LINE: Employment Expectations at Four-Year Lows

November 2007—18 months ago as of May 2009—was the last month the Leading Indicators of National Employment (LINE) hiring index was positive, according to the Society for Human Resource Management’s latest LINE data. The LINE Report examines four key areas—employers’ hiring expectations, new-hire compensation, difficulty in recruiting top-level talent, and job vacancies. Its findings are based on a monthly survey of HR professionals at more than 500 manufacturing and 500 private service-sector companies. Together, these sectors comprise more than 90 percent of America’s private-sector employment. Employment expectations for May 2009 are at four-year lows for manufacturing and service sectors—down 34.8 percent for manufacturing and 18.1 percent for service—the report found.  “LINE’s employment expectations index has been negative since December 2007, which is the month when federal officials say the recession began,” observed Jennifer Schramm, SHRM’s manager of workplace trends and forecasting. “While employment expectations for May 2009 are still showing a net annual decline, the numbers are not as devastating as they have been over the previous few months,” she told SHRM Online. Hiring expectations for May 2009—while down—are not as severe as in previous months, according to the report. Although the employment expectations index is still down compared to spring of 2008, Schramm added, “more members of the manufacturing and service sectors say they will add to their payrolls in May than have in the past several months, so we will be watching this index closely to see if this trend continues.” April 2009 was the first April in four years that more manufacturers reported an easier time recruiting. There even was less difficulty in recruiting talent among the service sector. “With millions of people seeking work and fewer opportunities that exist, the LINE recruiting difficulty index is not likely to reverse this trend in the near future,” the LINE report states. New-Hire Compensation Wages and benefits packages for new hires in April 2009 also dropped dramatically compared to April 2008 for both sectors. “Although many companies have scuttled hiring plans during the recession and are cutting jobs, many are also turning to wage and benefit cuts in an ongoing effort to control costs,” the report says. In April 2009, a net 2.3 percent of LINE respondents noted they would decrease new-hire compensation in the manufacturing sector—the lowest April response total in LINE’s four-year history. As for the service sector, “the trend of slashing salaries and benefits was even more pronounced” during that same period, according to the LINE report. It found a net total of 12.2 percent of companies reporting reduced wages and benefits packages for new hires in April 2009. 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 U.S. Bureau of Labor Statistics.