Hiring Expectations Plunge

Friday December 5, 2008

More human resource managers in the manufacturing and service sectors plan to cut payrolls rather than hire in December 2008, a first-time occurrence in the four-year history of the Society for Human Resource Management (SHRM) LINE® Employment Report.

LINE, or the Leading Indicators of National Employment® Report, forecasts a 21.3 percent drop in manufacturing sector hiring and a 17.9 percent drop in service sector hiring compared to this time last year. (LINE employment report results are based on a monthly survey of human resources professionals at more than 500 manufacturing and 500 private service-sector companies. Together, these two sectors comprise more than 90% of America’s private sector employment. The employment report is a set of labor market indicators that forecast changes to four national employment measures: job expectations, job vacancies, new-hire compensation and recruitment difficulty.)

“The December forecast is coupled with a bleak November present - hiring freezes and ongoing layoffs have put a dent in job vacancies hence there are few jobs to fill,” said Jennifer Schramm, manager of workplace trends and forecasting at SHRM.

Schramm also noted that compensation is also leveling off for new hires as November 2008 marks the second consecutive month that wages and benefits packages have increased at a slower pace than during the same 2007 time period.” At the same time, HR professionals who are recruiting report little difficulty in filling jobs given the poor economy and overall weak labor market.

The employment report shows that 31 percent of human resource managers surveyed plan to cut payrolls of both exempt and non-exempt employees while only 20.1 percent plan to make hires in December 2008. HR managers report a 22.8 point drop in exempt job vacancies and a 24.2 point drop in nonexempt job vacancies.

In the service sector, 29.5% of HR managers plan to reduce staff while 20.4% plan to hire. This loss of service sector jobs is expected to last through December in the retail industry, an industry that normally increases hiring in December.

Finally, more companies are predicting flat starting compensation packages and some are lowering offers in comparison to a year ago.

The overall impact, according to the Wall Street Journal, is that "nonfarm payrolls, which are calculated by a survey of establishments, plunged a larger-than-expected 533,000 in November, the U.S. Labor Department said Friday, the 11th-straight decline and largest since December 1974. The economy has lost more than 1.2 million jobs in the last three months alone..."

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