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Sorry, this is not a pootie diary. A Purple Squirrel is a metaphor used by HR recruiters to identify the unrealistic expectations of a client company for the type of employee they want. Among the many issues facing the unemployed in today's economy, this is a striking one. How many of you know someone who appears qualified to hold a demanding, well paying job that can't find one? How many of you fit that description yourself?

It is true that there are some industries in which there is a need for more skilled workers, nursing and IT come to mind. But is that enough to justify the reported 3.9 million job vacancies in the US? Robert J. Samuelson just wrote an interesting opinion piece in the Washington Post on the subject, titled "Employers lack confidence, not skilled labor".

Some skill shortages always exist in a sophisticated economy, says Brookings economist Gary Burtless. "Are they serious enough to explain today'€™s high unemployment rate?"€ he asks. "€œThe answer is an emphatic no."€ In April, the unemployed totaled 11.7 million; another 6.3 million people wanted a job but weren'€™t looking. These figures dwarf the number of vacancies.
Okay, one pootie picture. This is an actual purple squirrel.

“In truth, companies increasingly want to hire only people who already have jobs—ideally people who have already done the exact job they’re applying for.”
Wharton Business School Professor Peter Cappelli

The Jobless Recovery

While I am far from an economist, and generally get into trouble when venturing into the land of numbers, I will try to break down the Beveridge Curve, the conventional wisdom of the relationship between employment and job vacancies since World War II.

The curve is a visual representation of the job vacancy rate versus the unemployment rate. During periods of economic expansion, the jobless rate is low and the vacancy rate is high. Fewer workers are looking for jobs, so the opening might be hard to fill leading to an increase in the vacancy rate. The converse is also true. Economic recession leads to higher unemployment and a lower vacancy rate.

A cursory look at the graph shows that the US economy follows along the curve from 2000 to 2009. Since late 2009, however, the curve has shifted outward. There are more job vacancies than the Beveridge curve would expect. Several explanations for this phenomenon have been offered. US workers are not prepared for jobs in the "new economy". Skills of the long-term unemployed have atrophied. Longer unemployment benefits mean that those who report as unemployed take longer to drop out of sight and no longer be reflected in unemployment data.

There is another possible explanation, offered by Catherine Rampell of the New York Times, that employers have vacancies but are afraid to fill them. Rampell attributes this to economic and policy uncertainty, although she also alludes to the problem of the purple squirrel.

As a result, some companies are keeping job postings up for months, if not years, and putting candidates through round after round of interviews without hiring anyone. For some companies, the only candidate who can justify the risky expense of filling a vacant position is a candidate who is unimaginably overqualified.

"I saw a posting for a job recently vacated by someone I knew," one unemployed reader, who did not want his name revealed, wrote me in response to the article. "I'€™d worked closely with this person and she had done an excellent job. She was missing about half the things they were now looking for."

Why Just The Purple Squirrel?

Little Or No Money Invested In Training

In 1979, young workers received an average of two and a half weeks of training, and now, according to a recent Accenture survey, only 21% of employees had received any training at all over the previous five years.

John W. Schoen at NBC wrote a piece for NBC titled "Employers may be aggravating the 'skills gap'". Schoen spoke to a small business owner, a Wharton Business School professor, and an HR consultant. Between the three, they paint a picture of an economy that both requires employees with more skills and de-incentivizes training.

There is less apprentice training, traditionally the bailiwick of unions, per capita in the US than in other industrialized nations. That leaves employers to invest in training, which many if not most are unwilling or unable to do. Training programs were one of the first casualties of the "Great Recession" and have not been revived, reinstated, or created in this current recovery, if you care to call it one. Schoen provides two perspectives.

“Training was one of the first things that we cut during the downturn because we weren’t hiring,” said [the business owner]. “If you’re not hiring, you don’t need to have anyone on board to train new hires.”
“It comes down to an excuse of budget limitations,” said [the HR consultant]. “The biggest issue probably is return on investment. It’s hard to measure the results. But it’s a poor excuse. People just get hung up so quickly on that point and they’re very, very short-sighted.”
One of the most commonly repeated reasons given for not offering training is the feeling that money spent on training is wasted because, once trained, the employees will leave for another job. My, albeit flippant, answer is that training needs to be accompanied by better post-training pay in order to keep that from happening.
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Wage Pressure

The high rate of unemployment has another effect in this scenario. It keeps wages down. Those who are employed are less likely to complain, much less search for better opportunities elsewhere. Therefore, they are very unlikely to complain about longer hours and stagnant wages. Employers, in light of the shaky recovery, can continue to wring as much work out of their existing employees as they can while they wait for their perfect candidate at the right price.
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Why Not?

This may seem kind of counterintuitive, but the sheer number of job seekers leads to fewer of them getting jobs. Hiring managers see a huge pool of potential employers, many with similar qualifications. This makes them less likely to settle on just one. Call it the "There may just be a better date out there than the one I have" Theory. Go ahead, I won't copyright it.

The Effects Of The Search For The Purple Squirrel

Employers Taking Longer To Fill Vacancies

Currently, job vacancies are staying open an average of 23 business days, compared to a low of 15 in mid-2009, according to an analysis of Labor Department data by the economists Steven J. Davis, Jason Faberman and John Haltiwanger. According to data from Glassdoor.com, a site that collects information on hiring at different companies, shows that the interview process at many major companies has just about doubled in three years.

"After they call you back after the sixth interview, there's a part of you that wants to say, 'That's it, I'm not going back,' " said Paul Sullivan, 43, an exasperated but cheerful video editor in Washington. "But then you think, hey, maybe seven is my lucky number. And besides, if I don't go, they'll just eliminate me if something else comes up because they'll think I have an attitude problem."

Like other job seekers around the country, he has been through marathon interview sessions. Mr. Sullivan has received eighth- and ninth-round callbacks for positions at three different companies. Two of those companies, as it turned out, ultimately decided not to hire anyone, he said; instead they put their openings "on hold" because of budget pressures.

Increased Importance of Connections

Nelson D. Schwartz wrote an article in the New York Times called "In Hiring, a Friend in Need Is a Prospect, Indeed". Schwartz says that employers are increasingly relying on current employees to refer new hires and "bypass reams of applications". Referred candidates are more than twice as likely to receive an interview. At Sodexo, which hires 4,600 managers and executives a year, referred employees are 10 times more likely to be hired.

Ernst & Young has set an internal goal to increase the number of hires from internal referrals to 50%. Currently, E&Y now hires 45% of its nonentry-level participants from employee recommendations. That is up from 28% in 2010. Many employers feel that this is the best way to find their purple squirrels, someone who is like those who are currently successful in their company. The problem with this approach is that 63.5% of employees recommended candidates of the same sex and 71.5% recommended the same race or ethnicity.

“You’re submitting your résumé to a black hole,” said John Sullivan, a human resources consultant for large companies who teaches management at San Francisco State University. “You’re not going to find top performers at a job fair. Whether it’s fair or not, you need to have employees make referrals for you if you want to find a job.”
...

“We call it Monster.ugly,” said Mr. Sullivan, referring to Monster.com. “In the H.R. world, applicants from Monster or other job boards carry a stigma.”

Follow The Money


Perhaps Ryan Chittum of the Columbia Journalism Review puts it best:
Now if you can’t start up in a specific job with no training whatsoever, you’re not hireable. That’s quite a bit different than a structural skills gap. It’s a story about companies that don’t want to invest in their workforces—or who want governments to do it for them.
God forbid you should try to raise taxes to pay for that training though.

Originally posted to Salted and Cured on Mon May 06, 2013 at 03:26 PM PDT.

Also republished by Community Spotlight.

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