Start Staffing Smarter

Start Staffing Smarter

Join Senior Labor Economist and Vice President of Staffing Strategy Ron Hetrick as he walks you through a vital piece of your sales stack that will optimize your sales and recruiting strategies. Ron will cover how to be more consultative with your clients using unbiased data points and trends. This is an exclusive opportunity to learn from Ron whose 30 years of staffing experience inspired SmartReq.

Transcript:

Justin Calvin - Alrighty. Hello. Welcome. Hopefully you can all hear me okay. Welcome to our staffing webinar. We're gonna wait maybe 60 to 90 seconds for people to trickle in. While people trickle in a fun slash not so fun fact is Ron is in Jacksonville, Florida right now, I'm in Moscow, Idaho. There's a 90 degree difference in temperature.

It's zero here and almost 90 there. And I'm pretty mad about it.  Hopefully it's warmer than zero where you guys are at. For those just now jumping in, we're gonna give people about 30 seconds more to join. Super glad you guys could make it.

Welcome, welcome. More trickling in. 

Glad you guys were able to make it. 

Looks like it's a one minute pass, so we can go ahead and jump in. Super glad you all were able to make it. 

My name is Justin Calvin, one of our account executives here. Been here for about four years on our staffing vertical, so I work with lots of our staffing customers and prospects.

Super glad you were able to join. Today we're going to be talking about how to staff smarter, going through lots of staffing workflows, specifically around how staffing companies can use data to do various things like maximize bill rates, have better conversations with prospects and clients, decrease time to fill, things like that and more.

A couple quick housekeeping items. The recording will be sent out your way within about 24 hours of this webinar, so be on the lookout for that. As you have questions, feel free to throw those into the chat feature, the question box. We're gonna leave at least five, 10, 15 minutes for questions at the very end.

So throw those questions in as you have them. Or feel free to reach out to your Lightcast account manager or your Lightcast account executive. If you'd prefer, speak with them directly with any questions you have. They'd be happy to showcase and share how this directly applies to your work. Feel free to do that as well.

That's probably about enough. I'm joined here with Ron Hetrick, one of my colleagues here. I’m super excited to introduce him. He's our VP of staffing strategy and one of our senior labor economists. He's gonna be presenting today's content, so it's gonna be great. Ron over to you to introduce yourself and take us through it.

Ron Hetrick - Thank you Justin, and thank you all for showing up. I know that things like this are interruptions into your normal day, maybe around lunchtime where you're at, and hopefully what I share today adds to your enjoyment of it versus… These can be pretty tough conversations. We're gonna actually be covering a couple different things and for anybody who's followed me on LinkedIn or has never seen me speak before, or you have seen me speak before, you know that I am all about what's been happening with the labor economy and the shortage of people.

Today we're gonna be discussing a series of things around this. So we're gonna, I'm gonna start with a state of staffing. So when we're talking about things like staffing, whether you're in a staffing company, if you're not in a staffing company, it's all about what's happening right now.

And I know there's a lot of curiosity. There's a lot of people who are concerned. There's a lot of things that are going around. A lot of uncertainty out there. I'm gonna talk a little bit about what I'm seeing and maybe that'll help you or maybe it will concern you, but hopefully it'll get a good foundation.

Later on we're gonna see why that foundation is so important anytime we're talking about data. The second thing I'm gonna be talking about is just why you need to be smart at staffing. The value that you bring to people. I'm gonna explain why it's just so important that you can't be ignorant about what's happening, especially in the labor market.

The next thing we're gonna do is we're gonna talk about keys to analyzing data. And this is, these are things, literally, tricks or things that I've learned over the years about how I approach data. And I think tricks may not be a great word. I think the right word is more of, there are things that you need to know, when you go to look at data, that you have to start to apply lenses to.

The next thing we're gonna talk about is, what is your message? What is it that you're taking to people, and what is that gonna look like, and how are you gonna interpret data? And then lastly, I'm gonna talk about the sources. So obviously today I'm gonna be sharing a tool that we designed here, but I'm also gonna tell you about some other sources that I use regularly and show you why and how those things fit into everything. With that in mind, if you've seen me speak before, you're gonna recognize some slides here coming up, because I cannot do anything without talking about the state of the state, what's going on. This is what I endlessly have to talk about with the press or put on LinkedIn.

But this is basically just a minimum foundation that we absolutely have to understand. Every single thing that we do right now, everything that we're looking at, we have to do thinking about this one simple thing, and that is: our unemployment rate, meaning the number of people as a percentage of the population who are actively looking for work, is as a percentage, the lowest that it's ever been in history.

Now, outside of wartime, it was actually lower during the Korean War, but we don't count that because you're actually taking a lot of your prime-age population and putting them on the sidelines. That is the first thing we have to establish. In labor economics, we talk about things being loose or tight. This is what we would call a really astronomically tight labor market. 

There are not a lot of people looking for jobs. In fact, when we try to figure out why this is happening, it's because so many people have dropped out of the labor force. In fact, it's been about five million people in addition to what we had prior to the pandemic. So right before the pandemic, we had about 95 million people out of the labor force. Now we have a 100 million, that's five million more people who say, I am not looking to work. I don't wanna work and I'm out of this. I don't wanna, I don't wanna be in this right now.

And if we look here, you can see that the vast majority of people who say, I don't want wanna work anymore are people over the age of 55. The concern here is that they're not coming back. There was some belief that maybe people retired early and they would be coming back, but we are now well into this several years and the labor force participation rate for people above the age of 55 is not recovering. It is, they are not coming back. 

So we have this huge gap of people. We have a very low unemployment rate and the population that we really would like to see helping us with our labor tightness is not coming back to work. So what we've had, and you've probably all been experiencing this, we've had this unbelievable increase in job openings.

Prior to the pandemic we had seven million job openings, which was fairly ludicrous at the time. And now, as of last month in December, we were doing about 11 million. People keep waiting for this number to come plummeting down. And instead of coming down, it keeps edging upward.

So, yet another concern when you're getting all of these conflicting things out there about, hey, things are softening up and I'm gonna actually show you some data points later coming from our SmartReq tool that you're gonna go, this just doesn't seem to make a whole lot of sense, but you just have to understand, we are just dealing with such a crisis of a lack of people.

And then we, where a lot of this is coming from as well, we just don't have a lot of 16 to 19 year olds who are in the labor force. There is a very large population of 16 to 19 year olds. But it's actually a smaller population than we had in 1972. We are adding very few in any given year and in every year, kind of going forward for the next 15 years, on average, we're gonna have 180,000 more people hitting the age of 65 dropping out of the labor force around that time, than people hitting the age of 16 and being eligible to enter the labor force. So this is going to be a perpetually evolving situation that will get much, much, much worse over the next 10 to 15 years.

Anything that we're feeling now, and I think we're feeling a bit more acutely now, you have to understand we'll get much, much, much worse as we approach 2030. So the concept of labor shortages will basically be with us for a long time. When you look at the Bureau of Labor Statistics’ projections over the next 10 years, they were saying that the biggest growth in our labor force was going to come from people over the age of 65.

So they were saying, look if we grow our labor force, if we're going to get any help, it's gonna be in people over the age of 65. But the problem is the average person right now is retiring at the age of 61. So once again, this constant collision of how are we gonna grow if where we thought we were gonna get growth from, these people keep retiring? And if you read Demographic Drought, or if you see me speak, I talk a lot about the wealth effect and why people are retiring when they do, and the fact that they probably will not come back. 

So the last thing we're gonna hit on here is the labor force participation rate is not projected to increase, it's actually projected to continue to go down till 2030. So once again, all of these kinds of things in combination. We just have way fewer younger people, but it's not even that anymore. It will literally be that more and more people will just opt to not work at all. You're gonna continue to see these things evolving.

So the big conclusion that we wanna come out of this with, the reason why I start this whole conversation with this is, we keep talking about a recession. And I've been telling the press since last summer, you wish, you are begging for it, you need one. And people think, that's such an odd thing to say, like who would say that you should be begging for a recession?

But historically speaking, a recession meant that we could lay off workers and then companies who so desperately need them can go get them. But in this particular case, it's just not materializing like people had hoped for. Certainly not how Chairman Powell hoped for when he started raising the interest rate.

It's just not having the impact anymore, and the reason why it doesn't have the impact is we never could fill the job openings that we had when we were trying to expand. So now that things are softening a little bit, people don't really have a whole lot of people to lay off. We had 12 million job openings, but during that peak, we only hired about a million people, so a lot of jobs just never got filled. 

Therefore, we just don't have any slack out there for people to get rid of. So you, if you're in the staffing industry, you are in the driver's seat. So those things may change week to week. It may get a little easier for you. It may get a little harder for you in some markets over certain times, but you have to understand, you are in the driver's seat for the next 10 to 15 years because your supply, which is labor, is so scarce, and the demand will continue to be very, very high.

So, why do we need to know this? Why does this all matter? We just did an informal poll before we built this deck and started to put this thing together. And we asked people, what's the most the most important aspect of a successful staffing strategy? And we had people say, maximizing bill rates. And then there's a huge percentage of people that said, you want a great client relationship. And then the last one is decreasing time to fill. 

And this is all actually can all be one thing. They're not mutually exclusive. Because you as a staffing company are dealing with a scarce resource, and you wanna make sure that you price that resource appropriately because you may never get to place them again. If you place someone, they could go perm, they could disappear. And so you're gonna have to get this right. And also making sure you get that person in the right company means that they would want to take them perm, that they're happy with who they receive.

And if they do hire them, then they're also gonna be happy that you were able to fill that job. So all of these things come together. So what's important here is you need to have the right data, not just your anecdotes, not just a “man, It's tough out there,” or “I'm having problems finding people.” You're gonna need to have information so that if you wanna be a great partner, if you wanna set the right price, if you wanna fill in time, you have to just make sure that you have the right information or you're gonna misread the market. 

So basically having data, and I'm obviously really biased around this because I've spent my whole life looking at data, and I would just say what I've learned is this: an educated person, a truly educated person, gains the trust of people around them. Who doesn't gain the trust are people who say things and they have nothing to back it up. And I think we've all learned that over the past couple years. We're learning who we can trust and who we cannot trust.

The people that we trust, we go, “Hey, you have really good data to back up what you're saying. It looks like it's been verified. It looks like it's been validated. It's what I'm feeling. So I agree with where you're coming from.” You earn trust and by being educated when you're staffing, you earn the trust of hiring managers because you're telling them, “Look, I wanna be honest with you. This is what I'm seeing in the market right now. And I'm up against a lot of other companies and they're paying really well and you are not paying well, and I'm gonna show you this data.” 

So now you’ve gained their trust. A lot of times what hiring managers want, is they want to be able to go back to their organizations and say, “Look, I know that we haven't really looked at this in detail, but I was just given this information to show that we are really falling behind on our pay rates. It may explain why people have been quitting. It may explain why we've been seeing the candidates so far below the par of what we would normally expect to see.” 

So, now they're empowered, so you've got their trust. They now take that information and they make their business cases inside to come back and say, you know what? I think I can do a higher pay rate than what we were thinking here. Didn't realize we had fallen so far behind. 

The third aspect is when you know something, when you're knowledgeable about something and everybody on this call has something that they're really good at. Whether it's something related to your job, something you do as a hobby. When you really know what you're talking about, you're utterly convinced and when you're convinced in your soul, when you're convinced in your heart about something, your strength in negotiations, your persuasiveness goes up dramatically. When you really know what you're doing, when you're standing on one leg and anybody can come up and just press on you and tip you over, you do not have that strength of conviction. And you're negotiating power goes way down, and you yourself start second guessing everything, and you start to get embarrassed, like what if I'm wrong? 

And all of that comes from being not convinced, not having done the legwork that you needed to do to withstand any counter punches that are thrown at you. I don't know if I believe this. I knew you'd say that. So let me show you how this has been evolving. Those kinds of things matter.

And then the last part of this is, when you're convinced of something and you negotiate in that spirit, then you have helped to shape a job order, a req that you can actually fill because you didn't sit there guessing at things. You didn't take a stab at the pay rate, and then you go out and start calling people and they're laughing at you, going that pay rate? Yeah, I would've accepted that two years ago, I'm certainly not accepting that now. 

Those are the kind of things that help you to say, I'm gonna help, I'm gonna fill this a lot quicker because I set up the proper expectations from day one. The person that I was working with, the hiring manager, knew that it was gonna cost them this much. They knew they couldn't ask for all kinds of skill sets that barely anybody has because I educated them. Therefore, they gave me a job order that I can fill and then I can go out to the market and do that. So if you saw me at Staffing World, or if you've seen me give this presentation before, a different presentation on the Five Cs of Data Presentation.

So these are things that I always tell people, you need to know these kinds of things when you present data to people. And I'm not gonna go into these today, I'm just gonna quickly recap. That data, when you hand it over to someone, I don't care what your job is, where you're coming from on this call… When you give somebody data or when you're receiving data, there are things that you know you like.

Number one, the data points can't be really odd. They can't just be like some kind of odd, statistical formula thing that you can't even explain. You need to know that data, what that data point actually represents. 

Concise means that you're not seeing a billion tons of data. I see this a lot. There are companies out there that do consulting work sometimes and they feel like they need to just bludgeon you with data. Like its data, data, data. And people think I'm helping them because I'm giving them a thousand data points. But the reality is, maybe you only needed two data points to make the decision. In order to keep the attention of the people that you speak to, you gotta keep it simple and focus on the very things that are gonna matter to them in that moment.

Contextual and comparative are almost related. One is, a context is saying, if I put this into a historical trend, is where we are at right now, is that a good thing or a bad thing? I'm gonna show you this in a second. Why it's amazing how this can jump out at you.

Comparative means, if I compare this to like market to market, or country to country, is this, our country's doing this. Our country right now has a 3.4% unemployment rate. How does that compare to Japan? Japan's like a 2% unemployment rate, all of a sudden you now understand things about the US and Japan, like just giving you comparative numbers can help you so much in going, I get it now. It's making more sense to me. 

The last of the Cs that I presented the original time was compassionate, and that is, you can't use data with the intent of manipulating people. You've seen that happen like crazy the past several years and it destroys trust. People can see right through it. Data analysis has to come from a place of compassion. It has to come from, I'm trying to answer your question. You may not like the answer, but I'm trying to do what's best here. I'm trying to show you data that's going to help us all out in solving the problem. 

And then I added for this presentation today that sixth C, which is what I've already talked about, and that's the conviction. To do something with compassion, you can't really be compassionate, not having been convicted. Not having endlessly pursued the right data points in order to help somebody out, that just doesn't work. The two have to be going together. 

So now I'm gonna tell you just some tricks really quickly about how we wanna look at data. So these are just things that I've learned over the past 30 years analyzing economic data of all kinds and writing articles and doing all this stuff. These are things that I'm gonna tell you really need to take into consideration. I'm gonna show you examples. 

One is scale. Always look to see the scale of a graph that you're looking at. The second one is a trend, and that is, an observation does not a trend make. So when we're looking at monthly data, the typical rule is around three months of consistent change is a trend. If you're dealing with quarterly data, like when people are determining if there's a recession, they look for two quarters. And if the two quarters are moving the same direction, they'll call that a trend. But a trend is not one month, so never get bent outta shape about that. 

The third part is zooming out, which is, giving yourself enough historical perspective. I was talking about this with context. Give yourself enough historical perspective to see if what you're seeing right now actually matters.

The fourth thing is outliers, and that is when you're presenting data, do not be afraid of removing crazy things that happened in the data so that you can see it more clearly. I'm gonna show you an example. Then the last thing I'm gonna mention today is seasonality, because this is gonna be really critical later on when I show you some screenshots, and I jump into the SmartReq tool to show you some things just move in a seasonal pattern. So I'm gonna use this one example for the first three: scale, trend, and zoom out. We're gonna use the same data point, which is new orders for non-defense capital goods, excluding aircraft.

And if you're very confused by what I just said, just know that these are manufacturers' new orders, but we've removed these really large items that can cause the numbers to go crazy, like buying a bunch of planes. We're taking those things out so that we can more easily see the trend line. So if we look at this, because a lot of people are saying, if a recession comes, it's going to come because of this. We're going to see a significant drop off in manufacturing activity and manufacturing new orders. We're gonna see a big drop off.

Now, if we look at the past couple months, we can see that this is going down. But let's talk about scale first. So we've gone down a bit, and if you look at this graph, you go, this looks like it's come down a bit, but if you look at the scale on the left side, we're talking about millions of dollars and we went from $75 million to basically, about $75 million. So 75.4 to 74.8, which is only a 0.6% difference. So this scale, even though I blew it way up, and it looks like something dramatic, it's not dramatic. It's barely moved at all. 

The second thing is we were talking about trends. We now have a three month trend where new orders for these non-defense capital goods have gone down. So it looks like we have a trend. People are starting to talk about this. We have a trend here. We are seeing new orders go down. Man, is this it? Is this our sign that we've been waiting for? Are we going into recession?

Let's use the third trick here and let's zoom out because if you look at my screen here, I'm showing you from July of ‘22, basically to December of ‘22. Let's put this in historical perspective. Okay, so if you look on the right side, that's where we are. That's what I just showed you right here is on the right side of the screen.

So if we go back through all of the history that we can gather on this back to 2000, and we look at new orders for manufacturing, we can see that we are still up in record territory and that we've barely moved in that record territory. In fact, if you go back through history, dramatic movements downward occur all the time, but they're not occurring now.

We're only getting a very, very subtle movement. So you can see that we've had this enormous run-up thanks in part somewhat to inflation, but also just huge demand that we've been seeing, and it's really not coming down yet. So if we're sitting here saying, we feel like a recession is imminent, we would've seen this number start to make a really dramatic turn, and we're just not getting that yet.

So the second part of what I was, this is actually the fourth point, was outliers. So we know that during Covid a lot of crazy things happened. So I'm gonna use unemployment claims. Now if you look at the left side, this is the graph of unemployment claims, the number of people who went and filed to collect unemployment.

And so basically, due to the pandemic measures, everyone was almost forced to collect unemployment. So you get this enormous spike and then we slowly work our way back. Now, what's happened is that this spike has distorted my scale so badly that I can't really see what the trend is anymore.

So what I did is I smoothed that on the right side. I just took it and applied a very small kind of historical trend, and I just bridged the two points together so that I could see what was happening. And when we do this, you can see that on the left, literally it's the same, it's the same group of numbers.

Okay? It's still 2012 to 2023. Okay. But now when you go to the right side, you can see that unemployment claims had been going down that entire time, from 2012 to 2020. They were going down this entire time. We then have this spike and then we resume, we pick up where we left off, and we can see that they've actually dipped down even more. Very lately, they've come up a little bit, but historically speaking, we are dealing with almost record low unemployment claims. But that would've been very hard to see on that left side, because that spike ruins everything. So don't be afraid to remove spikes when you're looking at data or just try to figure out how you can do things, but get people to focus on what you need them to focus on.

So the last thing I want to talk about with this before I jump into the other part is seasonality. Now here is something out of SmartReq. There's a screenshot out of SmartReq, which is a tool I’ll show in a second, but this is talking about electricians. So these are job postings for electricians in Chicago, and we can see that in the past two months, we've seen a pretty big decline in the number of postings for electricians.

So is that a big drop? Should we be concerned? Are people all of a sudden saying, you know what, I bet you everything's weakening now. We're not hiring nearly as many electricians. We're clearly getting the signs that this is on a downward trend. And then we can go back and say, let's look at this, but let's look at it seasonally.

So, let's look at what happens in January every year. So using that same graph here, I just put arrows in to show you, this is the same months that we're looking at now, and this is what has happened the past couple years. Electricians are construction related. This is Chicago. They have winter time. You don't build in the winter.

It's natural for things to go down in winter when they're in seasonally affected industries. So if we actually look at January of this year, in January of ‘23 versus January of ‘22, we actually are up 40% with the number of postings. So not only is this decline, nothing to worry about, it's actually showing us that we're doing pretty good versus last year at this time.

So we don't wanna be concerned about this downward movement because it's just a seasonal movement. This happens every year. It's very tricky sometimes when you look at data to understand that you need to stop and go whoa, wait a minute. Can this be explained by just the time of the year that this is?

And so I'm gonna show you these are the things that typically are affected. And when you're analyzing data, when you're analyzing industries, thinking about the staffing industry that you're in, thinking about the segments you serve, you know that you feel these seasonal movements, you know that there are times you get more orders.

But these are all industries that are affected, or occupations that are affected by seasonality. Those would be ones that employ a lot of teenagers, because teenagers become free in the summer and then they go back to school in the fall. If they are affected by the season. So if you are in the north and you are in construction, you're gonna be affected by the season. If you are in the south, construction is not affected by season. It doesn't change. It just keeps going. So you have to even think about where you're located. Is this an industry affected by holidays? When it comes time for Christmas and everybody starts building up and putting things in the warehouses, those industries are affected by holidays. So you're gonna get a runup every year in October and then it's gonna start to cool off over the months that follow right after the holidays. 

Then lastly, are they impacted by a specific event? So these would be accounting firms during tax season when they have to hire a bunch of people to process taxes, or when the government collects census data, they hire about 80,000 people to collect census data. So you get these massive spikes because of a special event, and then once that event ends, those people go back about their life again. We don't want those things to ruin our perspective of what's going on. We also don't wanna make a big deal out of things that are just nothing more than a specific event or some kind of seasonal factor.

So this takes us to what our message is. So I'm gonna go back and I'm gonna remind you, we are in a historically tight labor market, okay? So we have to always think, let me think of this. Anytime I look at data, I wanna make sure that I never lose sight of the fact that there are not a whole lot of people out there looking for work. Even now as we've been getting a lot of people saying a lot of negative things in the press.

Now the next thing is, I'm gonna take you back to your economics classes, unless you didn't take them. In which case, I'm gonna give you the five second crash course. There are two things that you have to know. This is simple economics. And that is wages, or price, is a product of supply and demand. So the greater the supply, the lower the demand. The greater the supply with lower demand, you're not gonna be able to get a really good wage. But if you have a lot of demand and there's not a lot of supply, you're going to be able to get a better wage.

And then the second part you have to know, this is another basic economic principle, wages are almost always sticky. So it's very rare that a wage will go up and then come back down. Historically, when you study it, wages tend to go up and then they stay there. After we saw a lot of the ballooning wages in the Y2K explosion in IT, a lot of those wages stayed. Very few of them went back, maybe those true outliers went away, but wages tend to hold onto their gains pretty well. We just experienced a lot of that in the sub $20 an hour category. So we were seeing things like McDonald's and Amazon paying $18, $20 an hour. They are not all the sudden retreating back to $12. They're holding those things. They may back off a little bit, but once again, there's not a whole lot of people out there. So wages are being sticky right now. 

So with that in mind, I'm gonna show you a screenshot. I'm actually gonna then take you into the tool. These are actual screenshots out of SmartReq, which I'm gonna show you in a second.

In SmartReq, what we've done is we've built a really simple interface to just choose any occupation, in any market and get an instant view of supply, demand, and price. So in this case, I'm taking laborers in Los Angeles. The way SmartReq works, which you'll see in a second, is that we start with an overall look of things. So nationally, how hard is it to find laborers, to find just a general laborer. And we see that it's actually in the top half of the hardest occupations to fill at a national level. This is crazy to even be thinking this because in the past, these were the jobs that were always easy to fill. Now they're not anymore.

It's really hard. If you see me speak now, I will go into tremendous detail about why it is that way, why it's so hard to find these people. Now in LA what we're saying is, when you compare LA to other markets of its size, it isn't as hard to fill these types of jobs in LA. So nationally it's very tough, but it shouldn't be tough to do in LA.

So, we go down and we say why is that the case? Why is it that they're not so hard to fill in LA? So we start with supply and we see that there's a lot of people in LA that either are unemployed or are willing to quit their job to take a job that's paying better. So it gives us about 10 people for every job posting that we're seeing that would be willing to take that job.

So that's a pretty good number of people for each job opening. Now if we look at demand, you can see that demand has come down quite a bit. So that's another reason why it's not so hard here we can see that the number of postings, that's what you're seeing there, that line is the number of unique new postings by month, and you can see that it's sustained at a pretty high level throughout ‘21, ‘22 happens, and slowly that number eases off. And then over the past couple months, it's gone down significantly. 

So we get to the end part here and we think, okay, I'm applying my basic economic principles that Ron just told me, supply and demand will equal a certain price. And I look at this and I go, okay, the supply looks pretty strong, the demand is actually weakening.

Why is the advertised wage stuck? It's sitting there. It has not moved now since the early part of ‘22. In fact, if you go to demand, demand was weakening all year long. But price never changed. There's a couple things that we wanna talk about here. These are our talking points. 

Number one, let's not lose our perspective. Yes, demand is down a lot, but there are still 1,100 postings looking just for laborers, not even the jobs that are related to them in this market alone. Yes, it's a lot fewer than there were last year, but that's still a lot of people trying to find something. Right now in LA there are 557 companies trying to find this job.

So you are competing against a lot of people looking for these people. And then what I told you earlier, wages are sticky. They don't give up their gains. It's very rare to see wages give up what they've gained. So when we look at this on the right side, despite this change in demand, companies are still having to post wages at a very high number because that shows us that they're not really filling the jobs. It's not an easy time filling these jobs. 

So this is an important thing. You can be thrown by this demand curve going down and be like, well I don't have any leverage now. They're gonna be asking me for discounts. And the truth of the matter is, that's not the way economics works. Once you gain your gains, you're not gonna give them back.

And you can see that employers are staying in this range saying, look, in order for me to find somebody worth a darn, I still have to pay at this level. So with that in mind, I'm going to actually jump out of here. I'm gonna give you one more example of this. So gimme one second. This is so much fun. Here we go. Here we are. Alright, so this is the, we have a two part stage tool that we have in SmartReq and one is helps you to actually find job openings. I'm gonna click on one of these to show you how this works. But these are all different job postings that are up in Austin, Texas for various kinds of software developers.

You can see here, there's all kinds listed. We can see the companies, all of these kind of things. So I'm gonna come down here to this solutions engineer. And I'm gonna click on this and it's gonna show me right now in Austin, Texas, what's the trend? What's going on for Solutions engineers in Austin, Texas?

So first off, like we were talking about the other screen, let's just establish the fact that these are in the top 10% hardest to fill jobs in all of the country. So forget Austin, Texas. For right now, let's just establish this ground principle that this is a really tough job to fill across the US. So despite the fact that you've been hearing of high profile layoffs, despite the fact that you hear IT companies saying, we've let go of some of these workers. Do not be fooled. It is still incredibly difficult to fill these jobs. There's still a lot of job openings versus the number of people out there to fill them. 

Second thing we see is Austin is a relatively hard market to fill these jobs in. Then we can go down here. We can see why this is the case? The first problem that we have is there's just a lot more postings for these kinds of people than we have people. So we have about 0.7 people for every job posting that's out there. 

Now, the job description for that job we clicked on is right here. You can see this. This is the job description from the website that we grabbed it from. We pulled all of the skill sets out, and you can see that the company that's hiring this basically asked for every single thing that you can ask for from a human being.

So you can see that when we went and we looked at all the online profiles of people who are saying that they are solutions engineers, a lot of them are not saying that they have certain things. Now, some of these are just basic. Of course they have these, they just didn't mention it. But some of these are things that we would probably want to see a little bit of, at least people mentioning it. Cleantech, Windows, Power Shell, Backend, any of those things that we're like, woo man, I wanna make sure you're not requiring a lot of these skill sets. Because it's going to be pretty tough here because it is hard to fill solutions engineers. So we gotta be careful about asking for a lot of skill sets.

The second thing that we're gonna look at here is the price. And you can see that price over time has worked its way up to right now about $70 an hour. This is where the going wage is. Now, if we look at the employed wage, meaning this is the last time the government surveyed employers and said, how much are you paying solutions engineers?

They're saying we're paying like 50 bucks an hour. That's a joke. We are way above that. Another thing that this tells us is that companies when they're going out to hire, are going out and trying to hire really high level people versus the kind of people that they have. We call that hired guns. We actually call them ninjas. So you're going out and trying to find that really highly skilled person and you're gonna pay a lot to get them, but we can see how this has been working its way up over time. 

Now this is the coolest part about this. So we can see here, once again, we can see a tremendous drop off in demand. So the number of unique postings for these solutions engineers has dropped. So we've dropped dramatically from about 2,200 postings in July of last year to about 1,300 in January of this year. So we're looking at that going, that's a pretty big drop, Ron. Like that's significant. I would think we would see some bit of price pressure easing because of that.

We've included some things to help us open our eyes a little bit, and that is when you are a solutions engineer or any kind of job around this, you are not forced to be that job. You could have any number of jobs that pay just as well and are still in the same field. So we have this ability to say, let's include similar jobs.

So when we do that, our postings just jumped to about 4,000. And then we can say, “Hey, I've excluded staffing companies, but what if we include the staffing companies postings?” Now we're up to 4,500. So think about this forest through the trees thing. Let's go back and let's look at the forest. There's 4,500 unique postings out there, active postings, that are out there looking for this type of worker in Austin, Texas. That is why your wage is staying so high. It doesn't matter that the demand dropped because it's still absurd. Okay? And if you're thinking what are, who's trying to hire 'em? Here are the companies that are trying to hire them. Here are the related job titles that everybody's putting out there.

So you can see what I'm up against and how are they trending. And a lot of them obviously are trending down, but let's not lose sight of the reality of, that is still a ton of demand. So inside of this, I'm gonna show you this in a second about sources. I'm gonna show you a little bit of another reason why Austin, Texas is stuck and getting worse.

So this is the unemployment rate in Austin, Texas, and here's our spike that we got for everything. But I want you to see something here. Right now, Austin, Texas has a 2.7% unemployment rate. Okay? Their lowest ever in all of history was 2.4%. They hit right before the pandemic. Okay? They have been trending down for the most part the entire year, back down into that critical level again.

So as we look at these things and we look at postings and we see all of this activity, understand that there are fewer and fewer people looking for work despite the fact that their labor force has been growing this entire time. So what that tells us is Austin keeps bringing people to their market. We know of a lot of companies that are moving there, but these companies are moving people who are already employed.

They're not freed up, you can't get them. And so even though they're adding people, they are consuming them at a faster rate than they're even able to add them. And that's a big reason why we are seeing so many things stuck. It goes back to the first principle I was telling you, and that is we cannot lose sight of the fact that this is a very demand driven market.

So with that in mind, I'm gonna jump back in and bring this thing to this kind of conclusion. If you know what's going on in that market, and we're gonna go back to talking about being an expert, you're going to get by default, everything that you want. You're going to get, I wanna say, maximize your bill rate, and by maximize, I mean you're going to get the bill rate that's the most appropriate for the one you have.

So you won't have to worry that you left something on the table because you know that the pay rates this, you know that things have been trending this direction, so you're going to get, you should be able to negotiate a bill rate that meets the needs that you have. You're going to be a strong partner, even while you're maximizing your bill rate because you've been honest with your client.

You've told them where the market's at, and you've told 'em that, “Hey, last time I filled this job for you, you know the pay rate was 20% lower than what it is now. I have to do it at this rate because if I don't, I'm not gonna fill this job.” It comes down to two things. You're gonna fill the job quicker because you're paying somebody correctly. And, this should always be the duh, it's going to be a better quality candidate. Because if you're out there and you're finding people who are willing to take a rate that is so far below what the market is bearing, you should be concerned. 

People who are like, I'll take that pay rate and it's $20 below what the market can bear. One of two things is true. Number one, they don't truly know their value and they're amazing. And the second they get on your job, they're gonna find out their value and they're gonna quit. Or two, there's a reason why they're taking a job that's gonna have a pay rate $20 lower an hour, and you may need to ask a couple more questions. You may need to do some reference checks. There always has to be an explanation for why somebody would be willing to take something below their value. Either one of those scenarios is very bad for staffing. It's very bad for anybody, even if you're not in the staffing industry. Always be concerned about the person who jumps quickly at something that they shouldn't have jumped quickly on.

That's the other part of just knowing where the market's at, knowing where pay rates are at. Because if you know where the pay rates are at and you know that this is what they could see if they were actually out there looking and applying, they should be seeing these pay rates. These are available to them.

So the fact that nothing's happening for them. Maybe you're talking to the wrong person. Maybe this person's not really qualified for this particular job. Maybe that's a lower level job. It's just maybe their resume looked a little bit more favorable. But you need a standard, right? You need to know that this is true.

This pay rate is true. So if I have that standard and then I hear somebody say they're willing to do something different, I can compare it to the standard and now I can do something more. So staffing at the right price is that key to a successful relationship. So the last thing I'm gonna share with you before we can switch to questions are these are the sources that we have.

I'm gonna talk about the ones we have internal to our Lightcast platform, and then the government sources. Because I do get asked all the time, “Hey Ron, what is it that you look at?” And the reality is, I look at everything, but I'm just gonna give you a couple. So first off I showed you SmartReq. SmartReq is that really quick view of, hey, I wanna know what's going on right now in the market.

I wanna know if I go out today and I open a job, you know what? No matter what kind of company I'm in, what am I gonna run into? How many people are trying to find the same thing? What are the pay rates looking like right now? How has this been trending? Is it getting way worse? Is it stable? Has the price been stable? 

Or if you just have positions and you're like, man, I've been concerned about attrition, and you want to go out and see. Hey, is everybody else trying to hire this right now? Why am I getting so many people calling my company trying to steal my workers? And you don't have to guess, you can go out and see, oh, I can see it now. This particular occupation right now, everybody's trying to find in this market. And by the way, the pay rates have gone up a lot. I might have to go back and have a conversation. 

We then have another tool called Staffing Analyst. There's another tool we have called Talent Analyst. That's for that kind of deeper research. We're looking at expanding into a certain market. Is there a lot of the kind of things that we wanna fill? If you're light industrial, is there a lot of light industrial in that market? Who all is in that market? Is it a one stop shop? If I don't get into a certain company, am I out? Like I have to get on the vendor list of this huge company, or I'm not gonna be able to do anything? All of those things you can find out inside of Staffing Analyst. You can benchmark your current performance against how markets are performing, all of these things.

It's a huge report. We also have APIs and Snowflake, which allows you to take the data sets that I've shown you in our tools and say, I wanna feed this directly into our data. And that way I can compare what's going on with your postings, trends, or your pay rate trends with our own data and what we're seeing.

And that way you can just hold those things side by side and say, wow, we're seeing a lot of pay increases outside, but we're not getting them inside. Maybe our people aren't negotiating in the right way, or maybe they're not getting at the kind of people that they could potentially get. 

As for sources that I use outside of our own data, I am a former Bureau of Labor Statistics Economist. It's where I started my career and I was supervising the payroll survey. I am very partial to payroll employment surveys because I helped gather and collect and analyze that data. The unemployment data I showed you for Austin, that also comes from there. We have these things also in our analyst tools, so you don't have to, if you get Staffing Analyst, you're gonna have this data inside of those tools.

I'm just saying that these things are there, it's worthwhile if you just want to geek out for an eternity. Learning how to extract data from BLS can just come really in handy because you can jump around from different programs. You can look at the employment cost index and be like, wow, I can see how rates have really been going up. And then you can look at some occupational data as well. 

It's not gonna be as much like the real-time fine occupation data that we're showing you in our data. It's not job postings. But there are some things out there that they do really well. GDP.gov is where GDP comes from GDP.gov. So we're in there, we're looking at things, elements of GDP, what is consumer spending looking like by segment, are we seeing people starting to back off their spending of manufactured goods? Are they spending more on services now?

These are things that I track, I post about on LinkedIn. I'm obsessively watching these things because I'm curious to see how people are changing their money and how they're spending money right now. You can look at corporate profits. Corporate profits are a great lead indicator to our people getting ready to hire more.

Companies with more money don't hold money because their investors don't want them holding money. They want them to invest in their companies. So typically it's a good lead for hiring. And by the way, corporate profits are still in the stratosphere. 

Capital investments are what companies are spending. Are they buying more equipment and software? Are they buying more computers? That can lead us if you're in certain industries, if you're in staffing providing to IT, you're gonna wanna see if companies are investing more in capital because that'll tell you that, “Hey, I think they're getting ready to do another hiring cycle right now.” That one has eased lately, but it's still at a pretty high level. 

And then if you've never been on the ultimate geek out site for nerds, fred.stlouisfed.org is just an amazing rabbit hole. You can go on there and just type different things. It's where I'm at all the time. You follow me on LinkedIn, I paste an enormous amount of things off of Fred.

Now, like with most things in life, you gotta know what you're looking for. But once you go down that rabbit hole, you will spend so much time, like trending data because they've got a lot of stuff from BEA, they have some of the stuff from BLS, they have unemployment claims.

So instead of having to go to a lot of places, you can just go there and get a quick trend line. And that's what it's so great for. And then you can dump those things off in the spreadsheets. But I really like it for construction data, for housing data, really any kind of thing. Like I said, corporate profits, there's tons of different ways that they look at it. Just a really cool way of saying, “Hey, I'm about to go talk to a client. I've got this really cool. I've been looking at what's happening in real time with some of the labor data in this market which you can't get from Fred.” Then you can go, oh, I can see what's happening. Housing in this market is really, there barely any housing starts anymore in Texas or all of these kinds of things. Literally, like an endless amount of answers can be found there. 

The thing I'm gonna leave you with is when you use data, and anybody who ever talks to me will hear me say this over and over again, always check the source of data that you get and make sure that the people who collected it didn't have a bias about what they were going to do with the data. Because data, the reason people lose faith in economists, the reason people lose faith in a lot of things, and especially healthcare in the past couple years, is so much of what was done was collected with a certain agenda in mind. And so you wanna make sure that as an objective data analysis person, or even a sales person who's gonna go talk to a client, that you don't present something that they're gonna look at and go, whoa, where'd you get that from?

Oh, you know that, that place. Insert this agenda here. You wanna keep yourself from anything that looks like it was collected with some kind of agenda behind it. So I tend to stick to these government sources. I worked at BLS, we were not a political organization at all. Everybody there was a non-political appointee, just a very solid way. If you don't like the way some things are collected, it's usually because you have to understand how they're collected. I see people get that wrong a lot. Just focus on those particular things. 

That is what I wanted to share with you today. This is my LinkedIn here, if you follow me. It's like an endless supply of Ron's random thoughts that come outta my head. So it's worth it sometimes to take that ride. If there are any questions, by all means we will open the floor to that and I'd be glad to answer them. 

Justin Calvin - Awesome. Thanks a ton Ron. Really appreciate all of that. And like you said, as you guys have questions, throw 'em into the chat. Looks like we have a couple.

So you've got a little bit of time to throw them in. First question, Ron. I understand how labor market data can help bill rate negotiations, but what would you suggest if the client is simply not willing or able to budge? Does your data have anything that helps solve those problems? 

Ron Hetrick - Yeah, man, that's a great question.

That's a hard ball right outta the gate. Okay, so let's break that into two different things. If they're not able, one of the things that may help is to help people understand how they're consuming labor. What does the job look like? What can they control? So if they can't do anything about the pay rates, if the place is just a really horrible place to work, then there's several things.

Sometimes things can be done, especially if they have a really pretty horrible safety record. Other times, it may not be a situation you wanna be involved in. If you are those people and you're actually asking the saying, no, I'm actually that person where I can't do anything about it. Like I'm stuck with what I have.

What I would say is, you have to change the way that you approach hiring and that is, it comes down to, I start to look for character. What do they say? Character over competence. I start to look for a person that I'm just like, I'm gonna take a chance on this person. They seem hungry. I want to do this.

So desperation leads to all kinds of horrible consequences. And sometimes you may just simply not be able to staff, in which case, at that point, sometimes you may have to accept less business because if you don't, then you take the remaining good workers that you have and you work 'em to death and then they quit.

So we don't want that to happen either. So sometimes you just literally have to start scaling expectations. So when I hear somebody say, I can't raise my pay rates, where I go with that is, that's a conversation that goes back to the executive leadership and say, you've told me that I can't do anything, so either you all adjust your pricing and we can bring more money in so I can pay people more. Or you are gonna have to turn down more work.

And I know that sounds absurd, but it's happening literally everywhere. I just talked to a trade association about two weeks ago. I presented it to them and they told me about this particular thing that's related to construction. They are turning down work left and right 'cause they can't find people to drive trucks to move the goods to the places.

So they're simply turning down the work for right now. In the future, if they're able to find people, then they'll ramp up what they can take in. And it seems like this is crazy, but if you can't compete now, I'm here to tell you it's not gonna get better. 

Justin Calvin - Got it. No, that's great. Got another one here, Ron.

How did the federal government get it wrong with the January unemployment and why are they not following you? 

Ron Hetrick - I was shocked as well and what's going on. So I will tell you that something happened towards the end of last year. Now I think I said this on LinkedIn. I know I shared this in various places. I believe I said it on LinkedIn. The biggest concern that I had was that people came off the sidelines because pay rates had gotten really great around the holidays, right? So, my fear was a lot of people would come into the labor force, work the holidays, make themselves some money so they could pay off their credit card debt after they bought all of their holiday gifts, and then they would drop back out of the labor force.

Now, what it appears is that was probably pretty true. So we do see things that have been happening and fluctuating in the labor force, but the reality is a lot of the people I think that came in, did what they wanted to, and came back out again. This was something that I thought could happen, but you just don't know.

We're all speculating out there. I think I made a call that I thought the unemployment rate would go up maybe a 10th or so. Certainly didn't expect that it would go down. But what I think is so important here, more than anything, is we are slowly learning. 

I've watched the narrative change with Fed Chairman Powell. He set out, he was a Volcker prodigy. And he's like, I am going to weaken this economy. I'm going to raise interest rates and this will cause devastation in the labor force because companies, who will need to borrow money to expand, will not be able to get that money. Therefore, they won't be able to expand. Therefore, they're gonna lay off workers. We're gonna see the economy weaken. He now realizes how cosmically wrong he was, and I said that he was not gonna have this effect back in the mid part of last year. The reason being is, we never hired anybody. So you can't weaken companies who are still trying to figure out how they're hiring people, let alone, like saying they’re ballooning up.

In the past, you go back through every single recovery in history. We hired during the point of that recovery, but we could not hire this time around. We didn't have the workers to do it. We had five million people drop out. Had we hired those five million people, yes, you would probably have seen five million layoffs, but we didn't hire them. So you can't lay these people off. 

And I think this is something that most recently in Powell's statements, he has finally started saying, we are realizing that we can't affect this because a lot of the people who dropped out are older people. That is not who gets affected by layoffs. Those people have already transitioned into jobs that are typically a little less layoff averse.

They're at the senior parts of their career. They've either backed into other occupations or they start to get laid off and they're like, that's fine, I'll just leave. I'm done. I'm retired. I was just holding on regardless. So he's not having this impact, but he is starting to recognize that now.

Therefore, I think he'll continue to try to raise the interest rates. But there's one other thing that I've shown you on LinkedIn and that is, corporate profits went up by 40% in a really short period of time, thanks to all the cash infusion we put into this economy. Companies have an enormous amount of money they do not need to borrow, so they are not needing fed funds rates to be low because they don't need that money.

They're still sitting on a massive amount of cash, and you can go look at corporate profits after taxes, you'll see that they're incredibly high, even though they're starting to bend and come down. You keep it in perspective. Historically speaking, zoom out and you'll see that these corporate profits are just insane. Very high levels of money, just not affected by the things that you would normally be able to change. 

Justin Calvin - Sweet. Super helpful. I think we have time for at least one more. Ron, with the federal government hold out during the Pandemic for immigration, how is that trend looking today and in the near future?

Ron Hetrick - Yeah. There's so much happening here. Whoever asked that question, and if you know me at all, this is what I'm speaking about everywhere right now. I am an absolutely enormous proponent of adults talking about immigration and changing the way that we've been talking about it for the past 20, 30 years.

If you see me speak, one of the things I talk about is the reason why we're a very anti-immigration country, historically speaking, is because the boomers still have a large voice. When they came into the labor market, there were so many of them and they were all competing for very few jobs because the economy didn't know how to build jobs for that many people.

And so we gained a mindset. And if you look at the leadership of our country, it tends to be a little aged. So these people are very influenced by what they knew to be true 30 to 40 years ago. But that stopped being true about 15 years ago and will become drastically worse. So we are having a lot of problems getting politicians to have kind of an adult conversation.

So what's happening and this is just really cool. Lately, we're hitting more and more words. So there were two governors, I believe this was just sent to me yesterday. A governor from the state of Indiana and a governor from the state of Utah. Basically did an open letter to Congress saying, “Hey, we need you guys to have an adult conversation because we're dying and we need immigrants.”

So can you just let us determine how many we want and just give it to us? We'll figure out how many we want. You guys can set it like an overall cap. If you feel like you want to, but let us worry about this. We'll do it. We'll handle it. You don't have to worry about it. If you guys are too scared to have the conversation.

We're not afraid to have the conversation because if we don't get these people. We may not have a food supply. We may not have people to do the very basic jobs that we need to keep the country running. This is something I'm speaking about a lot right now. Our current demographics for native-born people in the US is just not fitting.

About 60 to 80% of our young people are going to college, but about 60 to 70% of our jobs, our open jobs, don't need a college degree. So these jobs are typically being filled by immigrants, and it's going to have to be that way going forward. So I think it's gonna be very interesting to watch this all kind of shake out.

Just so you know I didn't even really know anything about immigration until about two years ago. Now that I've spent all my time educating myself on the data, you start to realize that it is absolutely critical for this country's survival that we like I say, have a grownup conversation about how we can strategically get immigration increased, how we can have businesses have more of a say in it, that they can sponsor people.

There's just so many things that we can do to do this the right way, but we at this point, we still haven't been willing to cast aside a lot of our biases and things to be able to have that conversation. 

Justin Calvin - Sure. No, that's super helpful. 

We do have other questions, but I don't think we have time for them.

Just know that if you asked a question we will have either your account manager or your account executive reach out to you via email and get that addressed here today. Be on the lookout for that. 

We posted some links in the chat, so some links to a webinar based on skills coming up here. Also a link to if you wanted somebody to reach out if you had specific questions or wanted to hear more about this, there's a link you can fill out a form and say, “Hey, please have somebody reach out to me.” And again, if you did ask questions, we'll make sure to get those answered here soon.

We'll send you the recording, so look in your inbox here either today or tomorrow for that recording. And super glad you guys were able to make it. Thanks a ton, Ron. Super helpful and hope everyone has a great rest of their day. 

Ron Hetrick - Thank you all. 

Justin Calvin - See you guys.