Recent labor market sentiments have frequently mirrored observers’ opinions of the U.S. economy as a whole. Every good report seems to come with a caveat:
We are in the midst of a stretch of job growth not seen since the 1930s, according to federal data. Yet millions of people remain out of work.
The nation’s gross domestic product has rebounded strongly since a poor first quarter of 2014. Yet despite the resulting profit gains, employers generally aren’t raising wages and many Americans are still struggling to get ahead.
Economists and other labor market observers report that employers still aren’t under enough pressure to boost compensation, since there are plenty of people seeking work and hiring managers can afford to be selective with whom they bring on board and how much they choose to pay.
There’s no question that the unemployment rate has declined. But experts contend this is largely attributed to the fact that millions of job seekers have “checked out” and aren’t looking for work anymore; as such, they aren’t included in the monthly federal unemployment surveys.
The reality is, the drop in the jobless rate is not only because many Americans have stopped looking for work, but also because thousands more are retiring every day, effectively taking themselves out of the labor market.
Still, several reports from the Society for Human Resource Management (SHRM) and others indicate that hiring activity is showing no signs of slowing down. December marked the ninth straight month that hiring in the manufacturing sector rose, compared with the same months a year ago, according to SHRM’s Leading Indicators of National Employment (LINE) report. It also marked the seventh time in eight months that the service-sector hiring rate rose, compared with the previous year, according to LINE.
Many employers surveyed for LINE report that they are struggling to fill vacancies, however. In November 2014, the reported recruiting difficulty for manufacturers was the highest it had been since May 2006. In the service sector, it reached a record high since data collection began for that sector in October 2005, according to LINE historical data.
The SHRM 2014 Economic Conditions Survey series released in October also revealed that 50 percent of employers had difficulty recruiting during the previous 12 months. And while many of those surveyed HR professionals said that this was due to candidates’ “lack of experience” or “insufficient skill sets” (50 percent each), there are signs that employers are still keeping a tight grip (perhaps too tight) on compensation.
Fifty percent of HR professionals responding to that survey said they were hindered by “competition from other employers,” which could very well mean the office across the street has bigger pockets. Another telling statistic: 37 percent of those respondents said they couldn’t fill the jobs because “qualified candidates rejected the compensation package.”
Moving ahead to 2015, perhaps employers will begin to shell out the money expected by the people they need to fill particular jobs, or job seekers may grow more willing to acquire new skills and accept a lower pay grade in order to get back to work.
The following are some other predictions for 2015:
- The unemployment rate projections cited by the Federal Reserve’s board of governors and bank presidents during its September 2014 meeting ranged from an annual rate of 5.2 percent to 5.7 percent for 2015, 4.9 percent to 5.6 percent in 2016, and 4.7 percent to 5.8 percent in 2017. While those projections were optimistic, they are subject to change at subsequent meetings.
- A panel from the National Association for Business Economics (NABE), a Washington, D.C.-based nonprofit trade group, reports that it expects nonfarm payrolls to post an average gain of 211,000 jobs per month in 2015. NABE also projects the unemployment rate to drop to 5.7 percent in 2015.
- In its October 2014 World Economic Outlook, the International Monetary Fund (IMF) predicted the U.S. unemployment rate to average 5.9 percent in 2015. Improving housing activity and “steady payroll gains” suggest that the U.S. economic rebound is becoming more sustainable, the IMF has said.
- U.S. employers expect to hire 8.3 percent more college graduates from the class of 2015 compared with 2014, according to the nonprofit trade group National Association of Colleges and Employers (NACE). Employers participating in NACE’s Job Outlook 2015 survey conducted from Aug. 11 through Oct. 7, 2014, cited company growth and attrition caused by retirements as the main drivers for the increase in hiring.
Joseph Coombs is a senior analyst for workforce trends at SHRM.