2016 Jobs Outlook


By Joseph Coombs, senior analyst, workforce trends September 27, 2016

​Confidence in the job market has fallen among HR professionals compared with a year ago, but many reported that their organizations' financial health was strong and few expected job cuts in the latter half of 2016, according to the newest Jobs Outlook Survey (JOS) by the Society for Human Resource Management (SHRM). 

The JOS results for the second half of 2016 show that hiring activity will be steady throughout the end of the year, and compensation rates should increase for several job categories. Among the survey's highlights: 

  • A total of 58% of respondents had some level of confidence in the U.S. job market for the second half of 2016 and expected job growth: 45% were somewhat optimistic about job growth in the United States, and another 13% were very optimistic and anticipated job growth during the July-to-December timeframe (see Figure 1A). That represents a decline from the second half of 2015, when a combined 69% of respondents expressed some level of optimism about job growth.

  • In the second half of 2016, 37% of respondents expected hiring to occur at their organizations, down from 42% in the second half of 2015. Among employer size categories, companies with 2,500 to 9,999 employees were the most likely to add jobs (40% of those surveyed) in the second half of 2016 (see Figures 2A-2B).

  • In the first half of 2016, 43% of companies surveyed added jobs (see Figures 3A-3D). Among the respondents that did not add jobs or kept staffing levels flat, more than two out of five (39%) of publicly owned for-profit companies said they did not grow payrolls due to "economic volatility/uncertainty."

SHRM's JOS report is based on an annual survey of public- and private-sector human resource professionals who have a direct role in the staffing decisions at their companies. The report examines hiring and compensation trends across a 12-month spectrum, as well as financial conditions at organizations in several U.S. business sectors. Respondents come from small, medium and large companies from around the United States and belong to a variety of for-profit, nonprofit and government entities.

Figure 1A Optimism About Job Growth in the 2nd Half of 2016

Figure 1B Optimism About Job Growth in the 2nd Half of 2016 By Organization Sector

Figure 1C Financial Health of Organizations

LOOKING AHEAD: 2nd Half of 2016

For the second half of 2016, a combined 13% of HR professionals had concerns about the job market and anticipated job cuts in the U.S. labor force (11% were somewhat pessimistic and expected job losses, 2% were very pessimistic). That is up slightly from a combined level of 10% in the second half of 2015. Another 29% of respondents were neither optimistic nor pessimistic about job growth.

HR professionals' degree of optimism was similar across organization sectors (see Figure 1B). Over one-half of respondents had confidence in the job market, a combined level from 54% to 62%. About one-tenth were very optimistic about job growth and more than two-fifths were somewhat optimistic.

HR professionals' decreased levels of faith in the labor market are perhaps reflective of lower rates of job growth in 2016 compared with a year ago. From January to July 2016, an average of 186,000 jobs were added to the labor force each month, according to preliminary data from the U.S. Bureau of Labor Statistics (BLS). That is down from an average of 228,428 per month from that same period in 2015, although most economists and labor market observers agree that the current rate of job growth is strong enough to keep unemployment rates low and stay on pace with increases in labor force population.

Meanwhile, economic activity on a broader scale has been tepid at best through most of 2016. Following an anemic first quarter, when the nation's gross domestic product (GDP) expanded by just 0.8%, GDP grew by only 1.1% in the second quarter of 2016, according to a second estimate by the U.S. Bureau of Economic Analysis.

On the positive side, consumer spending remains healthy, and that may be why many HR professionals say business conditions at their organizations are very strong at the moment, according to the JOS results. More than four out of five HR professionals (83%) had positive views of their organizations' financial health (51% classified it as "good," and 32% called it "excellent") (see Figure 1C).

The forecast for the remainder of 2016 looks encouraging as well. A combined 62% of HR professionals expected some level of financial improvement at their organizations for the second half of 2016 (10% expected "significant improvement," and 52% expected "mild improvement"). Another 30% expected no change, and a combined 8% anticipated a decline (7% said "mild decline," and just 1% said "significant decline").

Most organizations will maintain or raise the level of variable pay (bonuses, commissions, awards, etc.) during the second half of 2016. More than seven out of 10 (71%) HR professionals said variable pay would remain the same during the July-to-December timeframe, and another 18% said it would increase. However, fewer employers will increase overtime hours in the second half of 2016 compared with those that did in the first half (18% compared with 28%).

Looking ahead for hiring, 37% of HR professionals said their organizations expected to grow payrolls during the second half of 2016, according to the JOS results. Among employer size categories, the largest entities (those with 10,000 or more employees) were the least likely to add jobs (24%) during the July-to-December timeframe. 

The majority of respondents (76%) said their non-exempt employees would work the same amount of hours in the second half of 2016 compared with the first half of the year. Another 15% said they would increase hours for their non-exempt employees, and 9% said they would decrease their hours in the second half of the year.

Hiring was expected to be broad-based in terms of positions' categories. Small businesses (those with one to 99 employees) were the most likely (50%) to add completely new positions among their hires in the second half of 2016. Employers of all sizes and sectors were also expected to conduct replacement hiring (due to turnover, layoffs or restructuring, for example) and replacement hiring with new duties for those positions.

Only 7% of respondents said their organizations would conduct layoffs during the second half of 2016, unchanged from the second half of 2015. The largest employers, or those with 10,000 or more employees, were the most likely (16%) to cut jobs in the July-to-December timeframe. The smallest employers, or those with one to 99 employees, were the least likely (3%) to conduct layoffs in the latter half of 2016.

Figure 2A Planned Changes in Total Staff Level
Figure 2B Planned Changes in Total Staff Level by Organization Size

Planned Changes in Compensation in the 2nd Half of 2016 for Salaried Individual Contributor/Professionals, by Sector

Will increase Will stay the same​ Will decrease​
​Publicly owned for-profit
(n = 68)
​ 24%  76%​0%​
​​Privately owned for-profit
(n = 225)
​ 28%69%​3%​
(n = 90)
(n = 41)
 51%​  49%0%
Categories of Workers That Companies Will Hire

HR professionals also expect base pay to rise in the second half of 2016 for a variety of job categories at their organizations. More than half (51%) of government respondents surveyed, for example, said compensation would increase for salaried individual contributors/professionals, a job category that includes analysts, nurses, engineers and other high-skill positions (see Figure 2C). Very few respondents in any category indicated they would decrease compensation during the July-to-December timeframe.

More than three out of five respondents (61%) said their organizations' budgetary expenditures would remain the same in the second half of 2016. One-fifth of respondents (20%) said budgetary expenditures would increase during the July-to-December timeframe, and 19% said their budgets would be cut.

LOOKING BACK: 1st Half of 2016

Hiring activity was strong in the first half of 2016, according to the JOS results. Among all HR professionals surveyed, more than two out of five (43%) said their companies created jobs in the January-to-June timeframe. Forty-one percent of organizations maintained staffing levels, and another 16% conducted layoffs in the first half of 2016.

Nearly half (49%) of privately owned for-profit employers surveyed added jobs in the first half of 2016. They were followed by nonprofits (44% of which conducted hiring), publicly owned for-profit companies (36%) and government agencies (32%). More than four out of five (86%) HR professionals who said their employers added jobs in the first half of 2016 said they hired full-time workers.

Nearly three out of 10 respondents (29%) said their non-exempt employees worked more hours in the first half of 2016 compared with the second half of 2015. The majority (64%) said those hours did not change during the January-to-June timeframe, and just 7% said their non-exempt employees worked fewer hours in the first half of 2016 compared with the latter half of 2015.

Employers that kept staffing levels flat or eliminated jobs in the first half of 2016 pointed to a variety of reasons for not expanding their payrolls. Nearly two out of five (39%) HR professionals at publicly owned for-profit companies cited "economic uncertainty/volatility." Many employers are also learning to do more with less, according to the JOS survey. One-third (33%) of respondents from publicly owned for-profit companies said improved efficiencies (such as automation or technological improvements) have reduced the need for staff at their organizations, as did 30% of privately owned for-profit respondents, 29% of nonprofit respondents and 27% of government respondents.

In contrast, other SHRM data show that employers would like to add more workers to their payrolls, but are having trouble finding qualified candidates for their open positions. SHRM's Leading Indicators of National Employment® (LINE®) report includes a recruiting difficulty index, which measures how difficult it is for companies to recruit candidates to fill the positions of greatest strategic importance to their organizations.

A net of 28.9% of manufacturing respondents had increased difficulty with recruiting in August, as did a net of 39.3% of service-sector HR professionals, according to LINE data. A separate survey found that more than two-thirds of HR professionals (68%) reported challenging recruiting conditions in the current talent market, according to The New Talent Landscape: Recruiting Difficulty and Skills Shortages, a SHRM research report from June 2016. 

Even with those staffing challenges faced by many HR professionals, many private-sector and government forecasts call for hiring to remain steady and unemployment rates to stay low for the remainder of 2016 and into early 2017. Panelists on a National Association for Business Economics survey in June 2016, for example, called for nonfarm payroll growth to average 201,000 jobs per month for the rest of 2016 and then to "slow modestly" to 192,000 per month in 2017. The panel expected the unemployment rate to average 4.8% for the latter half of 2016, and then decline to 4.6% by the fourth quarter of 2017.

Federal Reserve Board members and Federal Reserve Bank presidents, in a set of projections released in June, had varying opinions that called for the unemployment rate to range from 4.5% to 4.9% for the remainder of 2016, and from 4.3% to 4.8% in 2017.

Figure 3A Changes in Total Staff Level

Figure 3B Changes in Total Staff Level by Organization Staff Size

Reasons for Not Changing Staff Levels in the First Half of 2016

Economic volatility/uncertainty 
​Publicly owned for-profit (n = 70)
​​Privately owned for-profit (n = 152)16%​ 
​Nonprofit (n = 66)18%
Government (n = 37)20%​
Business is declining (e.g., decreased demand for products or services) 
​Publicly owned for-profit (n = 70)
​​Privately owned for-profit (n = 152)15%​ 
​Nonprofit (n = 66)7%
Government (n = 37)10%​
Business is not growing or expanding
​Publicly owned for-profit (n = 70)
​​Privately owned for-profit (n = 152) 43%​ 
​Nonprofit (n = 66)39%
Government (n = 37)43%​
Improved efficiencies have reduced the need for staff (e.g., technology or automation improvements)
​Publicly owned for-profit (n = 70)
​​Privately owned for-profit (n = 152)30%​ 
​Nonprofit (n = 66)29%
Government (n = 37)27%​
Other reasons
​Publicly owned for-profit (n = 70)
​​Privately owned for-profit (n = 152)23%​ 
​Nonprofit (n = 66)25%
Government (n = 37)23%​
Note: Only respondents whose organizations had maintained or decreased total staff levels were asked this question. Percentages do not total 100% due to multiple response options.

Categories of Workers that Companies Hired

SHRM Jobs Outlook Survey Methodology

A sample of HR professionals was randomly selected from SHRM's membership database, which included over 285,000 members at the time the survey was conducted. However, only members who had not been selected to participate in a SHRM survey or poll in the last six months were included in the sampling frame. Members who were students, located internationally or had no e-mail address on file were also excluded from the sampling frame. On July 22, 2016, an e-mail that included a hyperlink to the 2016 SHRM Jobs Outlook Survey was sent to 4,000 randomly selected SHRM members, and 502 HR professionals responded, yielding a response rate of 13%. The margin of error was +/-4%, and the survey was accessible for a period of three weeks.

Project Team

Project leaders: Joseph Coombs, senior analyst, Workforce Trends and Forecasting;   Tanya Mulvey, researcher, Talent Management and Workforce Skills

Project contributors: Jennifer Schramm, M. Phil, SHRM-SCP, manager, Workforce Trends and Forecasting; Evren Esen, SHRM-SCP, director, Workforce Analytics; Alexander Alonso, Ph.D., SHRM-SCP, Senior VP, Knowledge Development

Copy editing: Katya Scanlan, copy editor

Design: Jihee Lombardi, design specialist


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