Hot Economy Produces More Jobs, Higher Pay
Workers jump from company to company to boost wages
While the nation's increasingly robust economy is causing problems on Wall Street, it is good news for everyone from the tool-and-die- maker in Ohio to the software engineer in Silicon Valley.
The job market is getting hot.
Across the country, help-wanted ads are swelling newspapers. Temporary employment agencies are finding demand up. Wages are rising, and workers are jumping from job to job to boost paychecks.
Consider the case of Marc Demars. Until recently, he was content working for the Compaq Corp. in Houston. But headhunters wouldn't leave him alone. He finally decided to leave after getting a salary offer he couldn't refuse - in sunny southern California. Monday he will join Toshiba America Information Systems in Irvine as marketing director for consumer desktop computers. "I was getting a lot of calls from headhunters looking for product people," he says.
The stronger demand for workers is showing up in other ways as well. Older people are being recruited more eagerly. More people who have retired are able to rejoin the work force.
Companies are expanding training programs to give employees needed skills. So are temp agencies. Graduates of government training programs are snapped up more quickly. On the wage front, statistics released this week show real disposable personal income - income after taxes and inflation - has risen 3.7 percent from a year ago. Job seekers, particularly those with technological abilities, are finding it takes less time to find a new job.
"Companies are having to look hard for people with the right background," says John Challenger, executive vice president of Challenger, Gray & Christmas Inc., an outplacement firm based in Northbrook, Ill.
To many economists, the tightening of the job market justifies the anti-inflationary hike in interest rates last week by the Federal Reserve. Some think it also makes it more likely the Fed will raise interest rates again this spring.
"There is every reason to think the labor market is going to get tighter," says Charles Lieberman, chief economist, Chase Securities Inc., New York.
If so, that would make it easier for workers to demand higher wages or seek more lucrative new positions - as Mr. Demars did. The Fed's concern is that higher labor costs will prompt companies to boost prices.
When March numbers are released Friday, the unemployment rate will drop to 5.1 or 5.2 percent from 5.3 percent in February, some economists predict.
That would be the lowest unemployment rate since the peak of the previous business expansion in 1989. At the top of another cycle in 1973, the unemployment rate was 4.9 percent - not much lower than today.
Also, economists will be looking for any rise in the nation's "quit rate," the share of unemployed people who have chosen to leave their jobs voluntarily, rather than being fired or laid off.
It has been running between 10 and 12 percent for the past two years or so, a time when downsizing gave many employees a feeling of insecurity in their jobs. An uptick would indicate that workers figure finding a new job is relatively easy.
That sentiment has already showed up in a survey of consumer confidence by the Conference Board, a New York business research group. More than 33 percent of households surveyed said jobs were plentiful, the highest proportion for at least a year. The number saying jobs are hard to get -18.6 percent - is close to the lowest level since 1980.
Gordon Bingham, a senior vice president of Olsten Corp., one of the nation's largest temp agencies, says the labor market started tightening "rapidly" about nine months ago. A recent survey of 673 human resource managers by his Melville, N.Y.-based firm found that 45 percent said their companies were understaffed, and 50 percent expected not to have sufficient staff in 1997.
As a result, more companies are using temp agencies to recruit permanent employees, he says. This saves the company recruiting expenses and enables it to test the skills, abilities, and work habits of a worker before putting him or her onto the staff.
Some 40 percent of Manpower Inc. employees end up in permanent positions with customers, says Gretchen Kreske, a spokeswoman for the Milwaukee-based temp agency.
That trend has its risks for workers, says Mr. Challenger. Potential employers, seeing the rsum of a job applicant with several temp positions, may wonder why he or she was not put on staff in a full-time position.
Companies are finding it harder to find skilled workers, such as machine operators, tool and die workers, and mechanics. "They are almost a protected class right now," he says.
Middle management, however, still faces "turbulence," Challenger adds. As large companies seek to be more efficient, they downsize their bureaucracies at the same time they may be hiring employees for other positions.
Manpower, faced with a tough market for recruiting, is offering referral bonuses. If employees encourage a friend to sign up at Manpower, the employee gets a bonus if that friend works for the company at least 40 days.