Analysis: November 2011 BLS Jobs Report

The US unemployment rate slightly ticked downwards to 9.0% (from 9.1%); more importantly, the broader underutilization rate decreased to 16.2% (from 16.5%).
• A net +80k jobs were created in October, slightly below consensus estimates of a 100k increase – not enough to offset the roughly 100k new workers entering the workforce each month; August and September payrolls were revised upwards by 102k jobs.
• The total number of unemployed workers held steady at 13.9M; long-term unemployed, those who have been out of work for 6+ months, decreased by 370k to 5.9M (42.4% of all unemployed).
• Average hourly earnings increased 0.2% to $23.19 (+1.8% on an annual basis…far below the US’ current inflation rate: 3.8%); the average workweek remain unchanged at 34.3 hours; both metrics remain suppressed by the ongoing slack in the labor market.

Modest gains throughout the private sector; storm clouds persist
• Professional and business services (+32k), leisure & hospitality (+22k) and health care (+12k) continued to trend upwards.
• As a potential harbinger of things to come: manufacturing (+5k) remained flat for the third straight month, signaling decreased demand; temporary help (+15k) also remains well below its previous highs.
• The retail sector increased (+18k) with the most gains coming within general merchandise stores (+10k); this sector has added 156k jobs in the past year.
• The public sector shed an additional 24k jobs with most losses coming at the state level; thankfully, losses within education were not as significant.

What’s in store? Key watch items…
Aside from the ongoing “As the Euro Zone Debt Crisis Turns” saga, several other items are worth monitoring:
On the bearish side:
• Penny wise, pound foolish? While systematic belt tightening in the US and Euro Zone is warranted to get these economies “fiscal houses in order”, the long-term impact of austerity efforts (particularly the scale and abruptness of the cuts) is cause for concern. Economists forecast austerity may shave a couple percentage points off of GDP annually. Furthermore, strict capital standards being imposed on banks (to help them weather potential shocks to the financial system) will decrease much needed credit to businesses and consumers.
• Still waiting for Godot (aka the US economic recovery). The Fed’s revised GDP figures – 2012 downgraded to 2.7% vs. previous estimates of 3.5% – highlight heightened concerns about the health of the US’ recovery (Note: GDP of 2% is needed to keep the unemployment rate steady); unemployment rates are expected to remain elevated at 8.7% vs. previous estimates of 7.8%.

On the bullish side:
• China’s soft landing. Although growth slowed during Q3 (to 9.1% vs. 9.5% in Q2), Beijing appears to have effectively engineered a soft landing for their overheating economy. Furthermore, Chinese housing prices (another key watch area) as well as other asset bubbles continue to moderate.
• US consumer sentiment. If we use household spending as a proxy for consumer sentiment, then US consumers may be feeling better about their financial situations. Increased consumer spending helped produce Q3 GDP of 2.5%, quelling fears of a double-dip recession. The downside: US’ savings rate decreased to 3.6%, marking a level not seen since 2007.

The carrot or the stick: how would you motivate employees?

Picture a company where every unit of output from the start to the end of your workday is measured, compared against your peers and publicized real-time via an electronic monitor for all to see. Furthermore, those who fall behind the pack are ostracized and run the risk of losing their jobs. For some, this kind of workplace setting is not too uncommon. For others, myself included, this kind of environment is hard to fathom and highly unsettling. (Note: I admit I may be in the minority here.)

I raise this issue as a result of reading LA Times reporter Steve Lopez’s article “Disneyland workers answer to 'electronic whip'". In it, Lopez recounts Disney’s very public productivity-spurring practice depicted above. While I’m not here to judge Disney for employing this management technique, it’s interesting to ponder what is the more effective way of motivating your employees - by the carrot or the stick.

While the answer will largely depend on your business and industry (TCR…typical consultant response), let’s say for argument sake that you are working for a global company that operates in the knowledge economy…where long-term success is contingent on your employees’ ability to harness their expertise and know-how. Conventional wisdom says managing via the stick might not be a very good idea as it could impede collaboration, strike fear in the heart of your organization and run counter-cultural and generational (for the younger generations in the workforce) for that matter. However, what if you were to assess and publicly track employees’ ability to share ideas and help colleagues solve problems…could that motivate employees and spur productivity? Taken in that vain, possibly. In fact, many companies practice some form of this albeit not as overtly. Disney may be onto something…