The Employment Picture

  By Michael Neidle  |    Wednesday June 22, 2022

Category: Columns, Expert Advice, Recruiting


It is easy to settle for average or below average these days as the US employee rate of some 3½% and there is a severe scarcity of qualified people in many occupations. Healthcare professionals rate is 0.3%, office managers are at 1.1%, high-tech is 1.3%, managerial jobs are at 1.4% and skilled tradesmen are 1.8%. Just think back in the last recession where the unemployment rate was as high as 10% and employers had the pick of the litter. Inflation is now rising 8+%/year due to a slew of factors, so people are naturally seeking higher salaries, which is rising 6% and this doesn’t even make ends meet. To get ahead of the curve, people are changing jobs where the average increase of 16%.

I was originally going to write an article about hiring and only retaining the best staff, but that is a hard thing to do these days. I will therefore discuss how to deal with the employment picture during this rather odd period which is likely transitory, and employment will eventually cycle back to a buyers’ market. But the first thing to do is to hold onto your staff if they are good but not great. As to replace them will not likely bring in better people but cost you a lot more for similar folk. And  to get superior personnel will cost you a whole lot more right now. Think as the floor being the aforementioned 16% and if you are in tight markets and occupational areas this can cost you 20-25% more to replace those that have left, and superior people may cost you 30% more. So do what you can to keep your people in place with competitive salaries, perks, a positive and nurturing atmosphere, etc.

It is predicted that good economic times may not last very much longer. The supply chain, which was broken due to Covid, is very much worse these days due to the situation in China and Ukraine. Shortage, Inflation, uncertain monetary and fiscal policies, political discord, etc. Many economist estimate there is a 50% chance of a recession next year, with the stock market down now over 25% from its peak and a return to slower growth and more balanced employment market where one can trim staff as needed but recognizing that even marginal performers can in many cases be salvaged. 

Marginal performers are those who not meeting expectations, not covering their cost, as a produce, or support people who are essential to the operations of the company. Here are some examples.

  • A sale rep’s contribution is relatively easy to calculate. That is the margin they generate: [sales $, less cost of goods sold] / [their fully burdened compensation cost]. If this does not exceed 1.0, the company is generally better off without them, unless they are an essential part of the team and in that case their value becomes a more complicated situation to be factored in.
  • For support people (non-revenue generating positions) this is more difficult to calculate but still has to be done. It includes: the time needed to source, interview, reference check and train a new person; plus, the intangibles: lost production during the transition, “chemistry” and fit with the team members, knowing where undocumented procedures and records are, etc. And there is still the question is what you got in return as to productivity, efficiency and intangibles was better then what you gave up in replaced the person you had.              . 
  • If a payroll person was terminated or quit and assuming their function was critical to the ongoing functioning of the company and payroll certainly needs to be processed. They would certainly have to be to be replaced either: by a system, another person, or an outside service. The relative cost of these options would need to be measured against the original person, including all of the above elements.
  • The loss of an administrative assistant would result in either lower productivity as that persons boss would be doing that job as well as their own, or if replace by another person or outside service, relative cost and productivity would have to be again weighed.


In summary, we are in a now in a tight employment period with lots of moving parts and unknowns. Wait things out and try to keep it together until the dust settles. Retain you people as best you can and provide them with the compensation, resources, intangibles, perks, an open-door policy, etc. But nevertheless, make the hard decisions that you know are right after considering the consequences. 

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