Business Trends Survey Reveals Optimism Tempered by Challenges
You won’t see that colorful noun written anywhere in the National Business Trends Survey conducted by the Employers Associations of America (EAA), said Mark Adams, but there is quite a bit of that commodity lurking behind the words and especially the numbers that are contained in that document.
There is angst — or concern, or anguish, or anxiety (all quality synonyms) — when it comes to the labor market and what is becoming increasingly a labor shortage. There is more of it when it comes to wages — employers want to raise them, but there are hindrances to doing so, especially rising healthcare costs.
And there is more angst when it comes to the juxtaposition of wages and the labor market, said Adams, director of HR Services for the Employers Assoc. of the NorthEast (EANE). Indeed, he said that, as wages remain fairly stagnant (3% increases are the norm, as they have been for several years) and the increases amount to less amid the rising cost of living, many employees are exercising their right to pursue greener pastures. And they’re finding them, leaving employers to replace them in a job market where good help is increasingly hard to find.
“It’s definitely a buyer’s market,” said Adams, noting that employees are the buyers. “With unemployment being so low, and people looking to add bodies to their organization, either through new jobs being created or replacing existing workers that are going to leave, employees realize that now is the time to explore all their options if they haven’t been fully satisfied with what they’re been earning in their organization.
“The 2.8% to 3% increases they’ve been getting are being cannibalized by rising health costs and the cost of living in general,” he went on. “So they’re not advancing financially within the organization they’re in, and a lot of them are sitting there saying, ‘I’m going to start exploring other options.’ For companies, there are a lot of openings, and they’re not finding adequate replacement workers, which puts a whole premium on ‘are we paying people enough? Are we providing a workplace that’s engaging enough?’”
Like we said, angst. There’s enough of it to temper the considerable optimism reflected in the report, said Adams, adding that nearly two-thirds of respondents (62%, to be exact) expect their 2017 revenues to exceed those of 2016, and 73% project that 2018 will be better than 2017.
Meanwhile, more employers expect to be hiring in the year ahead than in 2017. In the Northeast region, 51% of the executives surveyed plan to increase staff in 2018, a sizable increase from a year ago, when 41% responded in such fashion.
But these positive numbers are couched in the reality that, for many employers across virtually every business sector, hiring is becoming a real challenge. Indeed, 42.3% of regional respondents (those in the Northeast and Mid-Atlantic states) identified the skilled labor shortage as a ‘serious’ challenge in the short term (up from 37.8%), while 52% identified it as a serious challenge long-term, up from 47% last year.
Adams noted that these numbers clearly reflect what he’s heard anecdotally and seen directly through EANE’s efforts to assist members with finding and hiring talent.
“We’re experiencing all that with the members we’re serving,” he explained, adding that many of the recruitment-and-hiring projects EANE has undertaken with members have taken much longer than anticipated, and some have been relaunched, simply because employers have not been satisfied with the response they’ve seen in terms of the quality of the job aspirants.
Elaborating, Adams said EANE will assist members with searches for managers or professional staff, providing services including ad placement, sourcing of candidates, prescreening, help with interview questions, actual interviewing, and more.
And, as he noted, many of these searches are taking much longer than they did even a year or two ago, and a growing number of them are not ending successfully, and for a host of reasons, ranging from lack of satisfaction with (or consensus on) finalists to disparity between what the candidate is seeking compensation-wise and what the company is willing to pay.
As the challenges to hiring and retaining good help grow, employers are responding, said Adams, adding that many are making investments in technology, equipment, benefits, training, recruitment, and other areas in an effort to navigate a job market increasingly defined by full employment or something close to it.
Indeed, the survey showed that 60% of respondents plan to invest in technology in 2018, up from 45% in 2017; 54% plan to invest in equipment, up from 45% a year ago; 41% intend to increase the training budget, up from 26% in 2017; 38% plan to heighten their emphasis on recruiting, up from 30% a year ago, and 35% intend to shift more healthcare costs to the employer, a huge increase from the 15% who responded in that fashion a year ago.
“Companies are realizing that, if they can’t go dollar for dollar to keep people in the organization or attract people, they’d better bring other things to the table to make them a company that’s going to be worthwhile to someone,” said Adams, adding that these numbers speak loudly about the extent of the problem and growing awareness of the need to do something about it.
And while it is still too early to gauge the full impact of MGM Springfield’s ongoing efforts to create its workforce of roughly 3,000 people on all of this, it’s to assume that it will only exacerbate the problem, Adams said, adding that employers are certainly expressing concerns about this development at EANE HR Roundtables.
As for wages, many companies are in a bind because, as much as they feel compelled to raise them and want to, strong forces, especially double-digit increases in healthcare insurance, act as considerable roadblocks.
“The rising benefit cost is a countermeasure that’s creating a barrier toward putting more on the table financially to induce people,” Adams explained. “And it’s becoming a paradox for companies; they want to pay people more to attract and retain them, but they have these rising benefits costs, and there’s only so much in the budget to cover both of those things.”
Meanwhile, the pay-equity act set to take effect July 1 becomes what Adams called a “wild card” when it comes to wages in 2018.
“The question becomes whether there will be additional needs to invest money into compensation budgets because of concerns employers may have about questionable difference in pay structures,” he noted.
— George O’Brien