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U.S. Could See Hiring ‘Heat Wave’ in May
 

By Theresa Minton-Eversole  5/7/2010
 

More unemployed Americans might have a better chance of finding a job this coming summer than in the summer of 2009 if May 2010's expected hiring "spring fling" is any indication. May 2010 hiring activity in the manufacturing and service sectors could reach levels not seen in three years, according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) survey report released May 7, 2010.

Signs are growing more positive this month, with LINE employment expectations indices for both sectors at levels not seen since 2007,” said Jennifer Schramm, SHRM manager of workplace trends and forecasting. “The percentage of manufacturing companies that are hiring is the highest since October 2007; in the service sector, since June 2007.”

Good workers are getting slightly harder to find, too, with more employers in April 2010 reporting a higher level of difficulty with landing top-level talent than in 2009. In addition, new-hire compensation continues to increase. For the third consecutive month, the rate of new-hire compensation in April 2010 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. Together, these two sectors employ more than 90 percent of the nation’s private sector workers.

EMPLOYMENT EXPECTATIONS
Manufacturing
Service
In May, for the seventh straight month, hiring will increase in manufacturing and services on an annual basis.

+48.7

+37.0

RECRUITING DIFFICULTY
Manufacturing
Service
In April, the index for recruiting difficulty rose in both sectors compared with a year ago.

+18.9

+14.2

NEW-HIRE COMPENSATION
Manufacturing
Service
The rate of increase for new-hire compensation in April rose on an annual basis in both sectors.

+7.2

 

+10.9

Source: SHRM Leading Indicators of NationalEmployment(LINE), www.shrm.org/line.

Employment Expectations

Despite problems in the labor market, hiring looks much better in May 2010 than in recent months. The manufacturing index improved by a net of 48.7 points, which means a net 43.9 percent of companies will hire in May 2010, compared with 4.8 percent that conducted layoffs in May 2009.

The service sector hiring index rose for May by a net 37.0 points; a net 54.4 percent of respondents will add jobs in May 2010, compared with a net 17.4 percent that added jobs during May 2009. Even with the positive numbers, the unemployment rate is expected to remain elevated throughout 2010. The sharp rise in the LINE hiring indices is also a reflection of poor job market conditions from a year ago.

Exempt, Nonexempt Vacancies

LINE statistics cover exempt (salaried) and nonexempt (hourly) vacancies. Changes in the number of job vacancies can be one of the earliest indicators of a shift in the balance between labor supply and demand.

In the manufacturing sector, a net total of 18.7 percent of respondents reported increases in exempt vacancies in April 2010 (24.5 percent reported increases, 5.8 percent reported decreases). This represents a 22.2-point increase from April 2009 and the ninth consecutive month that exempt vacancies are higher than those of the same month the previous year.

A net total of 23.7 percent of manufacturing respondents reported that nonexempt vacancies increased in April 2010 (31.9 percent increased, 8.2 percent decreased). This represents a 28.6-point increase from April 2009.

In accordance with federal data, this suggests that manufacturers are adding jobs slowly and that demand for production is improving.

In the service sector, a net total of 16.6 percent of respondents reported increases in exempt vacancies in April 2010 (25.9 percent reported increases, 9.3 percent reported decreases). That is a 28.6-point increase from April 2009 and the ninth consecutive month that exempt vacancies are higher than the previous year.

For nonexempt service positions, a net total of 29.1 percent reported increased vacancies in April 2010 (36.9 percent increased, 7.8 percent decreased). This marked a 31.0-point increase from April 2009. Increased demand for positions in the service sector might be driven in part by the health care industry, which added 27,000 jobs in March 2010, according to the U.S. Bureau of Labor Statistics.

New-Hire Compensation

The continuing high rate of unemployment and a large pool of job seekers in the market have given many companies the option of reducing the wages and benefits they are offering new hires in an effort to control costs. But the LINE statistics show that new-hire compensation continues to increase incrementally, noted Schramm.

“April marked the third consecutive month where new-hire compensation rates were up on a year-over-year basis,” she said.

In the manufacturing sector, a net total of 4.9 percent of respondents said they would increase new-hire compensation in April 2010 (6.1 percent increased, 1.2 percent decreased). That is an increase of 7.2 points from April 2009.

In the service sector, however, a net total of 1.3 percent of companies decreased new-hire compensation in April 2010 (3.4 percent increased, 4.7 percent decreased). That still represents a net increase of 10.9 points from April 2009, when a net of 12.2 percent of service companies decreased new-hire compensation.

The low rates of change in the two sectors indicate that most organizations are keeping new-hire compensation rates flat and that people landing new jobs are continuing to accept lower wages and benefits as the labor market remains weak.

Recruiting Difficulty

LINE’s recruiting difficulty index measures how hard it is for firms to recruit candidates to fill the positions of greatest strategic importance to their companies. Even though small numbers of respondents are having a harder time finding top talent, the level of difficulty has risen compared with a year earlier.

For example, in the manufacturing sector, a net of 0.9 percent of respondents had less difficulty with recruiting in April 2010 (8.8 percent reported more difficulty, 9.7 percent reported less difficulty). This is still a sharp net increase of 18.9 points from April 2009, when a net of 19.8 percent reported less difficulty with recruiting.

In the service sector, a net of 6.5 percent of companies had less difficulty recruiting in April 2010 (10.4 percent had more difficulty, 16.9 percent had less difficulty). This was a modest increase of 14.2 points from April 2009, when a net total of 20.7 percent of companies had less difficulty with finding top talent.

“Improved hiring is likely what’s behind the slight rise in the LINE recruiting difficulty index,” said Schramm. “More employers [are] reporting difficulty filling their “A positions” compared to this time one year ago.”

Theresa Minton-Eversole is an online editor/manager for SHRM.

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