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U.S. Employment Situation
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Changes in wages and salaries ...
Last week, Q2 2015 data regarding employment costs were released and it caused quite a stir because at only a 0.2 percent rise, it was the smallest quarterly gain since 1982. This led some to speculate that with wage pressure and inflation nowhere to be seen, the Fed will be in no rush to raise interest rates.
Regardless of how the employment cost index (ECI) may or may not affect Fed monetary policy, the latest ECI data do provide some interesting strategic information that may be used for adjusting pricing strategies for staffing companies.
(Note: this accompanying chart shows only wage and salary information and on an unadjusted bases whereas the ECI that rose 0.2 percent in Q2 2015 that was widely reported is for total employment costs that includes benefits and is seasonally adjusted. Seasonally adjusted data are not available at the level of detail that are presented in the accompanying chart. The y-axis is the Index, which measures wage change over time; December 2005 = 100)
As seen in the chart, wages and salaries have tended to move in unison for the past two years, but some categories appear to break with that trend in Q2 2015.
Wages for all workers, as well as those in the service providing sector each rose 0.3 percent on a seasonally unadjusted basis. But wages for workers in the goods providing sector (a.k.a. blue collar workers) as well as for those in office and administrative support occupations, rose 1.0 and 0.9 percent, respectively.
The greater rate of wage and salary growth for some occupations can be an indication of qualified worker shortages that is translating into higher recruitment costs for businesses and companies needing those types of workers. Or "faster than overall" growth could be that because wages were so low in the first place.
This latest ECI data seem to track well with comments published in the latest Fed Beige Book, a summary of it that pulls out remarks relevant to staffing and IT staffing and solutions companies and can be found here. When Fed researchers talked with business owners and operators around the county in late June to early July, they found that wages pressure was fairly muted to non-existent except for a variety of some occupations in different areas of the country.
The Fed can see rising wages as one signal to start tightening monetary policy. In addition, some also believe that when average hourly earnings start to rise, the countdown starts to the next recession. Some say one year and others say five years.
The current expansion started June 2009, which makes it 74 months in duration. The expansion leading up to the start of the past recession was, coincidentally, 73 months; the expansion before that was 120 months long and the one prior to that was a stretch of 92 months. We are not saying that the economy is overdue for a recession nor are we saying that the current expansion still has five or more years to run.
If we don't do it, who will?
And now just a little self-promotion and a shout out to none other than Barry Ritholtz, author, wealth manager, as well as producer of one of the more widely followed financial and economic blogs The Big Picture, for reTweeting one of my Tweets last week ... And although I didn't know it at the time, Barry was one of the few economists who saw the housing implosive in advance. Another one was moi, as evidenced by our letter in the Financial Times published ten years ago this month comparing the then red-hot housing market to a Ponzi scheme that was doomed to failure because of a Nobel Prize winning work on asymmetrical information as well how that economic theory could be used to explain the IT bubble as well as the benefits that staffing companies bring to the table. Yup, you read that right -- a Nobel Prize winning theory explains the benefits of the staffing industry.
OurTemporary Help Services Interactive Data Book tool will enable to view the local (down to the county level) temporary help services trends as well as benchmark your local staffing operation to discover exactly where you are positioned in the market and if your offices are performing up to the local market.
Then use ourEmployment Tracking Tool that is designed to assist you in identifying and evaluating new sectors and markets. It examines the overall employment trends by industry in the given market to help determine possibly under-serviced industries to target marketing efforts (as well as what industries to avoid). By doing this, it shows what industries are growing and therefore are in expansion mode making them eager for a wide variety of products and services and likely in need of additional staff.
What will 2022 look like for staffing services?
The U.S. Bureau of Labor Statistics recently published 10-year employment projections. These projections are based upon a plethora of criteria including how changes in population demographics will affect the demand for specific goods and services, the types of jobs, and levels of education for workers to fill those jobs. Our report highlights some of the changes in the direction that both jobs (occupations) and well as employment changes by industry and sector that may be of special interest to staffing industry executives planning for the near-term future.
You may be surprised to learn that it appears that light industrial will be a growing sector for staffing services encompassing growing portion of staffing services jobs by the year 2022; office and administrative support jobs, although they will remain a significant part of staffing services jobs, will decline slightly as its portion of the overall mix.
Our report on the expected employment projections to the year 2022, which is only seven years away, as they relate to staffing services to assist you in planning for the future. Given the highly analytical nature of our readers and followers, this brief, eight-page report is light on words but heavy on tables and charts. And because we know you are a busy executive, you don't even have to go to the additional step of requesting this gratis and valuable report from us. Just directly download it from here.
Looking for more? Check out our podcasts!
Podcasts of the current employment situation will be available by 4:00 p.m. ET, Friday, May 8. The video podcast, which you can start and stop to study the tables and graphs as well as replay individual sections, includes additional data and information. Watch the video version here or just listen to the audio version here (no special hardware or software required), which also can be downloaded to an iPod or any smartphone.
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"Bruce is an invaluable resource to me in working through the strategic planning process with my clients in the staffing industry. Bruce consults with me on each engagement and customizes his deliverables accordingly, exceeding my expectations each time. He expediently gathers and compiles the data I need and delivers it in user-friendly reports which make the analysis portion of my job easy. Because with Bruce's assistance I can make strategy recommendations with confidence and accuracy, my clients benefit greatly in turn. He is the ultimate "consultant's consultant." -- Amy Bingham, Bingham Consulting Professionals | View more Testimonials
July 2015 Employment Report
Total nonfarm jobs were up 215,000 in July, which was okay, but shaky; and as we said last month, June's growth was also a bit weak at up only 231,000 especially when compared to May's 260,000 gain.
On the other side of the monthly employment situation, the unemployment rate was unchanged in July at 5.3 percent -- the still at its lowest point in more than seven years. Although the number of employed persons increased and the number of unemployed persons declined, the movements were not enough to have an impact on the unemployment rate. For more detail about this aspect of the monthly employment situation, see the "Household Survey" section at the bottom of this box.
Total private-sector jobs grew by 210,000 job in July, which we already said was just okay and below June's gain of 227,000 as well as under May's growth of 252,000 and even July 2014's increase of 243,000.
The private Goods-producing sector grew by 17,000 jobs in July after declining by 2,000 in June and shrinking by that same amount in May.
The picture in the private Service-providing sector was better, but nothing to write home about either with growth of 193,000 jobs in July, which was a disappointment after June's gain on 229,000 and May's growth of 254,000. In a way, it was back to the present as one year ago in July 2014 when it experienced growth of 190,000.
Thetotal number of Government jobs was up 5,000. The federal government neither added nor removed jobs, State government was down by 3,000; and Local government was up by 8,000 jobs.
Temporary Help Services Roundup
The news with Temporary help services was not very good. July's 2,893,900 temporary help services jobs were a result of a decline of 8,900, which was a 0.3 percent decrease from June, but up 4.5 percent year-on-year; July's year-on-year growth is the lowest it has been since August 2013.
And temporary help service's market share -- that is its portion of all jobs --also retreated in to 2.04 percent in July, which was a 0.0094 percentage point decline from June.
For a chart of temporary help's growth from January 1991 to July 2015 and comparing its trend to total employment, click here.
(if the chartis unclear, click on it to open in a browser window)
July's 5.3 percent unemployment rate wasunchanged from June because there was not much movement -- relatively speaking -- in its underlying components.
Although there were101,000 more employed persons in July, the labor force only expanded by 69,000 while the number of unemployed persons declined by only 33,000 and there were 144,000 more people not in the labor force. These data are in stark contrast to the June numbers that showed fairly large movements with these components.
The employment-to-population ratio incrementallywas unchanged 59.3 percent in July from June but was up from 59.0 percent a year earlier in July 2014. The labor force participation rate was also unchanged in July at 62.6 percent but down from 62.9 percent a year ago in July 2014. The number of discouraged workers continued to trend downward in July with 668,000 that was a decline from the 741,000 in July 2014.
NEXT EMPLOYMENT REPORT --FRIDAY, SEPTEMBER 4, 2015
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