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LINE: Hiring Pace Pressures Flat New-Hire Salary Structures
 

By Theresa Minton-Eversole  7/31/2014

Increased hiring and the difficulty with finding the right job candidates is starting to affect employers’ ability to maintain flat new-hire compensation rates that have been so prevalent since the recession that began in 2008, according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) survey for August 2014.

The monthly report highlights employers’ hiring expectations, new-hire compensation, difficulty in recruiting top-level talent and job vacancies, based on a survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies.

In August, hiring rates will increase slightly in the manufacturing and service sectors compared with a year ago, according to the LINE report. Half of manufacturers (50.2 percent) and slightly more than one-third of service-sector companies (35.8 percent) responding to the latest survey will add jobs this month.

Difficulty in recruiting candidates for key jobs rose in July in both sectors compared with a year ago, leading to more employers raising pay for new hires that month compared with a year ago.

Employment Expectations

Manufacturing

Service

In August 2014, the hiring rate will rise minimally in manufacturing and services compared with August 2013.

 +0.3

 

 +0.7

Recruiting Difficulty

 

 

In July 2014, recruiting difficulty increased in both sectors compared with July 2013.

 +4.8

 

 +2.3

New-Hire Compensation

 

 

In July 2014, the rate of increase for new-hire compensation rose slightly in both sectors compared with July 2013.

 +2.7

 

 +4.0

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

Employment Expectations

Hiring activity will reach a four-year high for the month of August in both the manufacturing and service sectors. This is the third consecutive month this has occurred in the LINE survey. June and July were also strong months for job growth, as indicated in federal surveys as well.

There was varying movement in salaried job openings among the sectors compared with a year ago. In July, a net total of slightly more than 16 percent of manufacturers reported increases in exempt vacancies (27.5 percent reported more vacancies, while 11.2 percent reported fewer), down 2.6 points from July 2013. In the service sector, a net total of almost 1817.6 percent of respondents reported increases in exempt vacancies in July (28.6 percent reported more vacancies, 11 percent reported fewer). This number is up by 8.8 points from July 2013.

But surveyed employers in both sectors also saw four-year highs in the increase in hourly job openings for the month of July. A net total of almost 24 percent of manufacturing respondents reported that nonexempt vacancies increased in July, a 4.6-point increase from July 2013. For nonexempt service positions, a net total of just under 22 percent of respondents reported increased vacancies in July, marking an increase of 5.7 points from July 2013.

In addition, a job cuts report released July 31 by global outplacement consultancy Challenger, Gray & Christmas Inc. stated that after climbing to a 15-month high in May, planned job cuts announced by U.S.-based employers in June plunged 41 percent to 31,434—the lowest one-month total so far this year. Through the first half of 2014, the pace of job cutting is down 5 percent from a year ago.

Recruiting Difficulty

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.

A net of 25 percent of manufacturing respondents had more difficulty with recruiting this July, an increase of almost 5 points from July 2013. A net of nearly 20 percent of service-sector HR professionals also reported more recruiting difficulties in July, an increase of more than 2 points from a year ago.

July marks the third consecutive month that recruiting difficulty has reached a four-year high for the month in both sectors, according to LINE data.

Other recent SHRM findings show that many HR professionals in other sectors also are having difficulty with talent management and recruitment. A September 2013 SHRM survey found that 82 percent of high-tech companies reported difficulty recruiting for open full-time jobs.

“As more employers compete to fill their key jobs, difficulties in finding candidates with the right skills and experience are increasing,” said Jennifer Schramm, GPHR, SHRM’s manager of workforce trends and forecasting.

New-Hire Compensation

In July, more responding employers raised pay for new hires compared with a year ago.

In the manufacturing sector, a net total of nearly 9 percent of respondents reported increasing new-hire compensation that month, an increase of almost 3 points from July 2013. In the service sector, a net total of more than 12 percent of companies increased new-hire compensation in July, up 4 points from a year ago.

“We may finally be seeing recruiting difficulty impacting wages, which have remained relatively stagnant well into the recovery,” said Schramm, noting that if hiring rates improve significantly, new-hire compensation can be expected to increase.

However, the index’s data overall show that most organizations are not increasing new-hire compensation. This is consistent with recent Bureau of Labor Statistics findings on real average hourly earnings, which fell 0.1 percent in June 2014 compared with June 2013.

Theresa Minton-Eversole is an online editor/manager with SHRM.

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