With contributions from Jared Arnett
This month, we have defined unemployment and examined the policies that aim to reduce it. This has allowed us to gain a better understanding of this measure of economic prosperity and how our legislation shapes it. Last week, we explored the perspective of communities facing high rates of unemployment and how people experience it. This week, we will consider another angle on this statistic- that of the business owner.
Businesses employ people. Whether a company employs one or one hundred people, hiring is an essential piece of a business. Hiring practices may shift based on cyclical changes in the economy. Sometimes it makes economic sense for a business to hire someone and sometimes it makes sense to fire them. Both by hiring qualified candidates and reducing turnover, businesses can reduce the rate of unemployment- the number of people actively looking for work but unable to find it.
Thoughts For (Aspiring) Employees
For those looking for work, one key avenue to consider is connections. Many studies suggest that the majority of jobs are filled through personal connections. Jared Arnett, co-founder of Mountain Music Exchange, noted his company’s success in hiring through personal connections rather than job-search platforms, like Indeed. Many of us likely know someone who has found a job through knowing someone at their particular company.
The skill of networking has lent itself to bestselling books like Never Eat Alone by Keith Ferrazzi and Superconnector by Scott Gerber and Ryan Paugh. Although some looking for work may be or may feel unqualified, often the next step is simply to meet the right people.
Another reason an employee is often a good fit is when they have a desire to work for that particular company. As discussed in the book Start With Why, businesses often find success when they genuinely want to help their customers and hold to these values. Likewise, when an employee genuinely shares this same sense of purpose, it is often a great match. This is evident in the case of Mountain Music Exchange, which is a dream job for many in the area of Pikeville, Kentucky.
Thoughts for Lawmakers
As mentioned in How Policy Takes Aim at Unemployment: Incentives for Both Businesses and Job Seekers, policies generally function through incentives. People act on incentives and one strong incentive is financial safety.
In areas with high unemployment rates, like Eastern Kentucky, many people are incentivized to treat unemployment insurance benefits as a support system. UI benefits may prevent some unemployed people from falling into poverty as they are genuinely seeking employment. However, it can also be treated as a safety net for many.
This safety net can cause a lack of qualified workers, because they have not taken the risks to learn skills. In these cases, learning marketable skills seems like a risk itself, because getting hired leads to the loss of UI benefits. An important part of employer-employee fit is qualifications of the employee, which often comes from desire for change and new skillsets. This creates a tradeoff that is heavily considered.
Key Points & Summary
- For (Aspiring) Employees:
- Look for connections in companies/industries you would like to work in
- Seek out companies that share your values
- For Lawmakers:
- Incentivize employment and skill acquisition
- Consider how safety nets can create long-term growth
Over the last four weeks, we have studied unemployment and how it relates to our government, our communities, and our businesses. High rates of it can have significant effects on families and communities, but there are possible systematic factors for it in particular areas. Nevertheless, there are policies and programs that are in place to address it and cultural shifts that are more than possible. All in all, unemployment is just one part of a region’s economic health. On to next month, we will discover another piece to this puzzle.