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Screening in Both Tough and Good Times

June 13th, 2017 | admin | Tags:

By Robert L. Cain

With the unemployment rate hovering around “no qualified employees” available, it is becoming more and more of a challenge to pick and choose the person who can do the job you want done. Rental owners and managers have the opposite “problem,” too many applicants. Even so, the solution is the same. We’ll look at that in a minute.

Yes, there are people out of work who don’t qualify as unemployed, but the labor department doesn’t count them. Those are the people who are either “discouraged,” that is, given up looking for work as a bad idea or who are working in place-holder, temporary, or part-time jobs. The Bureau of Labor describes “discouraged” as those who did not actively look for work in the preceding “four weeks for reasons such as thinks no work available, could not find work, lacks schooling or training, employer thinks too young or old, and other types of discrimination.”

They amount to some 8.4 percent of the population, including those who are considered by the Labor Department to be “unemployed.”

That group could be among those who apply for an available job. Not the ideal situation.

However, a more telling statistic is that only 78.4 percent of the 25-54 year olds are in the labor force leaving 22.6 percent, or more than one in five, outside looking in.

Rental owners, on the other hand, in most parts of the country, have the opposite situation. The national vacancy rate sits at about 7 percent, with some cities in the country at under 4 percent and Portland and Los Angeles at under 3 percent. That means there are almost no vacancies and those that pop up are immediately swamped with applicants. There are areas of the country where vacancy rates exceed 10 percent, and in those areas, the solution we will discuss still applies.

There’s a fly in the ointment, though, or maybe another fly. The wheels of the economy are wobbling. They haven’t fallen off yet, but the signs are there that all is not well.

For example, of the 107 million auto loans, 6 million of them are at least 90 days past due. The real fly in the ointment is the number of subprime auto loans in trouble, some 9.1 percent report Standard and Poors data.

Of the 44 million student loans, 40 percent of them, 17.6 million, are either in default or at least 90 days past due. That’s the combined population of Ohio and Indiana. Of that 44 million student loans, 11.3 percent are in default, meaning 270-plus days past due. That’s 4.972 million people, more than the population of Alabama.

Then there’s the credit card debt. Of the $746 billion that people owe, $4.077 billion is seriously delinquent, amounting to nearly 10 percent of the people who have credit card debt.

Finally, there’s mortgage debt. The total mortgage debt is $12.78 trillion, and of that the Wall Street Journal reports 5.54 percent of that is delinquent. That is the highest figure excluding the recession numbers since they started keeping track in the early 1990s and exceeds the first quarter 2008 numbers. Of course, mortgage debt isn’t an issue for rental owners and managers.

All those numbers mean factoring in this information in deciding whom to hire and rent to.

What’s do employers looking to hire need to do? What about rental owners and managers who have the opposite problem from employers? The answer is the same: describe your ideal employee or tenant.

Obviously employers still must take care in hiring so they get employees who can not only do the job but also have the potential to be employees they want to keep. That means deciding the minimum acceptable applicant. And write it down. Make a checklist on which all the boxes have to be checked for an applicant to get so much as an interview. That can include education, job experience, ability to get along with others, drugs, and credit situation. Keep in mind debt situations that could affect someone’s ability to do the job. People whose cars are about to be repossessed or who are about to be evicted or foreclosed on are too big a risk what with those people possibly ending up not being able to get to work.

Rental owners and managers will do best to follow the same pattern. Who is the ideal tenant? If the vacancy rate in your area is bouncing on zero, you have the luxury of picking and choosing— making the rental standards such that only the highly qualified need even apply. You can be selective about time on the job, qualities as a tenant as described by references, and amount of debt, factors that might make paying the rent a challenge. The most important thing to keep in mind is don’t budge from your requirements no matter how “persuasive” an applicant is. You have to follow all your procedures, something that might take a couple of days, before you can say yes or no. Of course, it’s first come, first checked. But you know that.

Remember, standards that are too strict can be loosened, but those that are too loose are much harder to tighten.

Yes, employers and rental owners and managers face the opposite situations, but the solution is the same, set up the criteria of whom you will accept. If you don’t know who is acceptable, how will you know when he or she shows up? Of course, employers may want to be a little more lenient as far as credit goes, but not so much that the door is wide open for anyone who can breathe and who may show up for work every so often and somewhat sober.

For rental owners and managers, it means your standards in low-vacancy and no-vacancy areas are so stringent that only the most qualified will bother to apply.

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