should be the role of immigrants in such a situation?

These are questions I seek to address in future posts. Stay tuned.

 

 

Everyone’s Tale of Acceptance

Sometimes things work out. Sometimes they don’t. Mostly they do. Or we just make it work.

We have all seen it. People living together and staying together. People moving to a new city and staying there for the rest of their lives. People sticking to one job or profession all their lives.

Because that’s what people do.

They stay.

Yes marriages and relationships fail. People move to different places and change jobs. But then that was never the argument. My argument is that if you stay long enough, you will stay for good.

As far reaching as my contention may appear, I wish to elaborate.

When two people get into a relationship, there is attraction at some level to start with. Always. Then comes the part about getting to know the other person. New things are discovered about the partner. Some are likable. Some, not so likable. Barring one or many shocking revelations, the relationship continues.

When someone moves to a new city, they move for reasons that span the entire spectrum: from an exciting new job to blindly following a sweet heart. It could be an opportunity or it could be a compromise. Take your pick. But irrespective, there is a period of getting to know the city – all it has to offer, what it lacks, the people, the places, the weather. And again, barring one or many shocks, they continue to live in the city.

When someone takes up a job, the reason is more likely just pure necessity. It gives money, it pays the bills, it gives peace of mind, and it helps you feel secure about the future. But then over time the rigors of a regular job are revealed. Some things are likable and some things are not. But yet again, barring a deep rooted hatred for the job or the boss, people continue to show up every single working day at the same place.

But why? Why don’t more people seek new relationships, new city experiences or new job challenges?

The answer is simple:

Because everyone’s ongoing predicament is not sufficiently bad.

That’s pretty much it.

Unless acted upon by sufficiently bad circumstances

A relationship need not be passionate or significantly compatible to work out for the long term. If the two people involved like each other to some minimum extent and don’t hate each other’s guts on a day to day basis, there is usually very little motivation to leave. They just learn to live with it.

A city need not be exactly what one is looking for. As long as there are things to keep people occupied, friends to hang out with, and some basic fulfillment of expectations, people will stay. The city may not have a vibrant social life but the light traffic and laid back lifestyle is perhaps a relief. Or put it the other way around, the traffic may be a pain, but there may be so many things to do and places to go to, that it makes everything else worth it. So unless there is something that is completely unacceptable or when even the most basic of expectations are not met, people will just stay.

A job need not be a dream job. The security the regular income provides goes a long way in making a job pretty darn comfortable. Not necessarily enjoyable, but very comfortable. The coworkers maybe a pain but the boss is good and there is some pride and recognition for the work. Or perhaps the work is monotonous and the boss is just barely manageable, but the work ultimately provides for the family and helps people stay close to their loved ones. So yet again, unless there is a complete breakdown in professional relationships or the hatred for the job is intense, people will just continue to stay.

There is an obvious and clear thread running through these situations. All of them involve spending significant time in a particular set of circumstances. Then follows the revelation and understanding of the good and the bad the situation has to offer. And then comes the part where people just get very comfortable wherever they are.

And then they just stay.

So ultimately, if under any set of circumstances involving a person, place or job, as long as you like the things that it has to offer and can put up with the things that it lacks or goes against your preference, and you spend sufficient time under those circumstances, you are likely to stay wherever you are. You will get comfortable too, and will even begin to feel lucky that you are able to experience all the good things that everything has to offer.

It is called a trade-off. And the longer you find the trade-off worth it, the more you are never likely to seek new challenges, experiences or relationships. It is the reason why arranged marriages work. It is the reason why people don’t move around as much. It is also the reason why the whole economy works like a clock.

People just get comfortable if things aren’t sufficiently bad. They ACCEPT, ADJUST and ADAPT.

There are a couple of lines in one of the songs in Steven Wilson’s new album. It goes thus:

Eliza dear, you know there is something I should say

I never really loved you but I’ll miss you anyway…..

The Watchmaker

It is really scary to contemplate the depths of the message in those two lines. Familiarity, comfort and security are not necessarily things to strive for. Sometimes they are just obstacles to a better life.

The grass maybe greener on the other side. But the pasture here is not bad enough to make people want to climb that hill and see what’s on the other side.

There is rarely any pride in inertia.

On Mitt Romney and the One Way Road of Entitlements

Everybody is now familiar with the leaked videotape of Mitt Romney’s comments on the 47% during a campaign fundraiser held in May. The American media has spared no time and left no holds barred in providing scathing criticisms of his comments and its implications. So much so, the real issue at hand is lost, or at best, obscured in a remote column somewhere. You will see a lot of judgment and opinion, but no inspection or meditation. The closest one does find to ‘inspection’ is the actual breakdown of the 47% who do not pay income taxes. But that is not the issue that should be the focus of Romney’s comments.

Mitt Romney

Before going to his actual comments, it would be prudent to put the whole comments into proper context. Everyone has seen the comments. But how many actually know what question Romney was trying to answer? His comments about the 47 percent were in response to this question:

Audience member: For the last three years, all everybody’s been told is, “Don’t worry, we’ll take care of you.” How are you going to do it, in two months before the elections, to convince everybody you’ve got to take care of yourself?

The inquiry is not only clear and specific, it is also very important. The audience member is worried, and presumably tired, of hearing the rhetoric emphasizing government dependency by President Obama in all his policies and speeches. And now he wants to know how Mitt Romney intends to convince the same set of people that the right thing to do is actually to assume responsibility for oneself and not depend on the government’s plans.

It is to this question that Mitt Romney responds with the now well publicized comments. I am only going to quote one small line that, perhaps, best serves as a platform for my arguments:

Romney: And so my job is not to worry about those people— I’ll never convince them that they should take personal responsibility and care for their lives.

There are two things to this. First, his comment about ‘my job is not to worry about these people…’ is only being said in context with who he can target for votes in the elections – NOT with regard to who he intends to care for when he is President. It is important to emphasize that this can only be seen within the proper context of the question asked. (And of course, the media won’t tell you that).

Second, when he says “I’ll never convince them that they should take personal responsibility and care for their lives”, he is making an extremely profound observation. Its spontaneity may have likely clouded the message. But that is not to imply that the message isn’t there.

Mitt Romney is not only talking about entitlement, but he is also pointing out what it does to a society in the long run. Subsidies, tax breaks, welfare schemes and food stamps are quick fire and sure shot processes to put money in the hands of the vast middle and lower class. There will be a lot of beneficiaries and a lot of happy people. Condition of life will generally improve and a lot of praise will be given to the President for having taken up this initiative. These welfare programs continue in their various forms, expanding the net to include more people all the time, while the federal debt and deficit continue to grow. A large number of people continue to extract the benefits year after year after year simply because they can.

But what this does over time is that it renders upon the beneficiaries a sense of entitlement –  an expectation that the government is going to support them no matter what. And this expectation takes form more out of habit, repetition and prior experience, rather than a genuine appreciation of one’s own situation. The longer these schemes run, the less the people are prone to be motivated to achieve something by themselves. Add high unemployment rate to this, and you have a society feeding off of government grants and subsidies.

And here is where comes in the idea of the one way road of entitlement. You see, welfare schemes can only be introduced or expanded. They can never be stopped, paused or downgraded. Firstly, it is going to be an extremely unpopular decision as all the beneficiaries treat those tax breaks or welfare schemes as a true entitlement. (They have simply been GETTING IT for so long). Secondly, as pointed out earlier, these people, who are now simply used to the idea of these handouts and feel that they are entitled to it, can never be convinced that handouts are not the way forward. And finally, within the workings of a democratic government, there is always going to be a party which will sing the rhetoric of populism and appeasement for votes, if the benefits are indeed stopped.

Put all these three together and the fact that every party in power wants to remain in power, and you will find that everyone is staring down the one way road of entitlement and deficit.

The current President’s idea is to continue this drive of government dependency of the middle class with tax breaks and welfare scheme expansions. Mitt Romney, on the other hand, recognizes the one way nature of the road and clearly intends to take a deviation. And within this context, his comments about “I’ll never convince them that they should take personal responsibility and care for their lives” ring true. For, you see, a large number of people now view these schemes as an entitlement that cannot be reversed. And there really is nothing anybody can tell them that will help them understand otherwise.

Now, the idea is to make sure that Obama does not get the chance to continue on that same road and allow more people to walk it. The solution is to create jobs for people to build their own lives upon – not to keep giving handouts to the vast majority and increase their dependence on the government. I am actually glad Mitt Romney made those comments (albeit not in an ‘elegant’ manner) that have now created a furor everywhere. It had to be said. Too bad he did not say it in one of his campaign speeches. THAT would have been something!