LINE: April Hiring Should Reflect Recent Economic Improvements

4/2/2010

By Theresa Minton-Eversole

Buoyed by incremental improvements in the U.S. economy, manufacturing and service-sector companies will hire more workers in April 2010 compared with a year earlier, according to the latest Society for Human Resource Management (SHRM) Leading Indicators of National Employment (LINE) survey. Although these hiring trends are positive, they are an indication of just how poor hiring conditions were in 2009.

Hiring is up on an annual basis for the sixth month in a row. In April 2010, the percentage of manufacturing companies that expect to hire will reach a level not seen since June 2008. In the service sector, the percentage of companies that expect to hire is the highest since July 2008.

In addition, recruiting difficulty continues to increase, according to the survey results, with more employers reporting difficulty landing top-level talent in March 2010 compared to March 2009.

New-hire compensation also rose slightly in March 2010. For the second consecutive month, the rate of new-hire compensation rose on an annual basis in both sectors.

The LINE Employment Report examines four key areas: employers’ hiring expectations, difficulty in recruiting top-level talent, new-hire compensation and job vacancies. It is based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies. Together, these two sectors employ more than 90 percent of the nation’s private-sector workers.

Employment Expectations	Manufacturing	Service
For the sixth straight month, hiring will increase in April 2010 in both manufacturing and services on an annual basis.	+52.4	+42.9
Recruiting Difficulty
In March, the index for recruiting difficulty rose in both sectors compared with a year ago.	+19.0	+26.6
New-Hire Compensation
The rate of increase for new-hire compensation in March rose on an annual basis in both the manufacturing and service sectors.	+2.4	+2.6

Source: SHRM Leading Indicators of National Employment (LINE), www.shrm.org/line

Employment Expectations

In February 2010, employers took 1,570 mass layoff actions involving 155,718 workers, reported the U.S. Department of Labor’s Bureau of Labor Statistics on March 23, 2010. The number of mass layoff events fell by 191 from the prior month, with manufacturing events hitting their lowest levels since August 2007.

Hiring in April 2010 will provide a better picture for job seekers. The manufacturing index improved by a net of 52.4 points (a net of 37.9 percent of companies will hire in April, compared with 14.5 percent that conducted layoffs a year earlier). The service hiring index rose in April 2010 by a net of 42.9 points (a net of 37.4 percent will add jobs, compared with a net of 5.5 percent that conducted layoffs a year earlier).

Even with those positive numbers, the unemployment rate is expected to remain elevated throughout 2010.

“Improved economic factors in the early months of 2010 compared to the dire employment conditions of the same time last year have resulted in increased year-over-year hiring expectations for the sixth month in a row,” said Jennifer Schramm, SHRM’s workplace trends and forecasting manager. “However, even with these increases, the rate of job loss during the worst months of the recession was so high that it will take many months and even years of sustained job growth to bring unemployment down significantly.”

Still, April 2010 marks the tenth straight month that more companies will hire rather than cut jobs in manufacturing (48.3 percent will hire, 10.4 percent will eliminate jobs), and it is the 12th straight month this has occurred in the service sector (46.5 percent will add jobs, 9.1 percent will cut jobs).

Recruiting Difficulty

“More employers are also reporting increased difficulty filling the jobs of most strategic importance in March compared to the same month one year ago,” Schramm said. LINE’s recruiting difficulty index measures how difficult it is for firms to recruit candidates to fill the positions of greatest strategic importance to their companies.

For the 13th consecutive month in March 2010, this index recorded single-digit response levels for those reporting increased difficulty with recruiting. In the manufacturing sector, a net of 2.3 percent of respondents had less difficulty with recruiting (6.6 reported increased difficulty, 8.9 percent reported less difficulty). This is still a sharp net increase of 19 points from March 2009, when a net of 21.3 percent indicated less difficulty with recruiting.

In the service sector, a net of 2.9 percent of companies in March 2010 had increased difficulty recruiting (9.6 percent had more difficulty, 6.7 percent had less difficulty). This was also a substantial increase from March 2009, when a net total of 23.7 percent of companies had less difficulty finding top talent.

New-Hire Compensation

“After a long stretch of decline and for the second month in a row, the LINE new-hire compensation index also increased on an annual basis in both the manufacturing and service sectors,” Schramm noted.

In the manufacturing sector, a net total of 1.1 percent of respondents said they would increase new-hire compensation in March 2010 (2.8 percent said they would increase, 1.7 percent said they would decrease). That is an increase of 2.4 points from March 2009. In the service sector, a net total of 0.4 percent of companies raised new-hire compensation in March 2010 (2.3 percent increased, 1.9 percent decreased). That is a net increase of 2.6 points from March 2009, when a net of 2.2 percent of service companies decreased new-hire compensation.

Bur the overall low rates of change in both sectors indicate that most organizations are keeping new-hire compensation rates flat and that people landing new jobs are continuing to accept low wages and benefits as the labor market remains weak.

Exempt, Nonexempt Position Vacancies

Vacancies for salaried jobs increased in March 2010, according to the LINE report. In the manufacturing sector, a net total of 11.9 percent of respondents reported increases in exempt vacancies in March 2010 (22.8 percent reported increases, 10.9 percent reported decreases). This represents a 20.2 point increase from March 2009 and the eighth consecutive month that exempt vacancies are higher than those of the same month the previous year.

In the service sector, a net total of 12.0 percent of respondents reported increases in exempt vacancies in March 2010 (21.0 percent reported increases, 9.0 percent reported decreases). That is a 23.3 point increase from March 2009 and the eighth consecutive month that exempt vacancies are higher than the previous year.

Vacancies for hourly jobs also rose in March 2010 for both sectors. A net total of 21.3 percent of manufacturing respondents reported that nonexempt vacancies increased in March 2010 (30.4 percent increased, 9.1 percent decreased). This represents a 30.5 point increase from March 2009.

In accordance with federal data, this suggests that manufacturers are adding jobs slowly and that demand for production is improving gradually. Industrial production rose for the eighth consecutive month in February 2010, according to the Federal Reserve.

For nonexempt service positions, a net total of 23.3 percent reported increased vacancies in March 2010 (32.7 percent reported increased vacancies, 9.4 percent reported decreased vacancies). This marked a 31.7 point increase from March 2009. Increased demand for positions in the service sector might be driven partially by the retail industry, which saw its sales rise by 0.3 percent in February 2010, according to the U.S. Department of Commerce.