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The labor market experts at Challenger, Gray & Christmas Inc. forecast fewer layoffs, more hiring and increased wages in 2016.
U.S.-based employers announced 574,888 job cuts for the year through November 2015, already far surpassing the 2014 year-end total (483,171) and setting up for the largest year-end total for job cuts since 2009, when 1.2 million job cuts were announced.
The rise in job cuts this year was due primarily to the dramatic decline in oil prices and heavy downsizing in the public sector, according to John A. Challenger, chief executive officer of Challenger, Gray & Christmas, based in Chicago.
Falling oil prices resulted in 102,738 job cuts through November, representing nearly 20 percent of job cuts announced in 2015. Military cutbacks claimed another 57,000 personnel.
“With oil prices expected to remain low for the foreseeable future, we could continue to see the industry workforce shrink in 2016, though probably not at the rate we saw in the first part of 2015,” Challenger said.
Challenger is predicting that fewer layoffs in the energy sector will result in an overall slowdown in downsizing activity in 2016. He’s also forecasting increased hiring and wages.
The nation’s payrolls grew by an average of 210,000 jobs per month in 2015 through November, according to the Bureau of Labor Statistics. That’s down from the 260,000 new jobs averaged per month in 2014.
“Part of the slowdown in job creation last year may have been related to a weakened energy sector, which was one of the strong growth areas in 2013 and 2014. However, another contributor to the slower job gains this year may have been a shrinking supply of available talent,” said Challenger.
The national unemployment rate is 5 percent, which many economists consider full employment. When broken down to include just those ages 25 and older, the rate drops to 4.1 percent. For those with a four-year college degree, the rate is 2.5 percent.
“An unemployment rate of 2.5 percent means that employers seeking college-educated, experienced workers are really struggling right now to find candidates to fill openings,” Challenger said.
According to the latest Bureau of Labor Statistics data on labor turnover, the nation’s employers hired 5.1 million new workers in October 2015 and there were still nearly 5.4 million job openings at the end of the month.
“We expect this heavy churn to continue in 2016,” Challenger said. “Around 10,000 Baby Boomers hit retirement age each day. That doesn’t mean they are going to leave the labor force. However, many will change jobs, others will cut back hours, and some may leave the workforce for a while and come back.”
All of this churn creates hiring opportunities. “Employers will have to increase their recruiting efforts to find the best candidates,” Challenger said. “They will have to rely more heavily on referrals from current employees. They will have to be more open to considering candidates who might have longer-than-desired gaps on their resumes or whose skills and experience do not perfectly align with the job opening. We could see starting salaries increase, as well as the salaries of existing workers, as employers try to attract and retain the best talent.”
Roy Maurer is an online editor/manager for SHRM.
Follow him @SHRMRoy
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