AMA 109 – Learn About The US Job Market with Ahu Yildirmaz

 

Ahu Yildirmaz is the Head of the ADP Research Institute. She has some great insight about the workforce market and gives the audience a sense of where the job growth is really happening in the United States and why. Ahu talks about how there’s a lot of growth happening in both the South and West regions in the United States. Ahu also tells the audience that there is a gender gap between male and female hiring rates and explains why this might be on today’s show with Jason Hartman.

 

Key Takeaways:
2:15 – Ahu talks about where she gets her data from in the employment reports that ADP produces.
5:25 – Are people working more full-time or part-time hours? Ahu breaks it down.
9:00 – Northeast and Midwest are lagging in terms of job growth.
12:45 – Texas is doing exceptionally well right now.
14:45 – Job growth is happening a lot faster for men than for women.
16:15 – Why is there a gender gap? Ahu and Jason give their opinions on the matter.
20:25 – When the economy is not good, employers are looking for people with experience so they don’t have to spend resources on training new arrivals.
22:45 – Ahu thinks robotic technology will be good for the job market.

 

Tweetables:
“The South added the most jobs and grew most quickly followed by the west.”

“Almost 70% of the new jobs created in Sept came from South and West.”  

“Texas is really the tiger state not only in the South, but nation wide.”

 

Mentioned In This Episode:
ADP.com

 

Transcript:

Jason Hartman:
It’s my pleasure to welcome Ahu Yildirmaz to the show. She is head of ADP Research Institute and you’ve certainly heard of ADP. They are the very large payroll processing company and they have a lot of interesting information on jobs and what’s going on in the employment markets, so it’s a pleasure to have her with us today. Ahu, welcome, how are you?

Ahu Yildirmaz:
Thank you. I’m good, Jason.

Jason:
It’s good to have you and you’re coming to us from New Jersey I believe, right?

Ahu:
Yes. That’s where our headquarters are.

Jason:
Good. Tell us first of all your data that we’re going to talk about and dive into today. Where are you getting the data from? Is it just ADP clients or is the data broader than that?

Ahu:
You know, ADP pays 1 and 6 US workers.

Jason:
Wow. That’s amazing.

Ahu:
That is amazing. So, what that means that we have access to 24 million US employee level database, then what we do, we partner with Moody’s Analytics every month to produce our employments reports. So, based on 24 million employee data set we model it according to DLS weight for the national job numbers. So, our job numbers come from, derived from, empirical data sets and we do publish every month, two days prior to government, the national employment numbers.

Jason:
Okay, great. So you publish before the government. I love that. Fantastic. So, overall, you know, we hear a lot of debate, Ahu, about, you know, the Obama administration would like everybody to believe that unemployment is down, but there are a lot of questions in the way that is counted, right? There’s the labor force participation rate, which, you know, to me seems to be a pretty valid way to look at things. They have the whole issue of the discouraged workers coming off the unemployment rolls and maybe you’re the wrong person to ask, I’m not sure, because you don’t really deal on the unemployment side, you only deal on the employment side, but if you have some comment there, it’ll be appreciated.

Ahu:
Well, our unemployment rate is more than the job numbers, right. We have to look at the labor participation rate as well as the population growth assumptions. So, different assumptions and different numbers come into the picture, but we report is the net job numbers, net added new jobs into the economy and that’s factual data.

Jason:
Excellent, excellent. So, are we doing better or worse?

Ahu:
I think we’re doing better. We look at the past 12 months, we are adding, on average, 200,000 jobs per month and in September we had another good month. US economy added according to our ADP national employment report, 2,000-13,000 private sector jobs and, again, this is very consistent with the growth we are getting the last 12 months and the good news is that the job gains are growth based across all industries and all company sizes.

Jason:
What about the issue of underemployment? There are complaints about that, about how with college degrees and masters degrees are working at coffee shops and not fully employed and many companies have been reducing hours to navigate around ObamaCare, making workers part time, contract, you know, there’s all sorts of complexities with this, of course, so I just want to ask you about that, because, you know, the interesting thing about what ADP does you know how much people are making. You actually write their paycheck, so is that amount is going up or is it going down, especially as it relates to inflation?

Ahu:
Yes, that’s a very hot topic and not the mention that last Wednesday we launched a new report from ADP Research Institute, which we call ADP workforce vitality report. In this report, what we do, we go one step further, we put down the employment numbers and we look at in terms of the wages, industries, hours worked, as well as gender income groups, who creates these jobs, what are these new jobs. So, it’s not just one job number, but we’re going to be able to dig further what kind of jobs are being created in the marketplace.

So, I can tell you from our first report that when we look at the growth in wage rates, we see an acceleration in the wage growth, so that’s good news, but we also have to look at whether these new jobs are coming from millennials or are they low paid jobs versus high paid jobs. For example, the sectors like retail, leisure, and hospitality versus fiance and technology companies and those are mixed.

Jason:
Okay, so, the results are mixed. Anything more on that though or?

Ahu:
Sure, again, in September both goods and serving producing industries have solid gains, but manufacturing and trade transportation and utilities added the most job. So, manufacturing, trade transportation, and utilities that includes retails jobs are very much consumer driven, but also more low paid jobs, but on the other side, manufacturing jobs are more mid level in ComCharts and we had a very good month in terms of manufacturing in September. There’s a sector for leisure and hospitality where we known that it is most employed by millennials, young aged, and low-waged jobs and definitely that’s a big part of job creation that we have been seeing lately.

Jason:
Okay, good, good. So, I like hearing good news about manufacturing. I like that a lot, because manufacturing is a very important base part of an economy. So, when we break this down by regions and states, tell us what the picture looks like in various states and regions around the US.

Ahu:
Yes, regional patterns remain in place and very much consistent what we have been observing past 12 months. In line with the US figures for September job gains remain fairly steady in most regions and states of the country, but again, the South added the most jobs and grew most quickly followed by the West. So, South and West are the regions really doing well and we still see that Northeast and Midwest are lagging in terms of the growth. Just in terms of the numbers, the South accounted for 42% of net new jobs followed by 25% generated in the West. So, what this means is almost 70% of the new jobs created in September came from South and West.

Jason:
That is absolutely staggering. I mean, I don’t know if the listeners are really understanding how big of a deal that is. I mean, that is just a staggering number that, you know, somewhere around 70% of job creation is coming from those two regions. So, you know, when we break that down, I guess the first thing we could say is people like warmer weather, because that’s what they get, but you know, the old rust belt economies and the business unfriendly states in which those rust belt economies are affiliated with, you know, that’s not where mostly where the action is.

There are a couple of exceptions and bright spots in everything that I know, but you can break down the West for us and that includes California, it includes Oregon, Washington, probably Arizona, Nevada. How do you divide that region? Do you include all of the four corner states, because I would think that California isn’t as much as a contributor to that.

Ahu:
Yes, but let’s remember that technologies still continues to drive the job growth in the West and established tech centers in California, but definitely Oregon and Washington now show that gains and they are holding on to gains, so it’s not only California, Oregon and Washington are definitely helping on the West side and this is mostly driven by technology, because this (#10:52?) has all the large big tech firms and they continue to hirer and it’s a very dynamic from the South. South has completely different story.

Jason:
So, tell us about that, that’s interesting, and certainly you’ve got Washington, no state income tax, you’ve got Oregon with no sales tax living on the border is probably paradise, because you don’t pay anything. I know people that go back and forth. They shop in one place, live another, and it’s quite a good deal, but what’s the different in the dynamic with the South and the West?

Ahu:
The population growth is more than twice as strong in these regions for both West and South relative Midwest and Northeast. So, stronger population growth translates into stronger demands for a variety of consumer services and housing as well as stronger labor force trends, so this is valid not only for South, but for West as well. So, both of these regions benefit from stronger demographic, but when it comes to the South, we see more dynamic industries.

The South is gaining from manufacturing and much of it is related to order sector and definitely oil energy related sectors and high tech companies are huge particularly in Texas. So, Texas is really the tiger state not in the South, but nation wide and it drives a huge growth coming from different sectors. High-tech, oil related energy related activities as well as population growth really drives the housing activity at a faster pace compared to the other states.

So, it’s a mix of all. Then we have the sunshine state, Florida, where we see a lot of hospitality, tourism activities helping to overall job numbers, whether it’s part time or full time, it helps with the job creation in that state. These are mostly, again, high turn over, low wage, young aged jobs, but leisure and hospitality, we see huge job gains, especially in South driven in Florida.

Jason:
Very interesting. Okay, good, good. Let’s talk about gender for a moment and then I want to get into different sectors, so how are the two genders doing in the job market? I’ve heard a lot of reports that during the fiance crisis men really struggled and women were the beneficiaries. I don’t know exactly why it was, but I remember reading a lot of articles like that.

Ahu:
Jason, the recovery continues to be he-recovery. Last Wednesday, as I mentioned, we launched our new report and you will see the numbers how the rate of wage growth differs between men and women and our data shows that the rate that wages are changing for men and women differ and what is more interesting during 2011 and early 2012, wages declined for both men and women at the same rate, but once the economy started recovery the pace changed and what we see is that the rate is much faster now for men and I have to say to gap is widening. It’s not closing.

Jason:
Really? That’s interesting, because I think one of the reasons men suffered so much during the financial crisis was because a lot of those jobs were housing and construction related jobs where there were just massive layoffs, but now you’re saying the men are doing better than the women in the work force.

Ahu:
In terms of the wage growth, yes.

Jason:
In terms of wage growth, okay. So, what do you attribute that to?

Ahu:
I mean, again, as the economy gets better, as you said, as we start adding more full time jobs and when it comes more across broad manufacturing, high-tech jobs as well as the construction jobs, the demand for that type of workers increase and that puts the pressure on wages. Just to give you an example, there’s a shortage in the US now for US truck drivers and that skill set and we had a similar gap in terms of the skill set in construction too. Those are mostly male-focused sectors and that puts the pressure on the wage growth.

Jason:
How does it put pressure on the wage growth, though?

Ahu:
So, when the economy gets better we see that some jobs are still being chilled. There’s a talent gap, skill set gap, in the job openings and job fillings and most of these jobs are related to male-dense sectors like transportation, utilities, as you said, construction and as the demand for these skills go up we also feel the pressure on the wages for these kinds of jobs therefore the wage growth accelerates and these are mostly jobs that are being filled by men. That could be one reason.

Jason:
Okay, okay good. So, what is your overall feeling about this. I know this is obviously a charged issue when you hear these stats about how women only make, you know, 73% of what men make. I think there are some interesting ways to dissect that, but I wanted to ask you your thoughts on it.

Ahu:
My personal thoughts on that, probably women..we may be less demanding. It depends. So, it’s hard for me to answer this question, but from a supply perspective, from a job creation perspective, they’re not seeing much difference. This could be something acute, this could be something related to women behavior in the job market, but this is my very much personal opinion, Jason. It’s hard for me to really connect that to a resource.

Jason:
Sure, sure and I’ll share a couple of mine and you’ll have some comments on them, because, you know, as an employer, over the years I’ve hired hundreds of people and I think there’s a lot of self-selection that goes on and that may just be for whatever cultural reason, but I have definitely noticed and, you know, I don’t even hire for this kind of position anymore, but when I used to put an ad in, I’ll say the ‘paper’, you know I’m talking 10 years ago and further back than that, but if I put that ad in for a receptionist position, invariably it would be a 100% or 99.9% female applicants whereas if I put an ad in for outside sales, it would flip and it would be 70% male and maybe only 30% female. So, a lot of this is really a self-selection issue, isn’t it?

Ahu:
That could be, that could be. I agree, but it’s also related with the educational level.

Jason:
Well, educational, I mean, women are beating hands down, aren’t they? The men better get on their game here, because they’re losing! You know, you look at law school enrollment, business school enrollment, and it’s like 55% + female. I mean, I’m not sure why that is either, you know?

Ahu:
Yes, but also personal priorities similar priorities definitely make it a big role for women in the labor force.

Jason:
Most definitely. So, when you look later in one’s career, when someone is, you know 35,45, or 50 years old in the workforce and then you look at those statistics, many times women leave the workforce for maybe 7-10 years and I don’t now what that average is by the way, but there are some stats on that. I’ve certainly read them before, you know, then you question, well, are people paid…is their age dictated by their number of years of experience? Certainly not as much as it used to be, but that is part of it, isn’t it?

Ahu:
Absolutely. Absolutely and also the economy plays a major role. When the economy is good, we have more flexibility hiring and taking risks from employer perspective, but when the economy is not good like the past couple of years, I think employers became more selective and did not have patience to really train the worker on the job. So, when the economy recovers and gets better you will see a much more flexible labor market for both genders.

Jason:
So, what happens? Is it they’ve had to cut their training departments and they just don’t have the resources to train people or as the economy improves what will happen there, why will there be more flexibility? That’s an interesting point.

Ahu:
It’s related to training course, but it’s not all about that. You have to produce the same amount of output now with less headcount or you don’t have the flexibility to increase your team, to increase your labor force, because of the uncertainty. I definitely felt that in my own team when the economy was uncertain, they wanted to, you know, be more careful about bringing a new person in the team, but when we get more certainty, more relaxed about the economy, we will feel less pressure and we will be able to bring more workers into the labor force so that they would have time and money to train them and prepare them for the job.

Jason:
So, Ahu, go ahead and give out your website and then I have one final question for you.

Ahu:
Our website is ADP.com/research.

Jason:
Research. Excellent. You’ve got some great material here and I wanted to ask you just your thoughts on robotics. You know, on the show we’ve been talking a lot about the self-driving car and obviously transportation. You mentioned truck drivers earlier. That’s a huge part of the workforce, but so many other areas where we’re probably going to see a pretty major, major impact from robotics. Are you talking and thinking much about that at ADP and seeing any of the effects of that yet?

Ahu:
This is very much interesting and timely. I just had a great conversation with one of my colleagues from ADP Innovation Lab. We have an innovation lab at Charleston, New York and I was there a few weeks ago and we actually talked about this specific topic. It will be interesting to wait and see how it’s going to shape, but from labor market perspective I always believe while it will impact some sectors in a negative way, it will definitely create new jobs, new job titles, and boost some of the other related sectors. So, we have to wait and see how that’s going to come into the labor market numbers.

Jason;
Yeah and my general thoughts on that people are always fearful of new technologies, because they do displace workers for a period of time, but then ultimately those workers certainly find something else to do and they create a new thing and someone certainly has to manage the robots if they don’t take over the world and manage us, which they might, but I think the future is very bright in terms of that, but the hard part is that adjustment cycle that takes maybe two years whenever any new major thing happens there’s a fall out and a readjustment period and a re-training period and that’s the part that really hurts most people, so the best thing to do is, you know, stay with the trends and constantly upgrade your education and I’m sure you’d agree with that, right?

Ahu:
Completely agree, but there’s also a big job for the corporations partnering with the universities so that we can prepare the new graduates to these unknown jobs for the future, so if they get into some private program and partnerships with universities, corporations, and with the help from the government, I think we can part working towards preparing the workforce for those undefined, unknown roles and the positions for the future.

Jason:
Absolutely. Well, good stuff. Well, Ahu, thank you for giving us some great insights into some of this and sharing the ADP research with us. We appreciate having you on the show.

Ahu:
Thank you.

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