Which comes first: consumer demand to spur job growth or jobs that provide salaries to spur consumerism? It’s a question that’s sure to be sparred about continuously by Republicans and Democrats in the 2012 election year. Meanwhile, the U.S. labor market’s struggles will continue in November 2011 as job cuts will rise in the manufacturing and service sectors compared with the same time in 2010, according to the Society for Human Resource Management’s (SHRM) latest Leading Indicators of National Employment (LINE) survey report.
The net rate of job creation will fall slightly in manufacturing and moderately in services in November 2011 compared with November 2010, according to LINE data. Further, more HR professionals in manufacturing and services reported increased difficulty with recruiting key candidates in October 2011. October was also the 13th consecutive month in which the rate of increase for wages and benefits rose on an annual basis in both sectors.
The LINE Employment Report examines four key areas: employers’ hiring expectations, new-hire compensation, difficulty in recruiting top-level talent and job vacancies. It is based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies, which together employ more than 90 percent of the nation’s private-sector workers.
|
Employment Expectations |
Manufacturing |
Service |
|
In November 2011, hiring will drop slightly in manufacturing and fall moderately in services compared with November 2010. |
-1.2
|
-9.8 |
|
Recruiting Difficulty |
|
|
|
In October 2011, the index for recruiting difficulty rose slightly in both sectors compared with October 2010.
|
+5.9
|
+3.4 |
|
New-Hire Compensation |
|
|
|
In October 2011, the rate of increase for new-hire compensation rose marginally in both sectors compared with October 2010. |
+2.1
|
+3.6 |
Source: SHRM Leading Indicators of National Employment (LINE), www.shrm.org/line
Employment Expectations
“HR professionals are continuing to report disappointing hiring expectations for the month ahead with the year-over-year change in hiring expectations falling in both manufacturing and services,” said Jennifer Schramm, M. Phil., GPHR, manager of SHRM’s workplace trends and forecasting program.
The manufacturing hiring index will fall in November 2011 on a year-over-year basis by a net of 1.2 points (a net of 27.3 percent of companies will hire in November, compared with a net of 28.5 percent that added jobs a year ago). Service-sector hiring will decrease by a net of 9.8 points (a net of 17.3 percent will add jobs, compared with a net of 27.1 percent that added jobs a year ago).
The LINE results for November 2011 reflect a trend of subpar growth in job creation, in accord with recent federal data. From April to September 2011, payroll employment increased by an average of just 72,000 jobs per month, compared with an average of 161,000 for the prior seven months, according to the federal Bureau of Labor Statistics (BLS).
Exempt, Nonexempt Job Vacancies
Another area to watch is job vacancies, Schramm noted. Typically, exempt employment declines by a smaller percentage than nonexempt employment during economic downturns and increases by a smaller percentage during economic expansions. In contrast, nonexempt employment typically decreases by a greater percentage during economic downturns and increases by a larger percentage during economic expansions.
But in October 2011, “job openings for both salaried and hourly jobs in manufacturing and services fell” compared with October 2010, Schramm said.
In the manufacturing sector, a net total of 9.4 percent of respondents reported increases in exempt vacancies in October 2011 (19.8 percent reported increases, 10.4 percent reported decreases). This represents a 6.4-point decline in exempt position vacancies from October 2010. A net total of 12.3 percent of manufacturing respondents reported that nonexempt vacancies increased in October 2011 (25.2 percent increased, 12.9 percent decreased). This represents a net 8.0-point decrease from October 2010. There were 240,000 job openings in manufacturing in August 2011, down from 252,000 in July, according to the BLS.
In the service sector, a net total of 5.2 percent of respondents reported increases in exempt vacancies in October 2011, representing a 9.9-point decline from October 2010. For nonexempt service positions, a net total of 12.3 percent of respondents reported increased vacancies in October, marking a 7.3-point decrease in exempt service-sector vacancies from October 2010. Job openings were down in professional and business services and were virtually unchanged in education and health services in August 2011 compared with July 2011, according to the BLS.
Recruiting Difficulty
But even though HR professionals are limiting hiring and job vacancies are down, recruiting for the jobs they have open is more difficult than might be expected, Schramm noted. HR professionals in both sectors continue to report having more difficulty finding candidates for their jobs of most strategic importance. With the exception of March 2011, recruiting difficulty has risen on an annual basis in both sectors for every month since December 2009.
“Considering that millions of people are actively seeking work and still cannot obtain employment in their industries, the rise in recruiting difficulty may be attributed to new or enhanced skill requirements for newly created, high-level jobs,” she explained.
A net of 14.5 percent of manufacturing respondents had more difficulty with recruiting in October 2011. This is a slight net increase of 5.9 points from October 2010 and the highest net of recruiting difficulty in four years in the month of October.
A net of 7.9 percent of service-sector HR professionals had more difficulty recruiting in October 2011, an increase of 3.4 points from October 2010 and also the highest net for the month of October in four years. The recruiting difficulty data suggest that the labor market is suffering partially from structural issues, along with decreased demand.
SHRM research findings show that skilled professionals are the hardest candidates for organizations to find. SHRM research on skills gaps indicates that the top categories of jobs that HR professionals are having difficulty filling are scientist (83 percent), high-skilled medical personnel (85 percent), high-skilled technical jobs such as programmers (85 percent) and engineers (89 percent).
New-Hire Compensation
A high rate of unemployment and a large pool of job seekers in the market have given many companies the option of holding down the wages and benefits they offer to new hires. New-hire compensation is now beginning to rise, however, albeit slightly.
In the manufacturing sector, a net total of 5.3 percent of respondents reported increasing new-hire compensation in October 2011, representing an increase of 2.1 points from October 2010. In the service sector, a net total of 9.9 percent of companies increased new-hire compensation in October 2011, which represents a 3.6-point increase from October 2010.
“With the exception of September 2010, the rate of new-hire compensation has risen on an annual basis in both sectors for every month since February 2010,” noted Schramm. “The areas of top demand in the skilled professions may be experiencing shortages even if the overall unemployment rate remains high, and for these jobs new-hire comp is going up slightly. But bear in mind that the vast majority of organizations are keeping new-hire comp static.”
Theresa Minton-Eversole is an online editor/manager for SHRM.
Related Articles:
Hopes for Labor Market Rebound Fade as 2011 Winds to Close, SHRM Staffing Management Discipline, Oct. 18, 2011.
Slow (to No) Hiring Activity Expected for October 2011, SHRM Staffing Management Discipline, Oct. 6, 2011.
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SHRM Online Staffing Management Discipline