SHRM Says More Payroll Cuts, Less Hiring in January 2009

Jan 9, 2009

SHRM Says More Payroll Cuts, Less Hiring in January 2009

No shortage of top talent, but fewer employers are looking to fill positions

Alexandria, Va. More human resource managers in the manufacturing and service sectors plan to cut payrolls rather than hire in January 2009, a bleak trend continuing from last month according to the Society for Human Resource Management’s (SHRM) LINE® Employment Report.

LINE, or the Leading Indicators of National Employment® Report, forecasts a 23.3 percent drop in manufacturing sector hiring and a 19.5 percent drop in service sector hiring compared to this time last year. This is the worst drop in the survey’s four year history.

In the manufacturing sector, 2.0 percent of respondents said they would decrease new-hire compensation rather than provide an increase (1.9 percent). This is the first time in four years that the manufacturers’ net total ventured into negative territory

“The January forecast plainly illustrates a troubling trend where payroll trimming, hiring freezes and layoffs abound,” said Jennifer Schramm, manager of workplace trends and forecasting at SHRM. “Even those who are in a position to hire workers are being much more frugal with wages and benefits than we’ve seen in recent years.”

The good news: the few HR professionals actively recruiting report little-to-no difficulty in filling jobs with top talent. The reason: the historic number of people unemployed and available for work.

The findings are detailed in the January 2009 LINE Employment Report (, a set of labor market indicators that forecast changes to four national employment measures: job expectations, job vacancies, new-hire compensation and recruitment difficulty.

LINE is based on a monthly survey of human resource professionals at more than 500 manufacturing and 500 private service-sector companies. Together, these two sectors comprise more than 90 percent of America’s private sector employment.

The manufacturing sector:

The LINE index of manufacturing employment expectations for January 2009 plunged 48.4 points compared with one year ago. Specifically, 38.0 percent of human resource managers surveyed plan to trim payrolls while only 17.8 percent plan to hire in January 2009. The -20.2 percent difference between the two marks a negative gain and a drop from 2008 when the net was a positive gain of 28.2 percent.

December 2008 payroll vacancies include exempt (salaried) and nonexempt (hourly) workers and are steep as reflected in survey responses. HR managers report a 21.0 point drop in exempt job vacancies and a 30.7 point plunge in nonexempt job vacancies.

Those who do secure employment will face new-hire compensation rates that are growing much more slowly than at this time one year ago, say HR managers. Only 1.9 percent plan to increase compensation for new hires while 2.0 percent plan to offer lower starting compensation packages.

The service sector:

The LINE index of service sector employment expectations fell 32.7 points. A breakdown of responses from HR managers shows that 24.7 percent plan to reduce staff while 14.9 percent plan to hire.

A look at the December payrolls shows a 4.8 point drop for exempt job vacancies and a 10.0 point fall in nonexempt hiring vacancies.

New hire compensation for job seekers who find service sector employment will likely be flat. Only 5.3 percent of HR managers report an increase in compensation packages for new hires while 1.3 percent report a decrease.

About LINE

The SHRM LINE Report is released at 9 a.m. Eastern time on the third Friday following the conclusion of the week containing the 12th of the month. The SHRM employment expectations index describes the same time period referenced approximately one month later in the Employment Situation Report issued by the Bureau of Labor Statistics.


About the Society for Human Resource Management

The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Representing more than 250,000 members in over 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China and India. Visit SHRM Online at


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