May 21, 2020 – Americans displaced by the coronavirus crisis again filed for unemployment benefits in historic numbers within the last seven days, with the Labor Department reporting this morning another surge of 2.4 million claims. More than 38 million people have now filed for unemployment benefits over the past nine weeks, representing the biggest loss in U.S. history. These figures are now at the highest levels not seen since The Great Depression, some 90 years ago. But the difference between now and then, say economists, is vastly different. Over the span of the last nine decades support structures and financial engineering techniques have been created to help the nation weather the worst of storms.
“The hemorrhaging has continued,” Torsten Slok, chief economist for Deutsche Bank Securities, told The New York Times. He expects the official jobless rate for May to approach 20 percent, up from the 14.7 percent reported by the Labor Department for April.
Nicholas Bloom, a Stanford University economist who is a co-author of an analysis of the pandemic’s effects on the labor market, estimates that 42 percent of recent layoffs will result in permanent job losses. “I hate to say it, but this is going to take longer and look grimmer than we thought,” he said of the path to recovery.
The highest insured unemployment rates were in Nevada (23.5), Michigan (22.6), Washington (22.1), Rhode Island (19.9), New York (19.6), Connecticut (19.3), Puerto Rico (19.2), Mississippi (18.8), Vermont (18.8), and Georgia (18.5). The largest increases in initial claims for the week were in Florida (+48,222), Georgia (+14,420), Washington (+8,615), New York (+4,309), and South Dakota (+1,340), while the largest decreases were in California (-103,590), Texas (-102,382), Oklahoma (-54,806), North Carolina (-28,602), and Missouri (-21,382).
Executive Recruiter Weighs In
The COVID-19 pandemic has had an impact on every business sector. Among those on the front lines is the executive search industry. Craig Lapham, one of the sector’s leaders, has served as CEO of The Lapham Group since 1997. Under his leadership, the firm has conducted senior executive search engagements on a global basis for multiple Fortune 100 insurance clients and smaller emerging insurance/financial services firms across both P&C and life insurance.
Mr. Lapham recently sat down with Hunt Scanlon Media to discuss how the COVID-19 pandemic will impact executive recruiting. Following are excerpts from that discussion.
Craig, from your vantage point what impact has the COVID-19 pandemic had on the executive search industry?
As with virtually every other service industry, the executive search industry has experienced significant disruption due to the COVID-19 pandemic. The exact level of disruption varies by function and industry served, but needless to say every search firm has felt the impact of this global pandemic. Ours is a B-to-B service industry that thrives on clients being confident and certain about the future. Whenever that confidence and certainty lessens, clients will be less committed to engaging on large scale search engagements. Given the immediate and profound impact of this pandemic as it relates to the unprecedented global economic shutdown, much of the search industry has been put in a holding pattern with regard to both ongoing and impending search assignments. Facing tremendous uncertainty at present, clients have hit the collective pause button on both new and existing searches until some clarity arises around the length and severity of the global economic shutdown. Several of our firm’s functionally specific searches for executive roles viewed as critical by our clients, such as global finance/accounting and technology executive leadership roles, have continued but have moved to a fully digital and video based recruitment environment.
How has your firm adapted to meet the current challenges caused by the crisis?
One of the many competitive advantages of a boutique search firm is our nimbleness…in terms of our ongoing practice, for some time now and prior to this crisis we’ve been digitally focused and cloud based to mirror our clients’ technology structures. This allows us to be nimble and highly responsive with the ability to course correct against unforeseen circumstances that arise during the course of any search engagement. We are in the human capital business and humans by their very nature are inherently unpredictable…both clients and candidates. As a result, the best and most successful search firms have the necessary controls in place to adapt and survive within a high level of uncertainty and changing landscape. In the immediate term, our firm has focused on serving clients virtually throughout the entire lifecycle of a search engagement. The close and trusted long term client relationships developed through a boutique search firm model also pay dividends during these crises. There is a reciprocal loyalty between search firm and client due to our strong performance and high integrity representation of our clients’ interests over long periods of time.
“Having successfully navigated our firm though such impactful events as 9/11 and the Great Recession, I can say with confidence the executive search industry will withstand the challenges that COVID 19 has wrought.”
Will the executive search industry withstand the challenges that COVID has brought about? Will we return to the growth and expansion experienced in pre-pandemic times?
Having successfully navigated our firm though such impactful events as 9/11 and the Great Recession, I can say with confidence the executive search industry will withstand the challenges that COVID 19 has wrought. Might the industry be smaller on the other side of this event? Yes it will, but in paraphrasing Warren Buffett, “When the tide quickly goes out you find out who is swimming naked.” As such, the best managed firms with a viable value proposition and credible industry track record will survive and then thrive once the tide returns. I do feel longer term we will return to the large growth and expansion we saw prior to the pandemic. Perhaps the growth will concentrate in other functions and/or industry sectors, but the growth will return. Notwithstanding the headlines of protectionism and retreat of globalization, we live in an ever increasingly interconnected world that may in fact accelerate due to the increased virtualization of the way we live and work brought on by this pandemic. For example, our firm serves the insurance industry which is truly the backbone of the global economy and touches in some form virtually every single region, industry sector, and consumer on a worldwide basis…like the global economy, the insurance industry will continue to expand its product and service offerings on a worldwide basis to address the risk management requirements of an increasingly complex world, which will in turn require talented leadership to support this ongoing global expansion.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Erik Boender, Senior Research Editor – Hunt Scanlon Media