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Labor Market Continues to Send Mixed Signals

By Steve Bates  10/22/2009
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HR professionals are gaining confidence in the U.S. job market. They hope to start hiring again. They just don’t know when.

One-third of HR professionals surveyed by the Society for Human Resource Management (SHRM) have some level of concern about the U.S. job market for the fourth quarter of 2009, with 35 percent saying that they are somewhat optimistic and 4 percent declaring themselves very optimistic about job growth in the nation for the last three months of the year. That’s a big change from the first quarter of 2009, when 73 percent of survey respondents expressed some level of pessimism.

But when it comes to forecasting staffing increases for their organizations, only 20 percent expect such an expansion in the fourth quarter of 2009. Many HR professionals are hesitant to predict when they might increase hiring. The statistics are revealed in the SHRM Labor Market Outlook survey report for October-December 2009, released Oct. 22.

Among highlights of the report:

  • Fifty-nine percent of companies will maintain their staffing levels in the fourth quarter of 2009, with 14 percent planning to cut jobs.
  • Thirty percent of companies conducted layoffs in the third quarter, even though only 13 percent of organizations had predicted layoffs when surveyed by SHRM before the third quarter.
  • The government sector eliminated jobs at the highest rate—41 percent—of any sector in the third quarter, despite federal stimulus funds beginning to flow to state governments for job creation. Many state governments have been forced to make deep staffing cuts to balance their budgets in the face of rapidly plunging revenues.
  • Nonprofit organizations added employees at the highest rate in the third quarter of 2009, with 24 percent conducting hiring.

Several recent surveys concur with the SHRM fourth quarter outlook in finding that American business leaders and workers are gaining confidence in the general direction of the economy. “HR professionals’ faith in the job market has steadily increased as 2009 has progressed,” notes SHRM’s new report. That optimism does not vary much across U.S. geographic regions. And there have been other encouraging signs. For example, manufacturing productivity has begun to rise.

But these trends appear to have little connection to short-term staffing plans at survey respondents’ organizations. Many HR leaders and other executives apparently want to avoid staffing up only to face a new round of layoffs if the recovery loses steam.

“Even though HR professionals are less pessimistic about the strength of the labor market, they are still holding back on hiring until they feel more confident that an economic recovery is underway,” said Jennifer Schramm, SHRM’s manager of workplace trends and forecasting.

With the national unemployment rate trending toward double digits, the prospect of a “jobless” recovery, or at least one in which new hiring is tepid for some time, seems to be growing. “There is no evidence that a boom in hiring is on the horizon,” states the latest SHRM labor market outlook. “Many economists and labor market observers don’t expect the job market to make any significant improvements until 2010.”

In fact, a National Association of Business Economics survey of 44 economists found that more than half don’t expect the millions of lost American jobs to be recovered fully until 2012, and two-fifths of them say it will take even longer. Some economists suggest that some lost American jobs are gone for good and that new positions, such as “green” technology jobs, will have to take up the slack. 

‘Even though HR professionals are less pessimistic
about the
strength of the labor market, they are still
holding back on hiring until
they feel more confident
that an economic recovery is underway.’
Jennifer Schramm, manager,
SHRM workplace trends and forecasting

Globally, the outlook is not much better. Manpower Inc.’s survey of employers around the world indicated that organizations expect to keep staffing levels relatively flat during the fourth quarter of 2009. Employers in 17 of 35 countries surveyed expect some positive hiring activity in the fourth quarter; 15 percent report negative hiring expectations; 10 percent foresee their weakest hiring plans since the Manpower survey was established.

SHRM’s latest quarterly assessment finds that white-collar employees in particular have reasons to be concerned about their jobs through the end of 2009. With one in seven U.S. organizations planning to reduce staff, they are targeting:

  • Managers and professionals, at 56 percent of survey respondents’ companies.
  • Hourly service workers, 35 percent.
  • Contract/temporary work, 31 percent.
  • Skilled manual workers, 29 percent.
  • Unskilled manual workers, 25 percent.
  • Senior executives, 8 percent.
  • Other, 10 percent.

“As in previous quarters, large organizations are most likely to be planning layoffs in the next quarter,” said Schramm. Nineteen percent of organizations with 500 or more workers say they will decrease total staff by the end of 2009, compared with 14 percent of mid-sized companies (100 to 499 employees) and 15 percent of the smallest firms (fewer than 100 workers).

After government agencies (24 percent), sectors expecting to cut total staff in the quarter are publicly owned for-profit organizations (22 percent), nonprofits (17 percent) and privately owned for-profit firms (11 percent).

On the plus side, 20 percent of companies responding to SHRM’s survey said they will conduct some hiring in the fourth quarter of 2009. Large employers expect to add an average of 99 workers; mid-sized firms plan to grow by an average of 29 employees; small employers foresee adding on average 12 workers.

Publicly owned for-profit organizations plan to add jobs at the highest rate—28 percent—in the final quarter of 2009, followed by 25 percent of privately owned for-profit companies, 12 percent of nonprofits and 11 percent of government entities.

Steve Bates is manager of online editorial content for SHRM.

Related Articles:

Modest Hiring Gains for Manufacturing, Services Expected in October, SHRM Staffing Management Discipline, Oct. 2, 2009

Q3 Employment Outlook: More Market Optimism, Dismal Hiring Plans, SHRM Staffing Management Discipline, July 20, 2009

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