The State of the Union and the workforce

Posted by: Joel Capperella

I enjoy history. Looking back to see how events transpired that helped to shape that period of time under the historical microscope is fascinating. The adage that history is “written by the winners” is certainly true, but it can be perceived as negative, as though the entire story hasn’t been told because the perspective of the other side isn’t considered.

I disagree with that notion because while in the moment, the events, as they play out, can’t possibly be considered in the context of the future. When evaluating from the comfort of that future, one can certainly see the moving pieces impacted the realities of the past.

We are always living in an unforeseen future’s history, regardless of political, social, and economic climate. Some presents turn out to be more historical than others, and this moment in which we live seems like one that will be looked back upon as a significant time in the history of the United States. Mostly because of two very significant factors, two wars being fought, and an economic condition. The the likes of which arguably have not been seen since at least the late 1970s, but possibly since the Great Depression.

It is with such consideration that I viewed the president’s State of the Union (SOTU) address last night and the dueling punditry that followed that poured over the 7,000+ words of the text. After such amateur analysis, I began to consider if, historically speaking, the SOTU has ever had any significant impact. I think the answer is most likely direct impact from the SOTU is rare, and what it has become in modern times is nothing more than a political infomercial for the party in control of the executive. Last night’s address, I believe, will prove no different.

The cable news can throw up their countdowns to the start of the actual address as if it were some sort of compelling must-see sporting event. Then they can dissect every inch of the declarations of proposed policy, what are we, working America, to make of what is ultimately nothing more than an agreed upon mile marker in the current administration’s term. What does it mean for our immediate efforts, and what impact might it have over our long-term business objectives?

The answers are not at all surprising. What we do day-to-day, how we structure our workforce, the decisions we make to develop our talent, will not be impacted at all by the president’s words last night. Moreover, suggested and requested policy development is at least a good year away from impacting the execution of our business objectives, perhaps even longer given the divided nature of Washington, D.C. these days.

The answer is that we must continue to be as aggressive as we can with the development of our talent supply chain. We must be accountable for cost efficiency, quality, and strategic utilization of every single segment of a workforce.

To underscore our point, here is my take on some of the content of last night’s address and what it actually may mean in both the here-and-now as well as the long term.

Position: The president stated that the federal government “extended or increased unemployment benefits for more than 18 million Americans; made health insurance 65 percent cheaper for families who get their coverage through COBRA; and passed 25 different tax cuts.”

Implicit in this statement is the unemployment number itself. Double digits and one-in-ten Americans out of work is a start reminder of the realities of the current downturn. It is rough, and by touting the extension of unemployment benefits, it can easily be inferred that this administration, like many economists, believe that recovery is nothing that will come bursting onto the scene with force. Rather, it is likely any recovery will be slow and long.

Recommendation: The leanness of your workforce is likely to continue for at least this year. Focus must be placed on intelligent use of contract work and the overall job satisfaction within the full-time employment ranks.

Position. Of the economic recovery plan, the president said, “Because of the steps we took, there are about two million Americans working right now who would otherwise be unemployed. 200,000 work in construction and clean energy. 300,000 are teachers and other education workers. Tens of thousands are cops, firefighters, correctional officers, and first responders.”

The number is agreeable, but it is far from comforting. The stimulus dollars are not infinite. The impact once those funds are exhausted could have a significantly negative effect on what could be a deflated unemployment number.

Recommendation: The diversification of your workforce is critical right now. If you haven’t revamped your overall talent supply chain practices, it is long overdue. If the worst happens — a double dip recession — we must be poised to dial our workforce up and down against our most critical business objectives.

Position: On the “engine of growth” — American businesses. The president proposed “that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat. I am also proposing a new small business tax credit, one that will go to over one million small businesses who hire new workers or raise wages. While we’re at it, let’s also eliminate all capital gains taxes on small business investment; and provide a tax incentive for all businesses, large and small, to invest in new plants and equipment.”

This proposed policy would have the most immediate impact on those businesses that fell in the administration’s and congress’ criteria for receiving the benefit. However, it is something that would have to work its way through the legislative process. And unfortunately, Washington, D.C. is too frequently burdened by bickering over the criteria that defines the recipients. It could translate to a projected debate over who receives such benefits, or legislation that could be manipulated to simply avoid associated taxes, resulting in a flat employment growth rate and less revenue to the Fed.

Recommendation: Keep an eye on the legislative process and understand exactly how it is to be executed. Evaluate workforce needs against the legislation as it becomes more of a reality. Until then, focus on succession planning of the current staff and workforce development within the realities of current tax law. For small businesses, it is likely time to evaluate some workforce strategies that are employed by your bigger brethren. Investigate temporary workforce alternatives and identify providers in your geography that deliver quality and protect your cost concerns.

Position. The “clean economy.” Perhaps the biggest long term hope in the president’s jobs agenda. The realities of clean technologies is such that an associated economy simply doesn’t exist. However, he is spot on in stating, “There is no reason Europe or China should have the fastest trains, or the new factories that manufacture clean energy products.”

It is inevitable that these technologies will mature. And manufacturing needs will evolve. Leaving the manufacturing to other nations would be an incredible error. But, it is a long way off, and I don’t believe the Fed can necessarily accelerate the advent of the overall clean economy.

Consider Better Place. It is being funded by plenty of venture capital, and it cannot be understated what a huge gamble such investments represent. Moreover, the goal for Better Place is to achieve infrastructure needs by the year 2020. Not only does a lot have to happen between now and then for Better Place to be successful, but adoption of such technologies likely won’t increase large demand for associated products for at least another five. Translation, no jobs in the near term for such investments.

Recommendation: Don’t place any hopes in the development of the clean or green economy. Your workforce plans don’t even have to worry about them right now.

Position: Finally, the jobs bill. The president proposed amounts to a second economic stimulus and used the term “lost decade” to describe the ’00s. He stated, “We cannot afford another so-called economic ‘expansion’ like the one from last decade — what some call the ‘lost decade’ — where jobs grew more slowly than during any prior expansion; where the income of the average American household declined while the cost of health care and tuition reached record highs; where prosperity was built on a housing bubble and financial speculation.”

And so we’ve come full circle to history. I have never heard the previous decade referred to as the lost decade. In fact, the term is typically used to reference the condition in Japan in the ’90s after the commercial real estate market tanked. It is an incredibly eerie juxtaposition, and one that should send a shiver up the spines of all of us who depend on a paycheck to make ends meet.

Japan had what mounted to multiple jobs bills, but still, we look back on that time as a lost decade. So what sort of hope should we place on this proposed second stimulus. More importantly, how should we position our workforce accordingly?

Recommendation: Stimulus funding must be seen as opportunistic. If a second stimulus makes its way through Congress, the appropriate response is to immediately invest in labor that can help your company quickly capitalize on the availability of the dollar.

It is recommended that a contingent workforce be utilized as it is uncertain if these sorts of jobs will be sustainable in the long run. Therefore, it is critical for you to establish a comprehensive knowledge of who serves your contingent workforce needs today, and to build relationships with those partners of your business so you can act quickly.

The president spoke for over 70 minutes last night. The economy was two-thirds of his content. The impact that these words will have on our immediate workforce management is, just as most SOTU addresses, negligible.

Therefore, we have the responsibility to continue to follow the legislative discourse and position our talent supply chain to be prepared to act as soon as the words of the speech become a legislative reality.