Algorithms stalling recovery, or so it seems as hot resumes go nowhere fast

Expanding use of technology that uses ultra-specific criteria to screen and winnow candidates may be perpetuating one of the most unusual features of the slow rebound in the U.S. labor market:

Jul 14, 2014 @ 9:57 am

By Bloomberg News

One morning last month, a group of job seekers gathered in a cool basement meeting room under a Washington condominium to hear a talk and share stories.

The mid-career professionals included an intelligence analyst, an engineer and a woman who had run her own legal practice. They were frustrated with their inability to breach a nameless, faceless online-search process that seemed insensitive to their accomplishments and impossibly discriminating.

“Everybody is looking for the striped unicorn with blue eyes,” said Joel Sarfati, executive director of 40Plus of Greater Washington, host of the meeting. “It drives us crazy.”

Expanding use of technology that uses ultra-specific criteria to screen and winnow candidates may be perpetuating one of the most unusual features of the slow rebound in the U.S. labor market: Despite a steady increase in openings since the recession ended in 2009, these positions are being matched with job seekers less efficiently than in the past. For each 100,000 new openings, for example, companies have hired about 48,000 people, compared with about 54,000 following the 2001 recession.

Software provided by Taleo, a unit of Oracle Corp., allows recruiters to conduct “precision matching” through a “profile-based recruiting system” that uses “advanced search and artificial intelligence to find and short list top talent,” according to a brochure on Oracle's website.

For workers and job-seekers with exactly the right skills industries need today, the software programs can be a boon, filling their e-mail with notes from recruiters, talent scouts said. There's also a benefit for companies in lower talent-acquisition and training costs.

There are also disadvantages for other job prospects: A candidate with some, but not all, of the required attributes may be eliminated or moved down the list. This may be one reason why people out of work for 27 weeks or more still represent about a third of the total unemployed, compared with an average of 19 percent between 2004 and 2007. The share is down from about 37 percent in June 2013.

“It takes a lot more search to get these jobs,” said Robert Brusca, a former economist at the Federal Reserve Bank of New York who is now chief economist at Fact & Opinion Economics in New York.

That may help explain why some indicators on Federal Reserve Chair Janet Yellen's jobs dashboard still are out of sync with past rebounds. She will give her semi-annual testimony before the House and Senate this week, and part of her remarks will focus on labor conditions.

Fed officials have kept their benchmark lending rate near zero since December 2008 to stimulate growth, which has helped lower the unemployment rate to 6.1 percent in June from a post-recession peak of 10 percent in October 2009.


There are many theories about why the labor market is less efficient now in matching buyers of skills with sellers. Economists ponder the possibility that it reflects industrial shifts that may require retraining workers. Or the unemployed may have unrealistic expectations about the wage they should receive and are holding out for a better offer that might never come. Another theory is that extended unemployment benefits delayed the need to search.

For Gene Curran, the owner of Victory Realty Group in Baltimore, it has been difficult to find dedicated people willing to work for an entry-level wage and prove their value over time with the company. Some “maintenance techs ask me if we will pay them under the table” so they can remain on unemployment. The answer is “absolutely not.”

Curran says peoples' motivation and “labor quality” are some of the biggest issues slowing down hiring.


Economists also question whether some portion of job postings represents prospecting by companies still unsure about the economy's future, not real offers -- in effect, warehousing resumes and not really adding positions.

Independent recruiters also speculate that businesses aren't ready to start spending on training and have a tentative interest in hiring so their listings read like quests for an off-the-shelf, perfect employee.

Some postings “God couldn't fill himself,” said Robert Funk, chairman and chief executive officer of Express Employment Professionals in Oklahoma City. “Most people don't have all of those qualifications.”

Of course, the shift in the relationship between job vacancies and unemployment, a curve named after the British economist William Beveridge, could represent all of the above.

“There are all kinds of things changing in the American labor market and you see this in the Beveridge Curve,” Brusca said.

“The search and matching process is less efficient, for whatever reason,” said Michael Feroli, chief U.S. economist for JPMorgan Chase & Co.

For Sally Richards, the lawyer at the 40Plus meeting, what has changed is mainly the way a professional looks for work and contacts companies.

Richards owned and managed the staff of a law firm in Ohio that grew in two decades to more than 250 clients, including a hospital that helped her specialize in health care. She moved to Washington last year and has been job hunting for the past six months. Lately, she is focusing on personal contacts and networks, having been frustrated by the online-application process.

“Each place you apply is using a system to eliminate your resume,” Richards said. “You may have 99 percent of the qualifications, but they may reject your application.”


Robert Brandau, president of Increasing Revenue Inc., hosts a group called Beltway Job Search Partners. On Saturday mornings, he says, their meeting room is stocked with highly-qualified professionals who have had jobs for decades. What many of them need to learn is “pretty much everything has changed” in the way one finds work.

“You have a lot of job descriptions that are not realistic,” he said.

Software from businesses such as Taleo, along with social-media sites run by companies including LinkedIn Corp, provide recruiters with tools to manage an applicant pool or seek candidates.

A demonstration of LinkedIn's “Recruiter” software program, used by some 25,000 companies, shows that a hiring manager can mine the website for prospects by location, title, education and skills. Without even posting a job opening online, a recruiter using LinkedIn can locate profiles on the social network of people who already have a job yet fit a specification. It also gives recruiters access to connections they share with prospects in case they want to tap a reference.


While companies have used software tools to manage recruiting for decades, the scale of the online job market is “far bigger” than ever, according to Josh Bersin, who founded Bersin & Associates, which provides research on the labor market and advises some of the world's largest businesses on talent recruitment. Billions of people are on social-media websites, giving employers greater knowledge and access to candidates, while “the level of resume scanning and indexing is far better.”

The latest tools are so powerful and new that businesses still are learning how to use them and typically over-specify candidate requirements, creating an “over-focus on the equivalent of the resume and not on the real person.”

“Most success is not based on somebody's specific skills,” said Bersin, whose company was acquired by Deloitte Consulting LLP, where he is now a principal. “It is based on skills and attitudes.”

Richards, the attorney who would like to offer her health-law skills to a nonprofit in Washington, said her mission now is being able to connect directly with the “employer or hiring person.”

Success in this job market “is all about networking” with people who can assess a candidate's fit with their organization, not plugging data into a software program, she said.


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