Tag: Peter Cappelli

Why Walmart Is Enlisting Veterans

Posted on January 16, 2013

walmart newWalmart’s announcement yesterday that it would offer jobs to veterans may well be a good business move as well as a way to bolster its recently tarnished image. A strike last October by Walmart workers in California extended to the day after Thanksgiving at locations across the U.S. The protests were chiefly over wages and working conditions.

Walmart said it would offer a job to any honorably discharged veteran in his or her first 12 months off duty. It expects to hire up to 100,000 veterans in the next five years. “Hiring a veteran can be one of the best business decisions you make,” said Bill Simon, the company’s U.S. president and CEO, in yesterday’s announcement. He noted that veterans have a record of performance under pressure, and are quick learners and team players. He also sees them as “leaders with discipline, training and a passion for service.” Walmart today needs the “seriousness and sense of purpose that the military instills,” he added.

Peter Cappelli, director of Wharton’s Center for Human Resources, feels veterans bring “personal discipline.” Matthew Bidwell, Wharton management professor, rates Walmart’s move as a “great initiative” from a company with reputation issues. Below are excerpts of comments from Cappelli and Bidwell on Walmart’s announcement:

K@WToday: Are there good business reasons for a company to hire veterans, or does it serve mostly as a public relations gesture?

Cappelli: It does both. The jobs Walmart has are not ones that require a lot of skill. What they require is personal discipline, and veterans are more likely to have that.

Bidwell: I think it is a PR gesture and something that may well support the business. Veterans may often have developed important skills in the military, and they represent an important pool of labor. Walmart’s size combined with its high turnover rate mean that it always needs to hire large numbers of employees. Going to veterans as an important source makes sense. Of course, they would have been hiring a lot of veterans anyway. What is interesting is that it is offering to hire any veteran who wants a job. That’s what is eye catching here. 

K@WToday: Do veterans bring some special qualities? Are they particularly suitable for functions like HR or quality control? 

Cappelli: I don’t think Walmart is thinking about [tying] all its jobs to this promise. I’m sure it refers to front-line workers in stores. [“Most of these jobs will be in Walmart stores and clubs, and some will be in distribution centers and the Home Office,” says the Walmart statement.] 

Bidwell: Obviously the military trains very well for some roles. It’s worth remembering how broad the military is, though, in terms of all the jobs that it encompasses. That makes it quite hard to generalize. 

K@WToday: Is there a downside, however small, to hiring veterans? 

Cappelli: None that I see. Veterans are like other people, just pre-screened and given experiences that create personal discipline. There are veterans who have problems associated with combat, but there are non-vets with problems as well. 

Bidwell: None. One other point: This is a great initiative by Walmart, but/and it comes from a firm that generally has a poor reputation on employment issues. On the one hand, this could help to improve its image. On the other hand, it would be even better if a firm that was known for treating its employees better was showing this interest in veterans. 

K@WToday: Will veterans need special training to work in the corporate sector? 

Cappelli: There isn’t a lot of training in these jobs, for veterans or non-veterans. 

Bidwell: Corporate life and the different nature of authority and obedience can take some getting used to. Most people, however, don’t have too much trouble with that.

 

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Faculty Perspectives on the Election

Posted on November 7, 2012

In the wake of President Barack Obama’s victory over challenger Mitt Romney in the 2012 presidential election, K@W Today asked Wharton faculty for their perspective on a number of issues that will take center stage in the days and months ahead.

We posed a number of questions, including:

  1. What do you think was the biggest reason for Romney’s loss? What should he have done differently?
  2. What was the biggest reason for Obama’s victory?
  3. An editorial in The Wall Street Journal suggested that Obama got a big boost in the election from two men: Ben Bernanke and his quantitative easing, and John Roberts, who joined four other Supreme Court justices in upholding Obamacare. Do you agree?
  4. The election raised interesting demographic questions. Romney appealed to many white males, while Obama appealed to many Hispanics, Asians, women and African Americans. Does this suggest that Republicans need a better strategy to attract these groups going forward?
  5. What should Obama’s strategy be for dealing with the key issues of unemployment, the fiscal cliff and the deficit?
  6. Is there any reason to think that the Republicans, who control the House of Representatives, will be more willing to work with Obama to get some of these issues resolved? Can the two parties hope to work together?

Here is what we heard:

Peter Cappelli, director of Wharton’s Center for Human Resources:

“Aside from the tactical issues, the fundamental issue in the election was the role of government. The vote was basically split between those who did not think government did much for them economically and those who thought government either did, or should do, something for them. The Democrat/Republican divide always reflects this issue, but it was much starker this time because the Republican position was more extreme, particularly in the proposed cuts for social services.

“The Romney campaign suffered because its proposals seemed to frighten too many voters who feel they need government protection. The Romney ticket also could not shed the baggage from the primaries on social issues – women’s rights and immigration, in particular – that hurt them with those voters.

“The biggest reason for the Obama victory in my mind was that Governor Romney’s various gaffes shifted the contest from being a referendum on President Obama and the poor state of the U.S. economy to being more of a referendum on Governor Romney. Much of the energy on the Democratic side seemed to be [directed] to voting against the Romney ticket.

“There are a hundred things that made a difference to the election. Certainly if Obamacare had been turned down by the Supreme Court, things would have been bad for the President, but then it was bad for the Democrats when the Supreme Court upheld Citizens United. Quantitative easing appears to be helping the economy, but it has been bad news for the President that none of the other treatments before helped much. A lot of other things could have gone differently that would have affected the outcome….

“The big question seems to be how the Republican party, especially in the House of Representatives, will see their effort over the last four years to obstruct anything that would appear to give the President a legislative victory. The goal of that approach was to prevent the President’s reelection. That did not work. So what do they do now?”

Mark V. Pauly, professor of health care management:

On why Romney lost: “The economy recovered enough to take away his main argument for change.”

On The Wall Street Journal editorial: “I do not see that the court decision on health care reform meant more votes for the President. It kept an issue alive — you need to vote Republicans [into office] to get rid of Obamacare — but that was obviously not an important enough issue, nor should it have been since in the short run, relatively few people gain or lose from health care reform.”  

On dealing with the issues of unemployment, the fiscal cliff and the deficit: “Republican control of the House of Representatives will keep us at the same point in discussing these issues as we were before the election.”

On whether the two parties can work together: “Now that the House knows it will have to deal with the President, I expect they will try to get some things resolved that were held hostage to the election. I think the President has used most of the ammunition he has in terms of executive orders and the like, so I expect the House will pull things their way. We will have some tax increase on millionaires and billionaires, but of course we do not have enough [of them], so that will not help the deficit that much. It will just make Democrats feel better.

“I am hoping this will set the stage for bipartisan tax reform along the lines of the Rivlin-Domenici or Bowles-Simpson [debt reduction plans]. Both have big health care parts to them. I think the election gives cover to Republicans to go along a little.”

Kent Smetters, professor of business economics and public policy:

On why Romney lost and Obama won: “Obama had a better ground game — more regional offices, more effort to get out the vote. Romney also focused solely on jobs without painting a broader picture. He should have channeled Reagan a bit more.”

On The Wall Street Journal editorial: “I don’t agree with it. Money injected by [the third round of quantitative easing] is basically just sitting on bank balance sheets. I think that the [Supreme Court decision on health care], if anything, helped mobilize conservatives behind Romney.”

On the demographics question about Obama’s popularity with minorities: “The election raised interesting demographic questions. Romney appealed to many white males, Obama to Hispanics, Asians, women, African Americans and other ‘minorities.’ Does this suggest that Republicans need a better strategy to appeal to these groups going forward? Romney also appealed to married females. But, yes, the Democrats are effective at class war politics. Republicans need to do a better job of explaining how prosperity is better than envy.”

On a strategy for dealing with unemployment, the fiscal cliff and the deficit: “The ‘fiscal cliff’ is a horrible term. Minus five for Bernanke for coming up with it; minus 10 for still being an old school Keynesian. Otherwise, I like him.

“The real cliff is if we keep focusing on the short run without also addressing the huge budget deficit. The problem with the U.S. economy is not the lack of consumption. We have plenty of it. The problem is the lack of investment. We need to address the fiscal cliff by removing some of the uncertainty about future tax rates and returns to investment. Any proposed solution to the fiscal cliff can’t be short-term and [can't work without] comprehensive reform of the tax code and spending side that improves the long-run situation as well.”

On whether the two parties can work together: ”No, they will continue to play chicken. Hopefully, however, it will lead to a grand compromise, like the 1986 Tax Reform Act where Reagan and the House Democrats hammered out a deal that was tenable to both sides.”

Mark Duggan, professor of business economics and public policy:

On why Romney lost and Obama won: “A key reason for Obama’s victory is that the economy has been gaining more momentum over the last few months, with unemployment falling below 8% and job creation relatively strong. This may have given voters more confidence that his policies, such as his help for the auto industry — an important issue in arguably the most important state of Ohio — were working. His handling of Hurricane Sandy also probably helped to give him just a bit more support so that he pulled out wins in pretty much all of the states that were deemed battlegrounds.

“While Florida has still not been called, the races in states like Ohio, Virginia and Colorado were sufficiently close that even a small boost might have helped lead him to victory. Plus his victory margins in Wisconsin, Iowa, New Hampshire and Nevada were somewhat bigger than expected. On the foreign policy front, I think most people felt he won the third debate; that may have helped to tip the balance for many voters, too.”

On issues like the fiscal cliff, taxes and unemployment: “As for big things that are coming down the pike, the President will be negotiating with Congress on what to do about the upcoming fiscal cliff. Effective January 1, 2013, there are a set of spending cuts and tax increases taking effect that will lower the deficit by about $600 billion, which is close to 4% of GDP. While reducing the deficit is important, many think that a change in government policy of this magnitude could put the economy back into recession. Thus, it will be very important for Obama to work with Congress to make the right tradeoff between starting to tackle the deficit and stimulating economic growth.

“Certain parts of the fiscal cliff, like the payroll tax holiday (a 2 percentage point cut in this tax for all workers on their first $115,000 in earnings), are very unlikely to be renewed, but others — like the spending cuts and increases in income taxes — are likely to be negotiated. Long-term deficit reduction is also hugely important, with changes needed to the tax code and to entitlement programs.

“The fact that Obama will now be a second-term President may make it easier for him to confront these challenges as he does not need to worry about being re-elected. Indeed, that is why many support term limits.”

 

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Disappointing News on the Job Front

Posted on September 10, 2012

According to statistics released Friday by The Bureau of Labor Statistics (BLS), 96,000 jobs were added to the U.S. economy in August – a “worse than expected” showing, especially in manufacturing, notes Wharton management professor Peter Cappelli. The jobless rate dropped slightly from the previous month, from 8.3% in July to 8.1% in August.

“The unemployment rate fell because more job seekers have given up and withdrawn from the labor market,” Cappelli states. The labor force participation rate declined in August to 63.5% from 63.7% in July. “Manufacturing was surprisingly weak, and it could be that the recent fall of the euro against the dollar had some effect on that,” he adds. “The only good news out of these numbers is that public sector job losses have slowed.” In addition, August employment rose in food services and drinking places, professional and technical services, and health care.

The ADP National Employment Report – a measure of employment based on a subset of U.S. business clients – was published the day before and had offered more optimistic news – which only added to the disappointment regarding the BLS report, according to Cappelli. “Many people expected the numbers to be much better than they were, given that the jobs report from ADP, which is the second most important labor market estimate, showed that we had added 201,000 new jobs in August. The ADP numbers are based on 400,000 employers, so they are pretty good.”

Cappelli recently spoke with Knowledge@Wharton about the challenges for jobs seekers and employers, which he also addresses in his new book, Why Good People Can’t Get Jobs: The Skills Gap and What Companies Can Do About It. Wharton Digital Press and Cappelli are offering the ebook free for one week, from September 10-17, 2012, to stimulate discussion about the jobs crisis during the presidential election season.

At the recent Republican and Democratic conventions, job creation, unemployment and the economy featured prominently as key election issues. Indeed, a recent USA Today/Gallup poll reported that 90% of U.S. registered voters count the economy as extremely or very important to their vote in the presidential election. Unemployment, the federal budget deficit, and health care follow near the top of the list.

In the wake of what just about everyone describes as a lackluster BLS report, observers speculate that the numbers might encourage the Federal Reserve at its policy meeting this week to take action that will help stimulate job growth, including a new bond-buying program, according to an article Friday in The Wall Street Journal. “That is one reason investors, many eager for Fed action, appeared to take the jobs tally — which fell short of the roughly 125,000 many had expected — in stride,” the article stated. The Dow Jones Industrial Average on Friday closed at 13,306.64, up 14.64.

The Journal also noted that at a recent meeting of economists and central bankers in Jackson Hole, Wyo., Fed chairman Ben Bernanke “described the weak labor market as a grave problem — a strong suggestion that he wanted to take new measures to strengthen economic growth.”

Cappelli has some advice for jobseekers: “First,it’s not your fault if you didn’t find a job in August. It looks like there wasn’t much hiring. Second, given that business performance is still pretty good, there might be some pent-up hiring during the next month.”

During the interview with Knowledge@Wharton, Cappelli also noted that in this era of automated hiring systems, it is important to connect with “a real person” so that job applicants can explain to him or her what their relevant skills are, “in ways that may not be completely obvious from your resume. It always helps to put yourself in the shoes of hiring managers who understandably want to minimize their risk – and find somebody who is really motivated to do the job. See if you can make that case to them.”

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Is the Unplanned Career Best?

Posted on July 19, 2012

College students, and parents concerned about their kids’ careers, often try to divine which jobs or skills will be in demand when it’s time to enter the workforce. With today’s quickly shifting economies and technologies, it can be tough to hit that moving target.

Some resort to choosing broad categories. In the U.S., for instance, there has been a steady media drumbeat about the deficit in science education. For those who are science oriented, that might seem to make planning research careers in, say, chemistry, genetics or neuroscience a safe bet. But it’s not. Despite today’s high-tech, health care-oriented world, many PhDs in these areas are unemployed or floundering in lower level jobs, according to this article in the Washington Post. The jobs just are not there.

Here’s another straw in the wind: Only 38% of those with a new PhD in chemistry had jobs last year, according to a survey by the American Chemical Society, the Post notes.

This is unsettling, not only for well-educated scientists who can’t find appropriate positions – or are being laid off – but also for those trying to plan for future jobs requiring a long lead time to accumulate skills that are not easily transferrable. As the article notes, we all tend to think that more education is always a good thing, especially in a growing, technical field like health care. Yet it’s not true, given the quickly changing supply/demand curve for positions requiring such technical expertise. For example, while the number of PhDs churned out between 2003 and 2007 in the medical and life sciences nearly doubled, the job pool did not keep up and lately has shrunk in the U.S., the Post notes.

One woman, who studied to be a brain scientist, gave up looking for a permanent job in her field and accepted a lessor position three years after receiving a doctorate in neuroscience, the Post reports. “I’ve listened to this stuff on the news about how we need more scientists and engineers,” she said. “I’m thinking, ‘What are you talking about?’ We’re here.”

So, how can you know these things in advance? You can’t.

“The jobs haven’t been there for quite some time,” says Peter Cappelli, head of Wharton’s Center for Human Resources. “Despite the rhetoric about the need for more scientists, the reports that look carefully into the labor market for scientists have found that supply has long outstripped demand. That is why there are so many post-doc programs for PhD scientists, because there aren’t enough good real and permanent jobs for those who graduate.”

What’s more, “the other problem with most technical careers now is that they don’t last long,” Cappelli adds. “There isn’t much retraining available, and skills become obsolete quickly. When they do, the old workers are pushed out.”

In the Post article, another woman in her early 50s who had spent 20 years designing new drugs for large pharmaceutical companies and who was laid off not long ago, said she was planning to “get out of science.” But she also had advice for her daughter, who “loves chemistry and math. I tell her, ‘Don’t go into science.’ I’ve made that very clear to her.” In her industry, “it’s been a bloodbath…. Very good chemists with PhDs from Stanford can’t find jobs.”

So, is there any advice Cappelli can offer students, especially those in science, on how they can plan a career path? “Frankly, no,” he says. “It’s better to be adaptable than to try to plan your way to success.”

 

 

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Return of the Founder

Posted on January 17, 2012

It’s been a dramatic time for Urban Outfitters: First, CEO Glen Senk surprised everyone by resigning. Then Urban Outfitters founder Richard Hayne stepped forward to appoint himself to the CEO job. A few days later, Senk announced he had accepted a new job as CEO of David Yurman jewelers. Meanwhile the company stock started a roller coaster ride, falling almost 19% before showing a slight rebound.

This is not the first time the founder of a company has quickly stepped in to replace a CEO who has left or been fired. (In 2007, Michael Dell ousted Dell president Kevin Rollins and took back the CEO reins.) The question is, how well does it work in general, and how well can it work at Urban Outfitters, given that the company has experienced a sales slump in key divisions over the past year?

In addition to the Urban Outfitters stores, the company owns Anthropologie and sells clothing under the Free People label. It launched the BHLDN bridal brand last year. Initially named The Free People’s Store, Urban Outfitters was started by Hayne in 1970 in a neighborhood adjacent to Philadelphia’s University of Pennsylvania campus.

According to Wharton management professor Larry Hrebiniak, the company’s “precipitous” stock decline last week signaled that many considered Senk’s departure to be “a huge loss to the company. Truth be told, however, the company under Senk has been struggling,” Hrebiniak adds. “Recent sales have been down significantly. Inventory problems plagued the company and [continue] still, forcing price slashes and profit declines. Stock price under Senk underperformed the retail sector by a good margin. Senk was making some headway, but the future certainly wasn’t yet rosy. He was okay as a CEO, but certainly not irreplaceable as a leader.”

The question is, “Can the founder work his magic and finally get the company on a solid track?” Hrebiniak asks. Hayne clearly is a “stopgap CEO. He has a few years, at most, before a more permanent CEO candidate is found. Still, it can work. He founded the business, so he must know something about the steps needed to prosper in a competitive retail space.”

Hayne’s success and that of his company will depend on three things, Hrebiniak says. First is his “commitment to the tough task ahead: The 64-year-old leader must live the part and push hard with his reforms. Second, the quality of the top management team working with Hayne is critical, especially in light of Hayne’s pro tem position. The company needs day-to-day involvement and commitment, strong hands in operations, inventory control, marketing, product design, etc., to make things work. In my opinion, the top management team is up to the task.”

And third, Hayne and his team “must clearly lay out their strategy going forward. Functional plans must be articulated clearly to convince shareholders and analysts that the company sees a path to improved performance. A strong strategic and operating stance will also positively affect buy-in among employees…. There is an upside that Hayne and his team can envision and target.”

In a previous Knowledge@Wharton article, Wharton management professor Peter Cappelli commented on the performance of companies where founders come back to take on the CEO job. “The record is mixed,” he noted. “Generally, there’s a sense that organizations need different skills at different times. And so the people who have founded organizations and have the entrepreneurial zeal and ideas often aren’t the people who can take the organization to the next phase.

“Sometimes you need more administrative skills, more management skills,” Cappelli added. ”Sometimes leadership and zeal isn’t enough. On the other hand, the founders have a symbolism that becomes very important when they step back in — in terms of … their ability to sell ideas to the outside audience at different points in time.” 

As for Urban Outfitters, Wharton marketing professor Stephen J. Hoch suggests that it “makes sense for Hayne to take over again” because he still appears to be “completely engaged. I am sure that they will bring in a CEO/COO type soon enough, either an internal person or one from the outside.” Michael Dell was still very young when he returned to the CEO position, Hoch points out. Because Hayne is 64, “he is not going to be doing the CEO thing for too long.”

Observers also wonder whether the company will explain the circumstances behind Senk’s abrupt departure and the quick announcement of his new job. So far, no explanation has been forthcoming. Says Hoch: “Should Hayne come clean and explain what happened? I guess that depends on what happened.”

 

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The Discontented Thirties

Posted on December 5, 2011

According to a new research study by the Sloan Center on Aging & Work at Boston College, the people who are most satisfied with their jobs are older employees – those age 50 and up. The most dissatisfied? Those between the ages of 30 and 39.

Furthermore,employees age 40 and older are the most engaged and show the highest level of organizational commitment,according to the study,while those under 30 are almost as satisfied as the most satisfied group of 50 and older.

The study based its conclusions on work experience data from 11,298 individuals working for seven multinational companies at 24 worksites in 11 countries. 

So why is the 30-39 group so dissatisfied?

“That is the stage of life where people typically start a family and have young kids at home,” says Wharton marketing professor Cassie Mogilner. “Therefore, these people are more likely to feel the strains of balancing work and life, thus pulling their minds away from being fully engaged” on the job. In addition, notes management professor Nancy Rothbard, this age group “is in an intense career stage where they are often engaged in continued on-the-job learning, with greater responsibilities.”

Peter Cappelli, director of Wharton’s Center for Human Resources, notes that “life satisfaction seems to hit bottom [right around] age 30,” and may be related to the fact that these employees’ “expectations are not being met.”

But as employees’ children get older,says Mogilner, “those who are career oriented can get their minds back in the game and enjoy greater satisfaction from their work. Jobs provide a great source of self-definition,particularly when people are young and starting out their careers — and identifying what careers they want to pursue — and then again when they have fulfilled the toughest years of parenting.

“Employees who are working later [in life] and who are most satisfied with their jobs may reflect a case of self-selection,” she adds. “Usually by one’s 50s,if [a person] is working,she has likely climbed up the ladder to be successful in her profession. This group is likely to continue to work if they like what they do.”

As for Wharton management professor Matthew Bidwell, he is “a bit surprised by the results. My impression was that generally workers got more satisfied as they got older, and that the main reason for this was that they were generally moving into more rewarding jobs with higher pay and more responsibility. So I would expect job satisfaction to be lower for those under 30. In fact, if you look at the study, there doesn’t appear to be a statistical difference between the under 30s and the 30-39 year olds. So the results are consistent with the standard finding of job satisfaction increasing over time.”

Does the survey’s finding – that those over 50 are the most satisfied,and those over 40 the most engaged and committed – go against conventional wisdom that older workers are not as valuable as younger ones? What can be inferred from the study’s conclusions depends on what measure of engagement the authors used, says Rothbard. “It sounds like they used commitment as a proxy for engagement. So I think this more reflects the fact that those over 40 are more satisfied and committed to the organization,which can lead to greater workforce stability as it is negatively related to whether people leave.”

Bidwell says he wouldn’t “draw too much of a straight line between the commitment and value to the firm. Workers can be highly committed but also bad at their jobs, and vice versa. I’m not sure on the conventional wisdom about age. There are concerns that older workers will be less flexible than younger ones,but along many other dimensions including maturity, stability,knowledge, etc., you would expect them to outperform younger workers.”

Does the stalled economy affect these results, by, for example, creating a need for older workers to stay in their jobs longer,even as companies cut back on pay and promotions? Or is the 30 to 39 cohort always pretty dissatisfied with their lot? “I don’t think this is related to the stalled economy per se,” says Cappelli. ”After all, it’s stalled for everyone.”

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Labor Day 2011: Not Everyone Will Be Celebrating

Posted on September 2, 2011

If you look up the words “Labor Day” on the web site of the U.S. Department of Labor (DOL), you will learn that this holiday — first celebrated on September 5, 1882, in New York City — “is dedicated to the social and economic achievements of American workers.” The labor force, the site notes, “has added materially to the highest standard of living and the greatest production the world has ever known…. It is appropriate, therefore, that the nation pay tribute on Labor Day to the creator of so much of the nation’s strength, freedom, and leadership — the American worker.”

Unfortunately, for 9.1% of these lauded American workers, Labor Day 2011 finds them without a job and, in some cases, with little hope of finding one soon. The economy continues to limp along two years after the financial crisis, and most economists don’t expect the employment situation to improve until the end of 2012, at the earliest. Department of Labor figures released on September 2 piled on more bad news: Not only did the  unemployment rate remain unchanged for the month of August, but no new jobs were added to the economy despite expectations that the figures would show some improvement.

Acknowledging the importance of jumpstarting the economy and getting people back to work, President Obama plans to lay out a jobs agenda in a speech to Congress on Thursday.

KnowledgeToday asked several Wharton professors to each propose one idea for getting people back to work.

Peter Cappelli, director of Wharton’s Center for Human Resources and professor of management: “The most successful government policy for encouraging jobs is hiring subsidies — programs where the government gives employers some kind of subsidy for each new hire they make, usually in the form of a tax break of some kind. There has been extensive research on these programs, especially in Europe where they have been popular, and they work better than anything else at promoting new jobs. They have been tried in various forms in the U.S., mainly to help disadvantaged workers get into the labor market, but they were also used after the 1991 recession to promote hiring. While the results have not been spectacular, they are better than any other option under consideration.”

Mauro Guillén, director of the Joseph H. Lauder Institute and professor of management: “There are two types of unemployment — long-term and short-term. It is impossible to design effective policies that do not distinguish between the two. Long-term unemployment includes people whose jobs (or even industries) have disappeared. These people need re-training, and they need to be reminded that there is a place for them in the global economy, because otherwise they will feel discouraged and drop from the labor force. Therefore, education and training policies are needed.

“Short-term unemployment is a different story. It affects workers who have the skills to play a role in the global economy, but are jobless because of the economic downturn. The policies needed to tackle this type of unemployment all have to do with accelerating GDP growth. The debate among politicians, policymakers and academic economists is about the best way to stimulate the economy so that it creates jobs. Some argue that lower taxes, less regulation and a balanced budget is the way to go. Others maintain that the economy needs a boost in order to start growing in a sustainable way, so cutting government programs is not appropriate because aggregate demand will suffer. It is also important to keep in mind that the lingering doubts about the banking sector and the continued lack of confidence and trust in financial markets is adding to the problem because credit is not flowing to businesses as it should.

“As an aside, I think long-term unemployment among the young is the most disturbing aspect of the present economic situation. This problem is not as severe in the U.S. as it is in Europe and in the Middle East (hence the Arab Spring and the protests in the U.K., Spain, and elsewhere). Still, youth unemployment poses its own set of policy issues. A mix of education, training and economic growth is needed.”

Peter Linneman, emeritus professor of real estate: “The answer is reduce political risk. The government has been awash in new and unformed regulations and interventions for three years. There are no predictable ‘rules of the game.’ To that end, announce that taxes will not be changed in any way for five years, and there will be no new regulations introduced for three years. Give predictability a chance.”

Kent Smetters, professor of business and public policy: “I would focus on removing the distortions that companies currently face when making business investments.

“Under current law, the cost of a business investment can be used to reduce reported taxable income according to (usually) a straight-line depreciation schedule (with some modifications). For example, if I bought a machine for $100,000 that is projected to last for five years, I could report $20,000 in expenses against my business income over each of the next five years. Instead, I would move immediately to a tax system that allows for ‘full expensing’ of all business investments. In other words, all $100,000 would be immediately deductible against current income, regardless of the life of the asset. This idea dates back to the late, great Princeton economist David Bradford, during his time at Treasury under Ronald Reagan, and it has been supported by some prominent Democrats in the past as well, including [former senator] Tom Daschle. Full expensing would encourage the private sector to stimulate investment without the government trying to pick winners and losers. To be sure, full expensing is costly; it would likely cost the Treasury up to $1.5 trillion over the next 10 years. But it could be cheaper than all of the other stimulants and command-and-control methods currently being used by the Administration.”

Susan Wachter, professor of real estate: “Bring stability to the housing market. Consumer confidence is at all time lows. Construction and construction jobs are at record lows. Buyers are sidelined in what is the most affordable market in history. Ironically, this requires long-term thinking. Buying and putting equity at risk is not in order when buyers are worried about what the future holds. We need to build consensus on the provision of housing finance going forward. This is a large segment and the most underperforming segment of our economy. We need certainty to replace the fears of what is to come.”

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Happy Days Are Not Here Again

Posted on July 11, 2011

The workforce is not a happy place these days. According to a recent survey from Mercer Human Resource Consulting, half of today’s employees are miserable in their jobs and one third would like to quit. A study from the Society for Human Resource Management said that more than three-quarters of the companies polled had cut benefits. All this at a time when raises — if there are any — aren’t keeping pace with inflation.

That’s the news from a July 8 Philadelphia Inquirer article on the recent surveys. Disgruntled workers, of course, should think twice before trying to find a new job: The unemployment rate was at 9.2% in June, the highest this year. As Peter Cappelli, head of Wharton’s Center for Human Resources notes, “In general, recovery for businesses in terms of profit and recovery for workers in terms of jobs and wages don’t always coincide. Companies have been doing well in terms of profits by keeping costs down, even though the economy isn’t growing. Employees, on the other hand, only do well when the economy grows. And it’s still not growing.”

According to the Inquirer article, the unhappiest workers are those between the ages of 16 and 24 (44%), followed by those ages 25 to 34 (40%).

The Society for Human Resource Management survey also noted that the biggest cuts in perks for employees have been in paying for educational courses or degrees, life insurance for dependents, and incentive bonuses, according to the Inquirer article. “Employers also have significantly cut housing and relocation expenses, company sports teams, and paying for job-related travel.”

Yet according to a recent Knowledge@Wharton article on the state of perks these days, companies don’t always have to spend a lot of money trying to keep employees happy and productive. Indeed, perks are especially valuable when they “give employees the chance to customize their own employment arrangement,” Wharton management professor Adam Grant noted in the article. “Perks can help employees feel uniquely supported and valued by their employers. Think about an employment contract as a restaurant menu: An employer offers an employee a set of options he or she can choose from that are of similar cost to the employer…. We will probably be seeing a more concerted effort at this kind of mass customization in the future.” Examples of options that give employees more autonomy over how their jobs are structured include the opportunity to telecommute one day a week or to negotiate degrees of scheduling flexibility.

Indeed, added Bill Driscoll,northeastern district president for staffing firm Robert Half International, working at home — provided companies set productivity standards — and mentoring are two cost-free perks that can be offered to employees who “share the company’s values and strategy.” He advises companies to avoid cutting perks in a recession “because perks are a way to retain their existing talent. Companies can offer subsidized training and education, mentoring or a flexible schedule, and can do that without having to offer more financial compensation, and in some cases, can offer less.”

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