More teenagers found jobs in July compared to a year ago, but it was not enough to lift the overall summer hiring total above last year’s levels, according to an analysis of government employment data by global outplacement consultancy Challenger, Gray & Christmas, Inc.
The government shutdown that went into effect today, due to the inability of Congress to negotiate an agreement on a new budget, could have dire consequences for the economy at large, according to John A. Challenger, chief executive officer of global outplacement consultancy Challenger, Gray & Christmas, Inc.
“Even if the shutdown lasts just a few days, we are talking about nearly 2.0 million government workers who are bracing themselves for the loss of income resulting from the shutdown. Many may have already started to rein in their spending weeks ago in anticipation of a shutdown. Now, they are likely to go into full cost-cutting mode, spending only what they need to put food on the table and pay the most important bills. Dinners out, new furniture or appliances, vacations, and other discretionary expenditures are now off the table,” said Challenger.
“The economy is already weakened by continued high unemployment, as well as underemployment, which both impact consumers’ spending power. Now, the government is basically shooting the economy in the foot, hobbling millions of other consumers. And the timing couldn’t be worse, as we are just weeks away from the all-important holiday season, when retailers and other businesses benefit from increased spending. Depending on how long the shutdown lasts, government workers may have to slash holiday spending,” said Challenger.
According to reports, analysts estimate that a two-week shutdown will slow economic growth by 0.3 to 0.4 percentage points, which was at an already-meager growth rate of 2.5 percent in the second quarter. The 21-day shutdown in the mid-1990s caused a four percent dip in the stock market, but it rebounded quickly along with job creation and economic growth, after the shutdown ended.
“Unfortunately, this is not the mid-1990s, when the economy was in a much stronger position heading into the shutdown. Unemployment was at 5.6 percent and job creation was averaging 190,000 new jobs per month over the five months leading up to the furloughs. Following the shutdown, job creation bounced to an average of 257,000 per month for the remainder of 1996. That is unlikely to happen this time, as the government continues to seek spending cuts even if a budget is agreed upon,” said Challenger.
A new survey of human resources executives provides further evidence of just how difficult it is in a non-manufacturing-based economy to quickly increase employment following a downturn and why it could be another year or more for the unemployment rate to fall to pre-recession levels.
In the survey conducted by global outplacement consultancy Challenger, Gray & Christmas, Inc., just over half (53 percent) of the human resources executives polled said their companies implemented workforce reductions as a result of the recession that began in December 2007 and ended in June 2009. The good news is that 82 percent of companies have added new workers since January 2010. However, while 33 percent of those hiring were able to bring back some of their former workers, 67 percent indicated that the re-staffing process started from scratch.
Meanwhile, less than half (43 percent) of the companies adding new workers have reached or surpassed the number of workers employed prior to workforce reductions. Nearly 15 percent said they expect to eventually return to pre-layoff workforce levels. However, 43 percent indicated that their companies will meet future demand with fewer employees, suggesting that their payrolls will never return to pre-recession peaks.
“What we have come to know as ‘the jobless recovery’ may be the new post-recession norm, as employers rebuild their workforces from scratch, take more time to vet candidates, and find ways to operate with fewer workers,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
While prices at the gas pump are still higher than most drivers would like, more American workers are expected to use their vacation days this summer, thanks to the steadily improving economy, increased job security and reasonable airfares. Increased summer travel, beginning with the Memorial Day holiday, is likely to boost hiring across several travel-related sectors, including leisure and hospitality, food service, retail, and entertainment, according to the employment experts at global outplacement consultancy Challenger, Gray & Christmas, Inc.
“For young job seekers on break from high school or college, travel and leisure-related industries offer a wealth of employment opportunities. While many employers have already hired the bulk of their seasonal workers by this point, it is still not too late to find openings, particularly for those who live near or are willing to temporarily relocate to popular travel destinations,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas. Continue reading
Rising quit rates and fewer job seekers vying for open positions could signal a return to the types of labor shortages that plagued employers during the dot.com boom. While widespread talent shortages are probably five to ten years away, some regions and industries already may be feeling the pinch, according to the workplace authorities at global outplacement consultancy Challenger, Gray & Christmas, Inc.
“With 11.6 million Americans still unemployed as of April, it may be difficult for most to contemplate labor shortages. However, it is important that not all of the unemployed reside where jobs are being created at the fastest rate and many lack the skills required to fill the openings that exist. These two factors alone make skill shortages a reality right now for some employers,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
“As the economy continues to improve and more people find employment, labor shortages will only worsen; accelerated by an aging workforce that may not necessarily enter traditional retirement, but will alter their career path to the extent that it will prove disruptive to the companies that have employed them,” he added.
Challenger pointed to the latest jobs data from the Bureau of Labor Statistics (BLS) as evidence that it will become increasingly difficult for employers to attract and keep the best talent. The April employment situation report showed that payrolls experienced a net increase of 165,000. However, that figure from the BLS merely shows the difference between the total number of jobs added and the total number lost as a result of layoffs, terminations, retirements, people quitting, etc. For the number of Americans actually hired in a given month, Challenger turns to the BLS job openings and labor turnover survey.
In March, the latest month for which data is available, the nation’s employers hired 4,259,000 new workers. That was down from the previous month, when 4,451,000 Americans were hired. However, the hiring levels tracked by the survey typically fluctuate significantly from month to month. Overall, hiring levels have steadily risen since falling to a recession low in June 2009, when only 3,626,000 workers were hired during the month.
With college seniors around the nation returning to their respective campuses following spring break recess, many will undoubtedly turn their attention to their impending graduation and the search for their first post-collegiate job. A new analysis of the entry-level job market estimates that while the job market continues to strengthen for college graduates, the environment remains highly competitive, which may force some to pursue unexpected career paths.
In its annual college graduate job-market outlook, global outplacement consultancy Challenger, Gray & Christmas, Inc. says this year’s crop of 1.8 million bachelor’s degree recipients will be able to take advantage of the 36 consecutive months of private-sector employment growth that has occurred since the jobs recovery began in earnest in March 2010.
“Job creation has been slow, but it has been steady. Over the past 14 months, private payrolls have grown by an average of 190,000 new workers per month. There are a growing number of opportunities for job seekers, but the search definitely requires an aggressive approach. This is especially true for new graduates, who are likely to have less real-world experience to point to in job interviews,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
“This lack of experience would have less impact if they were only competing for jobs with their fellow graduates. However, in this economy, it is likely that they will be vying for entry-level job opportunities with those who have been in the workforce for one to five years. They may even be competing with seniors looking for any opportunity to continue working even it means taking a dramatic cut in pay, title and responsibility,” he added.
Despite increased competition for entry-level positions, the latest data on starting salaries suggest that demand for new graduates is on the rise. According to a January survey by the National Association of Colleges and Employers (www.naceweb.org), the average starting salary for new college graduates earning bachelor’s degrees increased 3.4 percent over last year. The biggest gains were achieved by those in education, whose starting salaries rose by 5.4 percent from $38,581 for the class of 2011 to $40,668 for last year’s graduating class.
While those in education saw the biggest increase, last year’s graduates with a bachelor’s degree in engineering enjoyed the highest starting salary at $62,655, up 3.8 percent from $60,344 for 2011 graduates.
Engineering and technology graduates are likely to experience some of the shortest post-graduation job search times. In fact, the most talented students in these fields may have multiple job offers to weigh before they even collect their diplomas, according to Challenger.
Tempe, AZ-based US Airways Group may announce a merger with bankrupt carrier American Airlines this week. The combined airlines would surpass United Continental as the world’s largest airline. US Airways’ CEO Doug Parker, who has been in talks with AMR since last January, is expected to lead the combined companies, while American’s CEO Tom Horton would become non-executive chairman, according to sources who spoke with Bloomberg News. The attempted merger comes after an unsuccessful bid to combine with Delta Air Lines in 2007. If successful, this merger will further consolidate an industry hit hard by the global economy and government regulations and could pave the way for the possibility of higher fares and more routes. The industry has seen five large mergers since 2001, including the May 2010 merger of United and Continental, costing 1,500 jobs in 2011. This, like other mergers, could also cost jobs: American Airlines announced 13,000 job cuts last February after seeking court protection. Airlines and airport/airline services companies announced 29,273 job cuts in 2012, according to tracking by global outplacement Challenger, Gray & Christmas, Inc. So far this year, job cuts at airlines total 1,281. How might this merger impact airline and air travel employment? How may the consumer be affected? What other industries could see major mergers?
With each new employment report, there is further evidence of the economy and job market’s continued improvement. However, each new report also serves as a reminder of how far the economy still has to go before reaching pre-recession levels. The slow progress has led many to conclude that job creation remains weak, but a closer look at the data reveals that current job creation levels are outpacing that which occurred during the last expansion.
Following new revisions to the employer survey data reported in today’s employment situation report, private-sector payrolls expanded by an average of 184,000 net new jobs per month in 2012. During the two-year period from January 2001 through December 2012 monthly job gains in the private sector averaged 194,000. So, how does this compare to other expansions?
From 2004 through 2006, the peak job creation years following the 2001 recession, private-sector payrolls increased by an average of 168,000 net new jobs per month. So, average payroll gains are trending roughly 30,000 jobs more in the current economy. Overall, the 35 consecutive months of positive job gains in the private sector have produced a total of 6,111,000 new jobs. In the first 35 consecutive months of job gains following the 2001 recession (August 2003 – June 2006), a total of 5,756,000 jobs were added to private sector payrolls.
Going back further to the robust expansion years leading up to the dot.com boom and subsequent collapse (which set off the 2001 recession) employment data show that private sector payrolls were growing at a clip of about 221,000 per month. What made this period of employment expansion so exceptional was not the number of jobs added each month, but the overall endurance of the job creation. The 221,000 average job gains per month were sustained over an eight year period, from January 1993 through December 2000. There was only one month in that period when more jobs were lost than were added (January 1996; 6,000 jobs lost). Overall, private payrolls expanded by 21.2 million jobs.
It is difficult to look at the employment situation each month and conclude that we are making progress on the jobs front. But, the fact is that this economy is indeed adding jobs and doing so at a faster rate than the previous period of expansion. Unfortunately, we simply had a much deeper hole from which to escape. From February 2008 through February 2010, private payrolls experienced 25 consecutive months of contraction, wiping out more than 8.8 million jobs. That is more than the total job losses incurred in the previous three recessions combined. It could be another 18 to 24 months before private sector payrolls reach pre-recession levels. Of course, a lot could happen between now and then that could significantly increase job creation or derail it. However, for the moment, the economy and employment are definitely heading in the right direction.
While companies continued to hire at a less-than-stellar rate in 2012, strong corporate profits are giving them plenty of reason to celebrate. A new survey shows that more than 83 percent are planning year-end holiday parties this year, up from 68 percent in 2011.
In its annual survey of human resources executives, global outplacement and workplace coaching consultancy Challenger, Gray & Christmas, Inc. not only found that more companies are hosting holiday parties, but 17 percent said more money is being budgeted for the festivities.
Despite the increase in holiday parties from a year ago, the percentage of companies holding year-end functions remains shy of a pre-recession 2007, when about 90 percent of companies surveyed held holiday festivities. Continue reading
As the nation hurtles toward the fiscal cliff, employers may further postpone major hiring decisions until there is more clarity on the country’s economic future, according to workplace authority John A. Challenger, chief executive officer of global outplacement firm Challenger, Gray & Christmas, Inc. “Uncertainty alone is not the driving factor behind delayed hiring. Hiring is driven primarily by demand and, right now, demand is in fact being negatively impacted by uncertainty. Businesses are holding off on upgrading equipment and technology. Government spending has ground to a halt. Consumers are also holding off on big purchases; not because they are thinking about the looming fiscal cliff, but because they still cannot obtain the credit necessary to fund large purchases.” Even if lawmakers reach a compromise and address the fiscal cliff, there remain several obstacles to economic recovery, including the ongoing financial crisis in Europe and an economic slowdown in Asia. What other factors are contributing to the slow pace of hiring? What has to change for employers to accelerate hiring? Which industries are most likely to see a hiring surge in 2013?
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