Will Hiring Stay Strong in 2015?

Positive reports about the job market come with caveats.

By Jan 7, 2015

 


010215_cover.jpgThe labor market often mirrors the U.S. economy as a whole: Every good report comes with a caveat.

We are in the midst of a stretch of job growth not seen since the 1930s—yet millions of people remain out of work. Corporations are enjoying record profits, but they generally aren’t raising wages and many Americans are struggling to get ahead. The unemployment rate has declined significantly, but—and here’s the caveat again—critics contend it is largely because millions of job seekers have stopped looking for work and therefore aren’t included in federal unemployment surveys.

Still, hiring is up and there are no signs it is slowing. December marked the ninth straight month that the hiring rate rose in manufacturing compared with a year ago, according to the Society for Human Resource Management’s (SHRM’s) Leading Indicators of National Employment (LINE) report. December also marked the seventh time in eight months that the hiring rate rose in the service sector.

At the same time, these employers are struggling to fill certain vacancies. In November, manufacturers reported the highest level of recruiting difficulty since May 2006. In the service sector, recruiting difficulty reached its highest level since October 2005, according to LINE.

Hiring Caveats

Despite strong hiring activity, organizations report that they are having difficulty hiring full-time regular employees. Here are the top reasons why and the percentage of organizations that cited each reason.

Candidates do not have the right technical skills 50%
Competition from other employers 50%
Candidates do not have the needed work experience 50%
Low number of applicants 43%
The local market is not producing enough qualified job candidates 40%
Candidates do not have the right professional skills 39%
Qualified candidates reject compensation package 37%
Candidates do not have the needed credentials/certifications 29%
Candidates do not have the right workplace (soft) skills 27%
Qualified candidates are not interested in moving to our local area 26%
Source: SHRM’s 2014 Economic Conditions Survey Series.

SHRM’s 2014 Economic Conditions Survey Series reveals that 50 percent of employers had difficulty recruiting in the past year. And while many of them cited candidates’ lack of experience or insufficient skill sets, employers also seem to still be keeping a tight grip—perhaps too tight—on compensation.

Another 50 percent of HR professionals from that survey reported that they were hindered by “competition from other employers,” which could mean that the office across the street has deeper pockets. Here’s another telling statistic: 37 percent of HR professionals said they couldn’t fill jobs because qualified candidates rejected the compensation package.

So as we move ahead to 2015, perhaps any further acceleration in hiring will come down to who blinks first—the employer who might have to shell out a few extra dollars to find the person needed for the job, or the job seeker who obtains new skills or perhaps accepts lower pay in order to get back to work.

Overall, though, several organizations issued fairly bullish predictions on hiring for 2015:

  • The Federal Reserve is optimistic that the unemployment rate will range from 5.2 percent to 5.7 percent in 2015.
  • The National Association for Business Economics expects nonfarm payrolls to post an average gain of 211,000 jobs per month in 2015 and the unemployment rate to drop to 5.7 percent.
  • Employers expect to hire 8.3 percent more new college graduates from the Class of 2015 for U.S. operations compared with 2014, according to the National Association of Colleges and Employers. They cited company growth and attrition caused by retirements as the main drivers for the increase in hiring.

After a few years focused mainly on retention, HR should head into 2015 ready to recruit—caveats or not.

Joseph Coombs is a senior analyst for workforce trends at SHRM.

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