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Widespread Hiring Not Expected in September, but Limited Layoffs Are
 

By Theresa Minton-Eversole  9/3/2010
 


Hiring during the end of the third quarter of 2010 likely will follow a recent pattern of modest job additions to the U.S. private-sector labor force, according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) survey for September 2010.

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. The September 2010 report was released on Sept. 3, when the overall U.S. unemployment rate edged up from 9.5 percent to 9.6 percent.

The latest LINE survey reveals that manufacturing and service-sector companies are expected to bring on more workers in September 2010 compared with September 2009, despite the fact that hiring activity has slowed in recent months. Meanwhile, layoffs for September 2010 are expected to be minimal compared to September 2009. In addition, compensation packages for new hires improved in August 2010, perhaps attributable in part to increased difficulty in recruiting for certain key positions.
 

Employment Expectations

Manufacturing

Service

 

For the 11th straight month, hiring will increase on an annual basis during September 2010 in both sectors.

 

+24.2

 

 

 

 

 


+14.6

Recruiting Difficulty

 

 

 

In August 2010, the index for recruiting difficulty rose slightly in both sectors compared with August 2009.

 

 

 

+12.9

 

 

 

 


+6.5

New-Hire Compensation

 

 

 

The rate of increase for new-hire compensation in August 2010 rose on an annual basis in both sectors.

 

+5.6

 

 

 

 

 


+3.2

Source: SHRM Leading Indicators of National Employment, www.shrm.org/line.

 

Employment, Recruiting Expectations

The manufacturing hiring index improved in September 2010 on a year-over-year basis by a net of 24.2 points, with 38.0 percent of responding companies reporting they will hire in September compared with 13.8 percent that added jobs in September 2009. The service hiring index rose in September 2010 by a net of 14.6 points, with 37.4 percent reporting they expect to hire compared with 22.8 percent that added jobs in September 2009.

The 14.6 percent of manufacturers that will conduct layoffs in September 2010 is the lowest level for the month in four years. The 7.8 percent of service-sector companies that will cut jobs in September 2010 is very close to the four-year low of 6.3 percent in September 2007.

Still, the positive numbers do not mask the fact that the unemployment rate is expected to remain elevated for the remainder of 2010.

“While it could be some time before hiring reaches anywhere near its pre-recession levels, recruiting for some key positions is getting more difficult,” said Jennifer Schramm, manager, SHRM workplace trends and forecasting.

Even though only a small percentage of respondents reported having a harder time finding top talent, the level of difficulty increased compared with 2009. In the manufacturing sector, 2.2 percent of respondents had more difficulty with recruiting in August 2010 than a year ago. This is a modest net increase from August 2009, when 10.7 percent of responding employers reported less difficulty with recruiting.

In the service sector, a net of 2.6 percent of HR professionals had less difficulty recruiting in August 2010, an increase of 6.5 points from August 2009, when 9.1 percent of HR professionals had less difficulty with finding top talent.

Exempt, Nonexempt Vacancies

Job openings for salaried positions increased slightly in both sectors in August 2010. In the manufacturing sector, a net total of 13.7 percent of respondents reported increases in exempt vacancies in August 2010, which represents a 0.2-point increase from August 2009 and the 13th consecutive month that exempt vacancies are higher than those of the same month the previous year.

In the service sector, a net total of 4.1 percent of respondents reported increases in exempt vacancies in August 2010. That is a 3.0-point increase from August 2009 and the 13th consecutive month that exempt vacancies are higher than the previous year.

A net total of 21.6 percent of manufacturing respondents reported that nonexempt vacancies also increased in August 2010, which represents a 7.6-point increase from August 2009. In accordance with federal data, this suggests that manufacturers are adding jobs and production is increasing. Industrial production rose 1.0 percent in July 2010 and was 7.7 percent higher than July 2009, according to the Federal Reserve. The U.S. Bureau of Labor Statistics (BLS) reported that manufacturers added 36,000 jobs in July 2010.

For nonexempt service positions, a net total of 10.9 percent reported increased vacancies in August 2010. This marked an 11.3-point jump from August 2009. The rise in vacancies might be driven partially by growth in health care, which added 27,000 jobs in July 2010, according to the BLS.

New-Hire Compensation

For the seventh straight month, the rate of increase for wages and benefits for new employees rose in August 2010 on an annual basis in the manufacturing and service sectors.

“A slight rise in new-hire compensation packages in the manufacturing and service sectors suggests that some employers are seeing a somewhat more competitive market for talent,” said Schramm, “but overall most organizations are keeping new-hire compensation levels fairly flat.”

In the manufacturing sector, a net total of 5.4 percent of respondents said they will increase new-hire compensation in August 2010, an increase of 5.6 points from August 2009. In the service sector, a net total of 1.7 percent of companies increased new-hire compensation in August 2010, a net increase of 3.2 points from August 2009, when a net of 1.5 percent of service companies decreased new-hire compensation. The low rates of change in both sectors indicate that many people landing new jobs are accepting lower wages and benefits as the labor market remains weak.

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

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