What if Paul Ryan is Right?

Matthew is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

“If you don’t address these issues now, they’re going to steamroll the country. And the issue is, the more you delay fixing these problems, the much uglier the solutions are going to have to be.” (CNN, Sept. 2011) – Paul Ryan

I don’t know her name, but it was heartbreaking to see her stand in line. Maybe it was because she appeared to be the age of my grandma and this just wasn’t the place she should have to be. She should have been playing bridge with her friends or taking her grandkids to the park.

The sad thing is I saw her standing in line to fill out an application to enter a job fair. I overheard her mentioning something about having previous experience working a switchboard. I don’t know her story; she was just one of many faces that passed by me at the job fair my employer organized.

There were a lot of faces, too many faces. A mom with her three kids, several seasoned executives that were trying to get back into the game, a game in which they were pitted against several bright eyed recent grads just looking for a chance. They all wanted one thing, for a chance to live out their American dream.

In a recent Tweet, Paul Ryan said that, “Unemployment has been above 8% for 42 months and over 23 million people are struggling for work.” It is tough to see any bright spots in America’s employment picture.  Take the recent quarterly results from Kelly Services (NASDAQ: KELYA) where revenue actually declined 3% year-over-year.  CEO Carl Camden tried to look on the bright side when he stated in the press release that, “Despite tepid economic growth in the US and recessionary conditions across much of Europe, Kelly made positive strides in the second quarter.”  If there is one positive sign at Kelly it’s that net margins have been creeping up over the past few quarters, though at just 1.2% it means that just over a penny of every dollar that comes in goes to their bottom line.

Robert Half (NYSE: RHI) on the other hand saw their revenue jump 17% as demand for skilled workers has been on the rise.  Their CEO, Harold Messmer said that, “Demand for our specialized staffing and consulting services remained strong during the quarter, particularly in our U.S. staffing operations,” while, “Gross margins continued to expand with an increasing mix of permanent placement and temp-to-hire conversion revenues."  One needs to look no further than the types of jobs each company looks to fill in order to see why Robert Half is performing better than Kelly.

Other staffing firms such as On Assignment (NYSE: ASGN) and ManpowerGroup (NYSE: MAN) continue to work hard to deal with the current economic conditions.  Manpower’s been hurt by their European exposure while On Assignment's business is doing better because of their specialization as well as by going the acquisition route to boost their growth.  Still, none of these companies really will ever become game changing investments.  If our employment picture ever does brighten up, only one company’s disruptive hiring solutions will steamroll their competition by providing better solutions for both employers and job seekers. 

Back to that job fair I mentioned, the biggest buzzword I heard, and the one I reinforced to countless job seekers who asked, it’s critical that they learn to use LinkedIn (NYSE: LNKD).  I think that its critical for investors to consider whether an investment in LinkedIn would be a positive solution for their portfolio.  Sure they trade for a nosebleed valuation of nearly 900 times earnings, but they haven’t even begun to earn a fraction of their open ended future potential.  In the past year they’ve doubled their professional customer count.  These are hiring managers who are paying LinkedIn for access to their deep database of member information.  This division which accounts for 51% of their revenue grew triple digits this past year and still has a long way to grow.  The employment picture might look bleak, but no other company can replicate the deep candidate pool that LinkedIn has nor will they be able to monetize them by providing solutions for both job seekers and employers like LinkedIn can.

Paul Ryan is right; if we as a nation don’t do something about our problems the solutions are pretty grim.  One of our biggest problems right now is our jobs situation and one company is using technology to come up with the hiring solutions that companies need.  As more seekers join their network they’ll only increase their opportunity to live out their American dream.  LinkedIn is a buy, the only question that remains unanswered is if Mitt Romney used LinkedIn to see if Paul Ryan was available to be his running mate.

 


latimerburned owns shares of LinkedIn. The Motley Fool owns shares of LinkedIn. Motley Fool newsletter services recommend LinkedIn and Robert Half International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.

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