Unemployment hit 13 percent in Nevada in January, the second highest after September’s 13.3 percent. It’s not a good time to be an employee in the state of Nevada.
That said, it’s not such a great time to be an employer, either. Much of the focus of the collective public attention is on employees and the statistically significant number of people out of work or underemployed, but the recession affects employers as well as employees. Thirteen percent unemployment clearly means there’s a large pool of qualified applicants for every job.
What it doesn’t mean is that employers can take advantage of it by hiring overqualified applicants for underpaid positions. There’s very little hiring going on. Those businesses that can expand or at least replace lost positions can pick and choose, but most aren’t hiring at all.
“We’re seeing a lot of different things, but the No. 1 thing we’re seeing is fear,” said Tom Fitzgerald, CEO, Nevadaworks. “That’s for the individual and for the businesses and for business owners. So some businesses are able to tap into the highly qualified people currently available and get a bigger bang for the buck because maybe in the past they wouldn’t have been able to afford this talent. However, others are saying ‘I don’t want any more employees.’”
Bill Rosado, president, ManagedPay, expects more outsourcing rather than hiring – “Employers would rather pay for services as they go than keep an employee on staff, even if those minimum-wage employees used to free up the owner to run the business rather than deal with details.”
Some employers utilize temps in order to avoid paying overhead, benefits and the possibility of future unemployment claims. “We’re seeing some companies who need people with good skills and they’re realizing they’re in the buyer’s seat and they can offer lower salary, perhaps, maybe cut back on some benefits,” adds Rosado. “The other side is employers who have not changed their hiring policies, haven’t lowered salaries or cut benefits because when they have a need they still want the best employees.”
“This is anecdotal, because we don’t have information on specific companies, but we’re seeing that businesses right now can be very selective about how they hire,” said Jered McDonald, economist, Research and Analysis Bureau, Department of Employment, Training and Rehabilitation (DETR). “There’s very little hiring going on in Nevada with a lot of people out of work, so employers can pick and choose who they like.”
When it comes to making cuts in workers’ salaries or, worse, in staff, most employers are doing what they have to – not what they want to.
“Most employers are devastated to have to do that,” said Gary MacDonald, membership services, business development, Nevada Association of Employers (NAE). “They just don’t want to have to make those cuts, but the economic conditions have forced many to do so. Business owners want to keep the doors open and they want to keep the employees they can afford to keep working so they’re doing everything they can to stay in business. I can’t name a single employer who was happy to see this happen.”
“Employers are concerned on a number of different fronts,” said MacDonald. “They know they have to cut staff and good employers are concerned because when jobs start becoming available again, they want to have treated employees well so they don’t jump ship and go somewhere else. They want to take care of the employees they have, and they’re aware they’re asking more of them.”
It’s Still a Job
NAE works with employers, offering HR counseling, assistance with employment law matters and can guide employers through the intricacies of unemployment insurance paperwork. For employers whose employees file, the paperwork can be overwhelming. If the employee was highly paid, dealing with unemployment can cost an employer upwards of $10,000 per claim.
NAE works to help get claims dismissed when an employer challenges the claim. Because even at this economic point in time, MacDonald points out, some employees are terminated for cause, not laid off. “The economy doesn’t change all the dynamics of the workforce. There are still good employees and bad employees and those dynamics are always in play.”
Though the ball’s a bit more in the employer’s court. Just as during the dot-com explosion when employers were doing everything they could to keep people onboard, today the situation has reversed. MacDonald’s hearing industry talk that there’s no reason for employers to keep ‘C players’.
“From an employee standpoint, performance is everything,” said MacDonald. Employees want to keep their jobs. “From an employer standpoint, there are good people out there and employees know if they’re not an ‘A player’ someone probably has their sites on them. They’re probably being watched. Performance is everything right now.”
The Employee Side
If employers are across the board with responses to the recession, some cutting positions, some holding steady, a very few hiring, employees are equally scattered. Many employers are operating out of fear, and so are many workers.
“We’re seeing individuals with a range of behaviors,” said Fitzgerald. “Some people are desperate and willing to take the stereotypical Wal-Mart greeter job; they’ll go for that to keep themselves going. Others are saying ‘I used to make $50,000 a year and I’m not going to work for less than that,’ then finding out that job doesn’t exist anymore or now it pays $38,000 a year, so is it realistic to say ‘I’m not taking lower pay’?”
Fitzgerald’s also seeing people who, tired of searching for employment and able to get by during the two years of state and federal unemployment benefits, aren’t looking until they panic as their benefits run out.
Some businesses that downsized find it hard to get everything done with a smaller staff. Others find the leaner profile suits them. Which means when things do start to turn around for employers in Nevada, they may not start to turn around for employees simultaneously.
“Employers are going to be slow to replace positions they’ve eliminated,” said MacDonald. “They want to make sure the economy is indeed going forward and want to make sure there is enough business before they hire those positions back again or expand the workforce. From an employee standpoint, that’s a difficult thing to look at. There may not be as many jobs when the recovery does come.”
And when will that recovery come? According to DETR, it’ll be a while before things improve significantly. “We’re hitting bottom now and things are going to remain pretty bad at least through the next year or two,” said McDonald. “We [DETR] expect to see some employment growth in 2012.”
According to Nevadaworks’ research, the flat rate of Nevada employment will continue through 2010. “I use the word ‘hopefully’ we’ll be coming out of it early next year,” Fitzgerald says. And Nevada is gearing up for a jobless recovery.
“Employers who cut back 20, 30, 40 percent six months ago, painfully reduced and operated their businesses are now leaner and as the economy turns around business owners and employers aren’t going to want to gear up again because first, they don’t want to be in the same position and second, they’ve been forced of find more efficient ways to work than they did back in the day when money wasn’t a concern. They’re less likely to hire again, so even though there’s a quality workforce out there, even as the recession turns around there may not be the same opportunities for these people,” said Rosado.
“People have been scared for so long and this [recession] has lasted so long that companies tend to focus on ‘Do I really need this person? Is this recovery staying so that I can keep this person?’ And that’s why they’re going to temp services,” said Fitzgerald.
When is a Job Not a Job?
It’s not just temp services. Some employers, who don’t want to be employers, are turning employees into independent contractors. Rather than hiring, they’ll contract services and avoid paying benefits, federal employment taxes or unemployment. That may be great for the business, but what about the sudden independent contractor?
“Some people are quite excited and others are scared to death,” said Fitzgerald. “Some have become so fixated on healthcare they will keep jobs because of benefits, not because they like it or because of salary.”
Individuals with an entrepreneurial spirit love it. They can work from home, set their own hours and be responsible for everything they do. Others are petrified. “They want a traditional nine-to-five job, tell me what to do and I’ll do it and you give my paycheck,” said Fitzgerald. They’re massively uncomfortable with too much freedom and not enough guarantee.
Not every state has been hit the same, with the same industries facing the same job losses. Texas, for example, has continued a fairly robust construction trade even after Nevada construction unemployment rose to 70 percent in May 2009. So it only makes sense for some workers to go where the jobs are.
“We are losing some workforce to other states, and it’s showing up in the unemployment numbers,” said McDonald. “Labor force dropped in November and December, so either folks were too discouraged to look for work or they’re leaving the state and seeking work elsewhere.”
Nevadaworks tracks workers who have gone through training and more often now they’re finding contact numbers and addresses have changed abruptly with no forwarding address. Combined with the vacancy rates for apartments and houses, the supposition is they’ve moved out of state.
But once the recession dries out and the jobless recovery sets in, is Nevada poised for problems with missing personnel? Not really. The only two industries truly down in workers are healthcare, which sorely needed nurses even before the recession hit, and education, which in light of proposed budget cuts, doesn’t look good for hiring.
MacDonald hasn’t seen workers leaving Nevada in significant numbers, but says it would be logical for workers with specific skills to look for employment in another state if the field or industry shut down in Nevada.
“The construction industry comes to mind, where if you’re a roofer or a framer or an electrician and those jobs just aren’t there, I can see where people would pick up and move,” said MacDonald. “I’ll say this, though – I’ve lived here 35 years and the things that drew me to this area are still here. It’s a wonderful place to live, the scenery, the mountains and the location. Everything that drew me here is still here. I love the people and I love this place. Eventually that will win out and eventually this Northern Nevada market will grow again. I look forward to seeing more smiles and brighter days ahead. It’s been very painful to watch, but in the end, it will all work out.”
Part of helping it work out is working to fix what’s broken. Fear is still driving the recession and word of mouth can help correct it. Instead of panicking at 13 percent unemployment, consider the 87 percent employment, suggests Fitzgerald, then talk up the state to friends, relatives and peers in professional organizations. “Share with them the great things going on in Northern Nevada,” said Fitzgerald. “Invite them to come visit us and see where we are today.”
Considering that not every lost job is ever going to be found as leaner, more efficient businesses move into their future, that future isn’t so gloomy. New jobs will be created. Workers will learn new skills. The pendulum will swing back toward a less bloated job market where businesses choose maybe to work longer hours during temporary busy times rather than hiring additional staff. It may not be as affluent a picture but it’s not hopeless, either.
“At the end of the day? Things are going to be OK,” Rosado said. “We’ll get through this. There are a lot of opportunities out there. These are unpredictable times but we’re human beings. Mostly we succeed. We’ll all survive and move on. It’s going to be a better world for it.”