The latest Society for Human Resource Management (SHRM) Leading Indicators of National Employment (LINE) Report shows no end in sight to the dismal job market trends of recent months. The report reveals dramatic drops in hiring expectations compared to a year ago (the lowest numbers in four years), plummeting recruiting difficulty, new-hire compensation shrinking for the second consecutive month, and exempt and nonexempt vacancies likewise decreasing.
The monthly SHRM LINE report is based on a monthly survey of HR executives at more than 500 manufacturing and 500 service-sector organizations. Together, these sectors employ more than 90 percent of the nation’s private-sector workers. The report tracks four key indices: employers’ hiring expectations, difficulty in recruiting top-level talent, new-hire compensation, and job vacancies.
Hiring Expectations Continue to Plummet
“January hiring expectations will continue the downward slide we have seen over many months,” notes Jennifer Schramm, SHRM’s manager of workplace trends and forecasting. Hiring expectations are at four-year lows in both sectors. For the second consecutive month (and just the second time since LINE debuted in 2004), more members of both sectors plan to cut payrolls than plan to add jobs. In January 2009, the 20.2 percent net total of manufacturing sector respondents planning to cut jobs is a nearly complete reversal from January 2008, which showed a positive 28.2 percent net planning to add jobs.
Similar to the manufacturing sector’s turnabout, a net 9.8 percent of service sector respondents plan to cut jobs in January 2009, as compared to a 22.9 percent net of respondents who were adding jobs in January 2008.
Other reports are consistent with these data. A U.S. Bureau of Labor and Statistics (BLS) report finds that the number of long-term unemployed in November 2008, or those who had been jobless for 27 weeks or more, was at 2.2 million—up 822,000 from November 2007.
Recruiters Have Their Pick
December 2008 marks the first of the past four Decembers in which more manufacturer respondents reported greater ease with recruiting (19.8 percent) than reported greater difficulty (3.5 percent), with a net total of 16.3 percent reporting greater ease.
By a larger margin than manufacturing, service-sector respondents also reported fewer recruiting challenges (33.2 percent reporting greater ease and 4.7 reporting greater difficulty, with a net percentage of 28.5 reporting greater ease). In stark contrast to 2008’s numbers, December 2007 respondents in both sectors reported greater recruiting difficulty (with net percentages of 12.1 and 14.1 in the manufacturing and service sectors, respectively).
The December 2008 net results of greater recruiting ease for both sectors can probably be attributed to two factors: Fewer HR professionals are engaged in recruiting right now during the economic downturn, and, with an increased number of job seekers, HR representatives and recruiters can afford to be selective.
LINE’s recruiting difficulty index measures how hard it is for firms to recruit for positions of the greatest strategic importance to their companies.
Vacancies Keep Falling
The latest LINE report findings of sizable decreases in both exempt and nonexempt vacancies for both sectors suggest that more employers are either imposing hiring freezes or cutting jobs. Like the employment expectations index, the vacancies index, too, is reinforced by BLS data. BLS reports that, in September 2008, the national job openings rate was 2.3 percent, the lowest since April 2004.
Vacancies are defined as open positions that employers are trying to fill. In the manufacturing sector, 10.7 percent reported increases in exempt, or salaried, vacancies in December 2008, and 23.5 percent reported decreases, for a net total of 12.8 percent decreasing. These figures differ significantly from those of December 2007, which showed a net increase in manufacturing exempt vacancies of 8.2 percent. The service-sector also showed a net decrease in exempt vacancies (13.8 percent) for December 2008, with 6.9 percent reporting an increase and 20.7 percent reporting decreases.
Typically, exempt employment declines by a smaller percentage than nonexempt employment during economic downturns and increases by a smaller percentage during economic expansions. The current economic downturn is proving to be no exception to the rule.
In the manufacturing sector, a net total of 19.4 percent of respondents reported that nonexempt vacancies declined in December 2008 (8.6 percent increased, 28.0 percent declined), marking a dramatic reversal from December 2007 when a net 11.3 percent of respondents reported that nonexempt vacancies increased. In the service sector, a net total of 23.5 percent reported a decline in nonexempt vacancies in December 2008 (9.6 percent increased, 33.1 percent decreased).
Wages, Benefits Grow Slowly
“For the third consecutive month, wages and benefits packages increased at a slower pace (than the previous month) in both the manufacturing and service sectors in December,” according to Schramm.
In the manufacturing sector, more respondents (2.0 percent) said they would decrease new-hire compensation packages than said they would provide increases (1.9 percent), with a net 0.1 percent decrease. The December 2008 manufacturers’ numbers in this category set yet another record, marking the first time in four years that the net was a decrease.
In the service sector, the net total (4.0 percent) shows that respondents are still increasing spending on new hires, though that net total is below that of December 2007 when a net 4.9 percent of respondents were increasing new-hire spending.
Maria Williams is a staff writer for SHRM.