The Death of the Secure Job

There is a disturbing trend in the American marketplace. It started as large vertically integrated companies shed jobs that were only marginally connected to their core business. Companies like General Motors discovered it was cheaper to outsource their cafeteria jobs rather than attempt to run those ventures with their own employees. In time this led to shedding major divisions such as Delco. The employees that lost their jobs always ended up earning less.

This trend is perhaps most advanced in the movie production industry. The great integrated studios of the 1930s through the 1950s no longer exist. Today movies are made as short term projects. Actors are no longer under contract to the studio. They are hired for one movie. The director doesn’t work for the studio. He is hired for the project. This is true of the special effects house, the cameramen, the sound men, and even the film editors. All the contractors and their subcontractors come together, do a job, and then go home. The producer gets the best people at the lowest cost without the legal hassles and long term costs associated with full time employees.

Recently Daniel Gross interviewed Jeff Joerres, CEO of Manpower, the temporary help agency. Joerres contends that the recent recession has fundamentally changed the way American companies will hire permanent employees. He is optimistic that more companies will hire in 2011 than in 2010. Joerres states, "Our clients — small medium and large — are looking at hiring more this year than last. The conversations are around "'how many and when' compared to 'not on my life' and 'never.'”

Still the chief obstacle to hiring is demand. American companies, large and small, simply don’t have enough demand to justify hiring new permanent full time employees. However, something fundamental has changed the American workplace. Joerres observes that the American corporation has become more efficient. They are learning to do more with less. The article observes, “Another ongoing structural shift is making companies commitment-phobic. "Companies are becoming much more adept at working in project-based environments," he (Joerres) says. They'll staff up with contractors to complete projects with a defined end date, rather than add new payroll workers.”

Joerres observes another recent trend in hiring he calls, “talentism,” the idea, “That every single talent in the company really matters.” In the past, companies considered important executives as exceptionally valuable properties. My uncle was a very successful chemist with a major company. At one time his life was insured with a “key man” policy. His company thought my uncle’s life was so valuable they wanted financial protection in case he died. This kind of mentality is now being extended to line employees.

There are 3.2 million job openings in the U.S. From the article, “Joerres explains this strange paradox as follows: It could be that companies can't find workers with the skills they need. Or, more likely, companies have become very good at understanding precisely what they need and are being extremely picky about finding the perfect candidate. Since demand isn't booming, they figure they can wait an extra 30 or 60 days to find the just-right candidate.”

The article gives an example of this phenomenon. Johnson Controls knows that they will need to hire 16,000 building service engineers with special skills in energy efficiency over the next few years. "But they're not being produced by universities and they're not growing on trees," says Joerres. As a result, "they're going to be very disciplined about where to place their bets on new hires."

Before America entered World War II, the German High Command believed that our country could not produce enough precision optics to support our military needs. A German lens maker was a master craftsman. He could perform all the operations required to produce any lens. It took about 20 years to train such an employee. The Germans just didn’t believe America could train enough people in time to make a difference. However, America solved the problem in another manner. Each step in the manufacture of each different lens became a separate job. While it was impossible to produce master craftsmen in time to make a difference in the war effort, it was very easy to train one person to complete one step in the manufacture of one optical device. The United States produced extraordinarily large numbers of precision devices, such as the legendary Norden Bombsight. However, those jobs that provided a middle class lifestyle to average employees are gone, probably forever. Today companies are looking for exceedingly high quality employees with specific skills. These corporations would like to avoid costly long term commitments that include health insurance and retirement benefits. The problem is most people, by definition, are not exceptional. We are mostly just average. The implications of these trends are truly frightening.