Labor Market Efficiency

beveridge curve labor economics

David R. Kotok has written a salient commentary about the current state of the Labor Market. In it he describes what is going on in the above “Beveridge Curve”. In summation, the shift to the right of the data points over time indicates a less efficient labor market. That is, for any one data point, say Feb ’12, a concurrent job vacancy rate in say Nov ’01 shows a much lower U-6 (fully loaded) unemployment rate, here approx. 9.3% versus 15%. How can this be? Are there so many more folks now looking for a job with the same level of jobs available (vacant)? He does not posit a definite reason for this move, but a recent paper in the Harvard Business Review lends some insight.
What if the current ease of travel and taste for independence was driving some of this shift? What if people were taking a trade off in income for flexibility? In The Rise of the Supertemp, Miller and Miller assert that some 16 million Americans are working independently today (Source, MBO Partners). These include an estimated 3 million managers and professionals, defined as folks with graduate degrees or equivalent who desire the flexibility of temporary work. And what if this group tended to stay independent, given their level of talent and the ability to choose what they work on and with whom to work.
To quote, “The only comprehensive survey of U.S. Independent professionals to date, conducted in September 2011 for MBO Partners, found that close to 80% of independent workers are satisfied with their situation, including 58% who are highly satisfied.” Further, only 19% said they planned to seek a traditional job.

The ground rules for successful Supertemp engagements are project oriented and include:
1) Focus on what needs to be done now – this means specifying your most critical objectives
2) Define the work clearly – agree on written deliverables
3) Identifying additional resources required
4) Identifying the internal sponsor – the one who can make things happen internally, in small company cases this is usually the CEO
5) Check in regularly – to reassess goals and objectives.
Hurdles to an efficient market for Supertemps remain, e.g. the difficulty of obtaining healthcare outside traditional employment situations, and tax reform.

Regardless of the ongoing issues, we believe that temporary work is here to stay for the

Economics beveridge curve

Economics Beveridge Curve (Photo credit: Wikipedia)

highly talented managers and professionals (think engineers, lawyers, accountants, CFOs, etc.) and will lead to a continued “inefficiency” in the traditional “Beveridge Curve” for the U.S. Employment market, or should we say to a new level of efficiency based on a permanent Supertemp professional class, working how and when they want to.

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One Response to Labor Market Efficiency

  1. Pingback: America – Land of the Non-Political Economy « SMB Matters – Small and Mid-Sized Business Blog

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