PHILADELPHIA-March 5, 2012-Recent reported employment gains should be great news for the American economy. But findings by the Yoh Index shows continued stagnation in salary rates among the most dynamic sector of the U.S. employment market. Temporary skilled employees are often considered bellwethers of future economic activity that offer businesses the ability to quickly add or subtract competent employees on an as-needed basis, as demand fluctuates. As the economy strengthens, wages for temporary skilled workers should increase as employers add temporary workers as a way to capitalize on surging economic activity in advance of adding permanent employees and cementing long-term fixed costs.
No such demand was found in the most recent Yoh Index, which has been tracking wage increases for skilled temporary workers since 2001. In fact, the Yoh Index barely budged for the quarter, ending the year at 114.26 (Figure 1), just a 1.15 percent increase over the same quarter for 2010 (Figure 2).
What's the disconnect? How can employment be surging according to some sources, while Yoh's real-world tracking of actual wages remains flat?
Much of it has to do with employment participation rate, which now stands at 63.7 percent, the lowest since the early 1980s. An artificially low employment participation rate decreases the unemployment rate by reducing the total number of people looking for work. Whatever the cause, the fact remains that there's still incongruity between what the government is reporting in job growth, and what companies, such as Yoh, are seeing in the real world.
So as this stagnant economic recovery continues, what are the real forces stifling American employment? A recent survey, commissioned by Yoh and conducted by Amplitude Research, found that systemic uncertainty over the economy and structural inefficiencies within the hiring process continue to suppress U.S. employment, and threaten to do so well into the future.
The Workforce Planning Survey queried 100 total online survey respondents. Half of the respondents were C-level and above, and half were business executives at the vice president or director level. All respondents came from U.S. companies with revenues greater than $750 million and workforces over 1,500 employees.
While these factors are out of the control of most organizations, the survey also found that factors within their control are also delaying a rebound in hiring as the economy heals and opportunities present themselves.
Many of these factors revolve around the uncertainty of a company's own practices for acquiring necessary talent, a situation that could cost poorly positioned companies.
"This institutionalized lag might continue to be a drag oneconomic recovery and could cost corporations billions of dollars in lost opportunities," says Lori Schultz, President of Yoh. "In large part, this delay is due to poor workforce planning, an area of enterprise management that has not kept pace with other business practices, such as logistics, supply, or distribution."
Schultz explains that the survey uncovers a number of workforce planning shortcomings, which deny corporations optimal profitability, particularly in the early stages of recovery when margins are greatest and opportunities abound. "Agility is vital during recovery, and the greatest impediment is talent. Smart companies must plan for workforce logistics with the same discipline and forethought as other business disciplines."
As proof, Schultz turns to a key finding of the Yoh Survey. When asked how frequently their organization evaluates staffing levels and workforce planning, 63 percent of respondents reported annually or quarterly, while 16 percent said they do not evaluate staffing levels on a regular basis. Only 21 percent said they perform that analysis weekly or monthly. Yet continuous improvement is the rallying cry for many other areas of business, including quality, customer service, sales, and logistics.
"The disconnect becomes clear through the survey's findings. Businesses have been slow to apply truly proactive employment strategies, and without a change in direction, they will feel the consequences of this reckless approach," says Schultz.
This quarter's Yoh Index further supports the notion that American companies are still delaying hiring even as government statistics show increased job growth. "Our data simply doesn't support the findings of recent jobs reports. More likely is what we're hearing from our clients and from major employers through our recent survey. Uncertainty, both in the controllable and uncontrollable, continues to dampen job creation, and until the economy strengthens and employers take proactive steps to improve workforce planning, the malaise is likely to continue for American employers and employees."
For over 70 years, Yoh has provided the talent needed for the jobs and projects critical to our clients' success by providing comprehensive workforce solutions that focus on Aerospace and Defense, Engineering, Federal Services, Health Care, Life Sciences, Information Technology and Telecommunications. Yoh fulfills immediate resource needs and delivers enterprise workforce solutions, including Managed Services, Recruitment Process Outsourcing, Vendor Management Systems, Independent Contractor Compliance, and Payroll Services. For more information, visit yoh.com.
Yoh is a part of Yoh Services LLC, a Day & Zimmermann Company.
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