9/6/2017. Agenda. Warm-Up: Polling Question. Faster, Smarter, Stronger: Getting Over Your Data Fears & Getting a Grip on Hiring Trends

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1 Faster, Smarter, Stronger: Getting Over Your Data Fears & Getting a Grip on Hiring Trends Josh Wright icims Chief Economist Tennessee SHRM icims Inc. All Rights Reserved. Agenda U.S. Labor Market Outlook The Changing Nature of Work The Economics of Talent Acquisition Warm-Up: Polling Question Are you satisfied with your own ability to understand labor market trends?

2 Warm-Up: Polling Question What proportion of your hiring managers do you think are satisfied with their own ability to understand labor market trends? My Background icims, Inc. Analysis of U.S. labor markets and hiring trends Building novel labor market indicators Previously at: Bloomberg macroeconomic analysis, novel economic indicators, frequent commentator on Bloomberg Radio and Bloomberg TV. The Federal Reserve financial crisis response, research, and policy advising across the legislative and executive branches of the federal government. U.S. Labor Market Outlook (1/3)

3 U.S. Growth U.S. Real GDP per capita $55,000 $51,000 $47,000 $43,000 $39,000 $35, Source: BEA U.S. Growth Average Annual Real Growth Rate. 8% 7.6% 7% 6% 5.6% 5% 4% 3% 2% % 5.1% 4.3% 4.4% 4.3% 3.6% 2.8% 2.1% 1% Source: BEA A Long-Lived But Lackluster Recovery Strong Growth in Payrolls 600, , ,000 - (200,000) (400,000) (600,000) (800,000) Month Average Breakeven Rate

4 High Hopes for 2017 "Soft" Data "Hard" Data 115% 11 Oct % 10 95% 9 Jan-2015 Jul-2015 Jan-2016 Jul-2016 Jan-2017 Source: FRED Growth Outlook & Recession Risk 3% Growth Outlook: Looking Good 12% 2% 8% 1% 4% -1% -4% -2% -8% -3% % Leading Economic Index (ls) U.S. GDP (rs) Source: BEA, Conference Board Engines of Growth Domestic Spending - Q % 17% Exports 13% Imports 16% 69% Consumption Investment Government Source: BEA

5 Household Balance Sheets Look Healthier 10 Mortgage Debt / Disposable income Source: FRED But New Vulnerabilities Lurk Household Debt / Income % 6 6% 4 4% 2 2% Total Mortgage (ls) Student Loan (rs) Source: FRBNY Lynchpin to the Outlook Nonfarm Payroll Growth 400, ,000 - (200,000) (400,000) (600,000) (800,000) Month Average Breakeven Rate

6 Thousands 9/6/2017 Another Look at Job Growth Strong Growth in Payrolls 150, , , , , , k monthly average 101k monthly average 160k monthly average Full Employment? Unemployment Rate Sustainable Rate 12% 1 8% 6% 4% 2% Pool of Officially Unemployed Unemployed Worker / Vacancy

7 More Openings / Unemployed Unemployment (millions) 20 Beveridge Curve Openings (millions) Wage Growth: Still Moderate Year-Over-Year Change 4.5% % % % % Average Hourly Earnings Employment Cost Index Demographics 66% Employment / Population Ratio 62% 58% 54% Empl./Pop. Avg

8 Demographics U.S. Labor Force Participation Rate 69% 67% 65% 63% 61% 59% 57% LFPR Avg Dwindling Slack Under-employment (ls) Unemployment (rs) 18% 16% 14% 12% 1 8% 6% % 9% 7% 5% 3% The Changing Nature of Work (2/3)

9 Contingent Work & the Gig Economy Google Search Interest Relative to Peak "gig economy" "sharing economy" Source: Google Trends Contingent Work: Temps Temp Work as % of Payrolls 2.5% % % Contingent Work: New BLS Survey First survey by BLS since Conducted May 2017 Results expected late 2017 or early How many questions do you think they have added?

10 Contingent Work: Taxonomies Share of working-age population engaged in independent work Primary Income Supplemental Income Preferred Choice Free agents 3 49 million Casual earners 4 64 million Out of Necessity Reluctants 14% 23 million Financially strapped 16% 26 million Source: 2016 McKinsey Global Institute survey of ~8,000 US and European respondents Contingent Work: Taxonomies Temp Agencies Employers Contracting Firms Independent Contractors Solo Freelancers Mobile-Enabled Brokers Marketplaces Flexibility vs. Unpredictability Managing the unpredictability of contingent work Hybrid status: dependent contractors Portable benefits Encourage saving Better labeling: breadwinning vs. supplementary

11 Proportion of Payrolls Proportion of Payrolls 9/6/2017 Other Shifts: Industry Composition Proportions of Payrolls 45% 4 35% 3 25% 2 15% 1 5% Manufacturing Education & Healthcare Retail Professional/Business Services Shifting Industries 16% Shrinking Footprints... 14% 12% 1 8% 6% Retail Manufacturing Shifting Industries and Growing Ones 14% 12% 1 8% 6% Healthcare Professional/Business Services

12 Shifting Occupations Shifting Occupations 3% 3% 1 23% 6 Production Management & Administration Maintenance & Repair Protective Service Transportation Production occupations are more likely to be at risk projections icims Hiring Data 3,500+ Customers 2.3 million Jobs per Year 32.2 million Applicants per Year Real-time & granular Full life-cycle of applying and hiring

13 YoY of 3-Month Average 9/6/2017 icims Data: Breaking It Down HR Metrics Details by: Time-to-Fill Talent Supply and Demand BLS-like Data Industry Manufacturing Trade, Transport. & Utilities Retail Trade Professional & Business Services Finance Information Occupation Type Engineers & Scientists Food Preparation Maintenance & Repair Arts Occupations Healthcare Workers Educators Legal Hires Openings Healthcare & Ed. Leisure/Hospitality Sales et al. BLS = U.S. Bureau of Labor Statistics Other Services icims Data: Monthly Hiring Indicator Nationwide Growth 4% Hires 6% Openings Details by Industry -3% Healthcare & Social Assistance 9% Retail Trade Details by Location 0.4% West Region 13% Chicago icims Data: Growth in Hires Growth in Hires Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Full-Time Not Full-Time Part-Time Source: icims

14 icims Data: Occupations Healthcare & Social Services 6% 17% 14% 2 43% 24% 14% Retail Trade 62% Technical Healthcare Healthcare Support Management & Administration Community and Social Service Other Sales and Related Occupations Management & Administration Other Source: icims icims Data: Occupations Manufacturing 22% Professional & Business Services 43% 48% 42% 16% 2 Production Occupations Sales & Related Occupations Management & Administration Other 1 Management & Administration Sales & Related Other Source: icims icims Data: Occupations Manufacturing Other Occupations = 43% Computer & Mathematics 9% Installation, Maintenance, & 8% Repair Architecture & Engineering 7% Business & Financial Operations 6% Healthcare Support 5% Professional & Business Services Other Occupations = 48% Arts, Design, Entertainment, Sports, & Media 9% Computers & Mathematics 9% Business & Financial Operations 8% Protective Services 4% Production Occupations 3% Architecture & Engineering 3% Food Preparation & Serving Related 3%

15 Millions (3m Average) 9/6/2017 Skills Gaps? Job Openings & Hires Openings Hires The Economics of Talent Acquisition (3/3) The Technologization of TA 10 Google Search Interest Relative to Peak "HR Data" "HR Analytics" Source: Google Trends

16 Technologization of TA vs. Other Industries E-Commerce Financial Markets Short-Term Housing Household Tasks Crafts Ride sharing Online marketplaces Efficiency Price transparency High-volume, often short-term Technologization of TA vs. Other Industries Online House Hunting Online Dating High-stakes, long-term decisions Highly complex valuation Intuition: human element remains irreplaceable Labor: Supply + Demand Price $40 $35 $30 $25 $20 $15 $10 $5 $- Job Opening Rate vs. Earnings Construction Manufacturing Finance & Information Retail Professional & Business Health Care Accommodation & Food 1% 2% 3% 4% 5%

17 Labor: Supply + Demand Price $40 $35 $30 $25 $20 $15 $10 $5 $- Job Turnover vs. Earnings Finance & Information Manufacturing Retail Trade Professional & Business Construction Accommodation & Food 2% 4% 6% 8% 1 12% 14% Arts & Entertainment Matching Markets Matching means selection based on other criteria, in addition to or instead of price. Price Alone No Prices Prices Plus Wheat & Oil Organ Donation Housing Stocks & Bonds Public Schools Residency Match Any Commodity Online Dating Jobs Matching Markets To be successful, markets must be: Thick Uncongested Safe

18 Matching Markets Thick You won t go to the market if it doesn t offer a good selection of products and vendors. Matching Markets Uncongested You won t stay at the market if you can t get served quickly enough. Matching Markets Safe You won t be honest about your true preferences unless it is safe to do so.

19 Matching & Matchmaking Solution? Set up the right intermediaries who can: 1) Attract enough buyers and sellers, 2) Give them enough confidence to share information, 3) Organize that information, and 4) Match buyers and sellers. Artificial Intelligence is Hot $6,000 $5,000 Global AI Financing 658 $4, $3, $2, $1,000 $ Disclosed Funding ($M) Deals Source: CBInsights But Prediction is Hard

20 Artificial Intelligence or Intelligent Artifice? Questions? Thank you! 6 0