The U.S. economy has never been easy to predict, but with low unemployment and impact from inflation, businesses continue to feel some uncertainty.
ManpowerGroup, headquartered in Milwaukee, fills open positions for global clients with temporary workers. Because of that, the company is among the first to feel the economic headwinds.
Jonas Prising, CEO of ManpowerGroup, recently met with hundreds of Milwaukee area students to expose them to different opportunities they could consider for themselves.
“This is all about the future,” Prising said. “The future of ManpowerGroup, the future of our communities, the future for all of these kids that we have here today. Because we still have great disparities in our community where people don’t feel like they know what to do, they don’t know how to do it, they don’t know what it would look like.”
Prising also emphasized the need for companies to diversify their employee base.
“All of us as businesses in Milwaukee are aware of the need to drive inclusion of talent pools that are underrepresented in our companies,” Prising said. “We know we can’t be successful unless everyone in our community has the opportunity to be successful as well.”
The Wisconsin Department of Workforce Development’s monthly jobs report shows that although unemployment has increased this year compared to last year, the rate still decreased from last month in all 12 metropolitan areas the department monitors.
In the Milwaukee-West Allis area, the unemployment rate fell from 4.2% in August to 3.6% in September. Last year the unemployment rate was 3.1% in September for the area.
While the economy is still doing relatively well, Prising leads a company that intimately connected to jobs and labor in a way most companies are not.
Here is a Q&A with Prising on the economy and what he thinks are the biggest challenges.
What do you see right now in the current state of the economy in the U.S.?
Prising: The U.S. economy is still strong. The consumer is spending. But you are starting to see the economic headwinds and the facts of what the central bank and the (Federal Reserve) are doing, in terms of trying to cool inflation by raising interest rates.
And a number of leading edge industries, such as our own industry, is really seeing the use of temp labor come down. Logistics is another industry that’s starting to see the flow of goods slowing down. So it’s clear to us that the economy is cooling down but it’s doing so within the context of, still, good growth in a number of different industries and labor markets are strong.
With the labor market strong, there is a labor shortage that’s been with us for awhile now. Do you see that starting to shift or do you see this continuing on for much longer?
Prising: There’s a couple of things. So due to a couple of structural drivers like demographics, an aging population, people retiring, we are probably going to be in a more skills-constrained market, structurally. But through an economic cycle it goes up and down. At this point, it’s too early to say what kind of effect the labor markets are eventually going to exhibit in terms of a cooling economy.
But we would expect, at least in our 75 year history, looking at our industry and how we’re a precursor of an economic slowdown, we would expect that to start showing up in the broader labor market as well.
Having said that, our starting point of 3.7% or 3.8% unemployment is very low unemployment. So whilst unemployment may go up, it may do so in a limited way and I think that’s why there’s this big debate on if we’re going to have a soft landing or are we going to have a recession? I think a lot of that debate hinges on the fact that we have such a strong labor market today and the demand for people is going to continue to be important because the labor markets are becoming so constrained.
With the unemployment rate being so low, how does that impact Manpower and the company’s ability to meet the needs of its customers?
Prising: It’s our business to find people. So clearly along with other industries, it’s more difficult. But still, by and large, when demand is good for human capital, we are beneficiaries of that.
The other area that’s going to be very important as part of an equation in this battle of getting inflation to calm down is the labor market needs to cool off somewhat so that wage inflation cools off a bit and so that we get to a lower run rate of inflation. It will be very difficult to get to the target rates of inflation without a cooling of the labor market.
I think that’s the big balance. From our perspective, good demand for labor is good for business.
Obviously the interest rates are a challenge, but what are some other challenges that you see in this economy?
Prising: The labor market are clearly one (challenge) as they drive high wage inflation. The biggest challenge, we think, the defining challenge of our time, frankly, is how we manage to educate and provide the skills that companies need to our workforce at large.
It is a highly polarized workforce today with people having skills that feel like they have great opportunities in the future and others that don’t have the necessary skills and the skill sets that are changing due to technological evolution, and they don’t feel like they have the opportunity to acquire those new skills.
In the U.S., as far as elsewhere in the world, that is the big race. To make sure we can re-skill and up-skill the force at scale in a way that’s never really been done in our history. To keep pace with the globalization and the technological evolution.
Are there areas that are benefiting from the current economy?
Prising: Knowledge work has been doing extremely well for the better part of the last 10, 15 years. It’s only really after the pandemic that you’ve seen this very positive evolution, as well as in hospitality work and experience work, and all of those areas. So we still have big gaps to bridge when it comes to providing people with the right opportunities at the right pay.
And I think that is going to be the defining challenge of our time. How do we bridge the gaps between the ‘haves’ and the ‘have nots’ in terms of skills.
How do you define ‘knowledge work’?
Prising: People with higher skill sets. The unemployment rate, while it is at 3.8% on average, it’s close to zero for high skilled jobs, and it’s close to double for lower skilled or unskilled job. It’s highly polarized. The average works out to 3.8% but you have people for a very long time, and frankly for the foreseeable future, will look into their future and say ‘Yeah, well if (I lose my job) I will be able to find a new job very, very quickly.’ That’s not true for everyone. And it’s certainly not true unless they’re able to graduate from high school with the right skill sets, having reading and writing and math proficiencies at the right level. It’s going to be very difficult to get well paying jobs, unless you have the right skills.
That’s what’s going to be so important to us as a community. But frankly from a ManpowerGroup perspective, it’s a great opportunity for us to create the talent so that the companies can find the talent that they need by helping people get the skills that are going to help them be successful.
