Mass layoffs and other cost-cutting measures continue to plague the U.S. economy, and that won’t change in February 2009 for either the manufacturing or the service sectors, according to the Society for Human Resource Management’s (SHRM) latest Leading Indicators of National Employment (LINE)
February hiring expectations are at four-year lows. Compared to a year earlier, hiring is down by more than two-thirds in the manufacturing sector and by more than one-third in the service sector. Recruiting difficulty was virtually nonexistent in January 2009, and among those still looking for top-level talent, very few hiring managers in either sector expect to have problems recruiting. Compensation growth, however, is sluggish for new hires, with wage and benefits packages increasing at a slower annual pace in both sectors for the fourth consecutive month.
The LINE report, which is based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies, examines four key areas:
Employers’ hiring expectations.
Together, the two sectors employ more than 90 percent of the nation’s private-sector workers.
Recruiting Difficulty, Hiring Expectations Dip—Again
For the first time in four years, LINE recorded single-digit response levels in January 2009 for those reporting increased difficulty with recruiting. The low response totals likely can be attributed to the fact that fewer companies are hiring and that there is an increase in top talent looking for work. In 2008, 2.6 million jobs were lost, deepening the talent pool for companies that are actually engaged in recruiting.
“Despite the increasingly bad news about the job market, the good news is that it has gotten much easier for recruiters to find top-level talent,” said Jennifer Schramm, SHRM’s manager of workplace trends and forecasting. “The question that remains is when will most U.S. companies believe they are in a good position to hire this talent,” she asked.
In the manufacturing sector, only 1.9 percent of respondents reported increased recruiting difficulty in January 2009, compared with 21.3 percent who reported less difficulty. This is the first time in four years that more manufacturers reported an easier time recruiting in the month of January than those who had more recruiting difficulty.
Service-sector respondents also reported fewer problems with recruiting in January, with the index negative at 18.3 percent (6.6 percent reported more difficulty, 24.9 percent reported less difficulty)—also a four-year low for the sector.
Still, few companies are actually hiring or expecting to in February, according to LINE. In fact, by more than a three-to-one margin, manufacturing sector representatives plan to eliminate jobs in February (44.3 percent will decrease payrolls, 14.2 percent will conduct hiring)—triple the number of manufacturing respondents cutting jobs in February 2008.
The service sector is showing some promise in February 2009, although hiring expectations are still down dramatically compared with this time in 2008. A net of 4 percent of service-sector respondents said they would add jobs during February 2009 (26.3 percent will add jobs, 22.3 percent will eliminate positions). But that still represents a steep drop from February 2008, when a net of 37.8 percent of respondents planned hiring for the month.
Job Vacancies, New-Hire Compensation
HR professionals in both sectors reported declines in exempt vacancies for January 2009 compared with this time a year earlier. In the manufacturing sector, by more than a three-to-one margin, respondents reported decreases in exempt vacancies for a negative net total of 19.9 percent (7.9 percent reported increases, 27.8 percent reported decreases). Nonexempt job vacancies also are down in the manufacturing sector by more than a three-to-one margin.
In the service sector, by more than a two-to-one margin, HR professionals reported more declines than increases in exempt vacancies for January 2009. A negative net total of 11.8 percent of respondents reported declines in exempt vacancies (7.1 percent increased, 18.9 percent decreased). For nonexempt service positions, a negative net total of 10.5 percent reported decreased vacancies this month (13.5 percent increased, 24.0 percent decreased).
In the manufacturing sector, more respondents said they also would decrease new-hire compensation in January rather than provide increases (2.3 percent are increasing, 3.1 percent are decreasing). That is the first time in four years that the manufacturers net total ventured into negative territory.
In the service sector, a net total of 10.1 percent of respondents paid more for new hires in January 2009 (11.3 percent increased compensation, 1.2 percent decreased). Despite the positive net, that is down from a net of 10.2 percent in January 2008 and a high of 15.3 percent in January 2007.
“The LINE data suggest next month will be just as bad as this one,” said Steven Director, economic adviser for SHRM LINE, Rutgers University. “We are all concerned about the firms and individuals that are struggling in this unusually harsh environment.”
But, he said, “That does not mean, however, that no hiring is occurring. For example, in November 2008 overall employment plunged by 548,000. Yet because of churn in the labor market, 3.5 million individuals were hired during that month. Job seekers should not give up in the incorrect belief that no one is hiring, [and] corporations should not minimize the need for strong HR staffs to manage this economic turmoil.”
Theresa Minton-Eversole is an online editor/manager for SHRM.
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SHRM Leading Indicators of National Employment