Ready for the unexpected? In these economic times, maybe it’s better to be a fox than a hedgehog.
Right now there’s a lot of talk about extremes—standing on the left or the right in the political arena, or volatile movements when we look at the global markets, oil prices, corporate profits, etc. Through all of this, the job market represents one major indicator that appears to be staying somewhat closer to the center.
While we continue to see job losses each month, they remain below the 100,000 mark, which could indicate stability and resilience in the labor market. When you consider that the U.S. employs almost 140 million workers, 100,000 jobs is a very small portion of a much bigger market.
August’s jobs report shows that on-the-job productivity is on the rise, despite labor costs decreasing. This trend indicates that employers could be doing more with less. However, employers need to closely monitor this to ensure that running a lean and efficient business model is not compromising their ability to retain talent in the long run. Being highly productive is important, but ensuring your staff isn’t overworked and overstressed could be equally important and something employers should keep a close eye on.
We see employers being more creative than ever before in how they secure the talent and workforce solutions they need to be successful. This includes more local talent scouting efforts instead of opting for relocation in a very challenging housing market; recruiting displaced workers from a wider variety of industries and focusing on transferable skills as employers make new hires; and turning to contingent labor as they look to increase flexibility and variability when it comes to their talent pool.
As in previous months, the public sector employment climate continues to be better than the private sector, while unemployment versus three-month, nonfarm job creation appears to have some correlation.
All these observations, data, and analyses can easily lead us to conclude that the nature of what we’re seeing in the economy is historical, cyclical and, at some point, will recover to previous historic levels. But what if it doesn’t? A one-sided bet—predicting economic and job markets recover because they have done so in the past—is rooted in data and confirmation bias. People who fall into confirmation bias are unable to see the other side of possibilities, which in reality are no less probable even though we are unable to imagine them or consider them because our mind blocks them out.
Questioning economist consensus could constitute economic heresy, or sounds a lot like the Black Swan possibility Nassim Nicholas Taleb writes about in his book titled, “Black Swan: The Impact of the Highly Improbable.” I am concerned that no one is considering what is just as likely to happen—the economy and job markets will not be the same. People are seemingly ignoring warning signs pointing to a more productive economy that would rather be smaller yet denser, more discriminating yet rewarding, more taxing yet enriching, more global yet beneficial to local communities. What if the economy and job markets do not return to historical trends?
Major social and economic changes in our history were not gradual, they were sudden, and in retrospect one could likely point to the instance of their occurrence. Stock market crashes, world wars, terrorist attacks, and even society-changing inventions like penicillin happened completely by accident. When it comes to how we forecast future events, we can be categorized based on Philip Tetlock’s definition of foxes or hedgehogs—the theory being that foxes understand that they don’t know the answers and are open to the existence of Black Swans, so consequently they incorporate information that a hedgehog might throw away.
The idea of the fox and the hedgehog is highly applicable to job seekers and employers. Both constituencies must consider the possibility that the economy and job markets might not return to historic levels. If companies are really able to be more productive with fewer resources, what skills are going to be in demand? And if you’re in HR and your CEO asks you to help the organization become more productive with fewer resources, how will you adjust your recruitment strategy to ensure you have appropriate talent?
Being a fox is not nearly as popular as being a hedgehog, but it will enable you to be better prepared regardless of whether the economy and job markets begin to trend back to historic levels or if they begin to develop a new trend.