After enduring an economy that’s gone from tsunami to squall to choppy waters over the past six years, many Americans saw last Friday’s jobs report as a welcome return to terra firma.
By some measures, it was the most encouraging report since the Great Recession poisoned the economic well in the late 2000s.
The economy added 257,000 jobs, beating economists’ forecasts. In addition, revisions to November’s and December’s jobs reports revealed that 147,000 more jobs were added in those months than previously noted. In fact, for once, there was little to complain about. Even wages, a sore spot for many workers during much of this recovery, increased by 0.5%, following an unexpected drop in December.
| “To attract the candidates they want to hire, companies may have to go above and beyond a little bit in terms of what the market value is.” — Mike Assaad, metro market manager, Robert Half |
All of this suggests that U.S. workers, who have largely been reluctant to seek their fortunes outside of their current jobs, may soon be getting a wandering eye, if they haven’t already.
In fact, a report from the U.S. Labor Department, released on Tuesday to less fanfare than the closely watched monthly jobs report, noted that there were 5 million U.S. job openings at the end of December, the largest number since January 2001. While that number includes workers who have both left their jobs voluntarily and been laid off, it largely reflects employee migration and a rapid shift from a buyer’s job market to a seller’s market.
So what does this mean for employers? If they haven’t already noticed upward pressure on wages and restlessness among their employees, they likely will soon.
To get some perspective on the latest jobs report, we caught up with Mike Assaad, metro market manager (Wisconsin and Illinois) for Robert Half, a global human resources consulting firm.
The following is an abridged version of that interview.
What does the latest jobs report mean for wage growth? Does it look like we might be turning the corner on wages?
Definitely. With the job market being as strong as it is, obviously wages will go up. To attract the candidates they want to hire, companies may have to go above and beyond a little bit in terms of what the market value is. And to make sure that they’re holding onto their top-tier people, obviously one way to do that is to make sure they’re paying market or even above market in some areas.
So we’re definitely seeing wage growth, and in terms of some of the positions we’re working on, what was market value for a specific position a year or two years ago is definitely higher now. So we are seeing that, and that is definitely one of the indications of a very strong job market, where the demand is high and the supply of candidates is very, very tight.
Just how forward-thinking will employers need to be as upward pressure is put on wages? Should they be prepared to sharply increase wages and benefits?
It’s really a case-by-case situation. It really depends on the individual person and the timing, but as long as companies have a good understanding of what is market value for a specific skill set or experience level, that’s where getting a good sense of the market and talking to recruiters [can help]. Where companies fall into problems is when they think the market is really lower than what it is, and when they’re offering specific salaries for a particular job that is lower than some of the other jobs in the marketplace, that’s where they’re potentially not hiring the candidate they want to hire.
It’s really just making sure companies have a good understanding of what the market value is. It is going up, but it’s not like a fire drill where they need to go way above and beyond.
Are there particular industries where there might be more upward pressure on wages?
All industries are growing and all industries are getting to the point where they’re short on finding good qualified candidates, so I don’t think there’s any specific industry, but I think right now in any industry, finding good people is definitely a challenge, and that’s going to get those salaries to go up a bit.
Given this new climate, what can employers do to retain and recruit employees apart from addressing wages and benefits?
A lot of companies now are just being more flexible with their schedules and allowing more people to work from home, and we’re in a day and age where many employees — of course they want to be paid fairly — but employees are also looking for that quality of life. Being able to work from home or come in early and leave early, or certain perks like that. One of our clients has on-site day care, so things like that.
Companies are really focusing on these things to make sure that everyone on their team understands the perks, understands what they offer, because a lot of that is obviously very important for people. People usually leave jobs or stay at their jobs for emotional reasons, not necessarily the dollar amount. It’s the connection with their boss, it’s the perks that they have, the flexibility that they have, the quality of life. They know that there are potentially better opportunities out there for their career, but because they have certain things that are important to them, like flexibility, they don’t want to leave.
(Continued)
Are you seeing these trends borne out in the numbers you’re looking at? Are a lot more workers already jumping ship?
Yeah, definitely, because when the job market was tough four or five years ago, people were just very happy to hold onto a job, and they didn’t want to take that risk. … People are definitely now very open to seeing what’s out there, and being on a search, whether it’s very aggressive or whether it’s passive, we are seeing it now. Candidates are more likely to say, “Yeah, you know what, I will investigate, I will venture out, I will explore that opportunity,” where they may not have been before because they just wanted to keep their job.
Sounds like to some degree there’s a skilled worker shortage. Do you think the lack of skilled workers could eventually threaten economic growth?
I don’t think so. I think there’s definitely a shortage, but there’s still always people out there. I think companies are obviously looking for a very specific type of individual. They have certain requirements and certain specifications that they look for, but when the market’s tight, they just loosen those specifications somewhat and they can still find good people. Maybe on a checklist of 10 items, they can’t hit all 10, but there are other candidates that can do the job that can maybe hit seven or eight. So to answer your question, I don’t think that it’s any threat to economic growth.
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