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The latest U.S. labor market report from the Bureau of Labor Statistics revealed higher than expected job growth and a 4.9 percent unemployment rate, the lowest in eight years. But wages are still a concern.
The new data shows employers in the United States added 242,000 jobs in February 2016, continuing a positive trend in job growth for 65 consecutive months—the longest streak on record since the 1930s.
The report “surpassed expectations,” said Jennifer Schramm, SHRM-SCP, manager of workforce trends at the Society for Human Resource Management (SHRM). “Even the labor force participation rate improved last month and the number of discouraged jobseekers was down.”
The labor force participation rate rose slightly from January 2016 by 0.2 percentage point to 62.9 percent and by 0.5 percentage point since September 2015.
“Today’s jobs report revealed strong gains for the U.S. workforce, but more importantly, the data shows there’s room for this labor market to grow,” noted Tara Sinclair, chief economist for job site Indeed. “In this environment, there’s definitely potential to bring more people off the sidelines if wages increase more.”
In February, average hourly earnings for private-sector employees declined by 3 cents to $25.35, following an increase of 12 cents in January.
“One downside of today’s report was disappointing wage growth,” said Andrew Chamberlain, chief economist for Glassdoor. “Average hourly wages rose by just 2.2 percent from one year ago. That’s slower than the recent pace of 2.5 percent growth, and well below the 3 to 4 percent wage growth we typically see in normal times. One partial explanation for slow wage growth that we’ve watched closely is the increase in employers offering more benefits—or non-wage compensation—over wages,” he said.
SHRM’s Leading Indicators of National Employment data also indicates that pressure to raise wages for new hires is minimal, Schramm said. “This is less surprising in the case of manufacturing where hiring expectations are somewhat lower compared with this time last year and where recruiting difficulty is also down. But it is also true in the service sector where HR professionals continue to report higher employment expectations for March compared with the same time last year, as well as rising recruiting difficulty,” she added.
“Finding qualified workers continues to be a challenge for many companies,” said Kenneth Esch, a partner at PwC, based in Chicago. “Highly targeted hiring is a common tactic we’re seeing among many of our private-company clients. It points to demographic shifts in the workforce and to core changes in U.S. manufacturing, where employees with specialized skills are increasingly replacing workers who typically manned pre-recession factory floors. This dynamic could eventually lead to an uptick in wage growth,” he said.
February job gains mostly occurred in health care (+57,000), retail trade (+55,000), restaurants and bars (+40,000), and private educational services (+28,000).
“The construction industry, a bellwether of investor expectations for economic growth in coming months posted gains of 19,000 new jobs,” Chamberlain said.
Mining employment continued to decline (-19,000).
About 7.8 million Americans are considered officially unemployed by the government.
Among demographic groups, the unemployment rates for adult men (4.5 percent), adult women (4.5 percent), whites (4.3 percent), blacks (8.8 percent) and Asians (3.8 percent) maintained at the previous month’s rates.
Hispanics experienced the second consecutive significant drop in unemployment since the start of 2016, falling from 5.9 percent in January 2016 to 5.5 percent in February, after dropping from 6.3 percent in the first month of the year.
The jobless rate for teens also fell, from 16 percent in January to 15.6 percent in February.
The employment-population ratio edged up to 59.8 percent in February, aided by the totals for people classified as marginally attached to the labor force and discouraged workers dropping by 356,000 and 133,000 respectively from February 2015.
“With the employment-population ratio up over the month along with the labor force participation rate, we see more people getting into the workforce … however, a good deal of the growth is coming from sectors that are lower-paying and have a tendency toward churn, such as retail and fast food services,” Sinclair said. “In the long run, we’ll need to see more gains in higher-skilled areas such as IT and business services for long-term growth. This will take increased workforce interest and training, however, as currently we lack the strength of talent pool for many of these roles.”
Roy Maurer is an online editor/manager for SHRM.
Follow him @SHRMRoy
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