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Employment Special Coverage

Employers Are Still Laboring

Meredith Wise, president of the Employers Assoc. of the NorthEast (EANE), has worked in the broad realm of human resources for decades. She’s seen a lot when it comes to different kinds of employment-market conditions, but admits that she hasn’t seen anything quite like this.

“This is an anomaly; employers have not been in a position where they’re not in control of the job market for a long, long time,” she said. “It’s been a long time since employees have had this kind of control.”

And it looks like they will maintain control for the foreseeable future, said Wise and others we spoke with, because the forces of supply and demand are certainly in their favor — as they have been since well beyond the pandemic, but now, even more so.

Indeed, the national unemployment rate in May remained at 3.6% for the third month in a row, just slightly above the mark in February 2020 (3.5%), prior to the pandemic — this despite a general cooling of the economy amid soaring inflation, supply-chain issues, the war in Ukraine, and other factors.

These numbers translate into a smaller pool of available, qualified labor, continued headaches for employers, and, as Wise said, control of the front seat in the hands of employees.

“Demand and supply still do not align where we would like them to, and more importantly, they’re not aligned where most industries and employers thought they would be at this point post-pandemic, whatever post-pandemic actually means,” said David Cruise, president and CEO of MassHire Springfield Career Center. “I think the pandemic is still very much a driving factor in decision making on the part of applicants, as well as, to some degree, on the part of the employer.”

Elaborating, he told BusinessWest that employers are struggling on several fronts; they’re not seeing large numbers of applicants for positions to be filled, they’re not seeing enough qualified applicants, and when they do find people they want to hire, they’re struggling to retain them because other job opportunities with better pay and benefits continue to present themselves.

Meredith Wise

Meredith Wise

“This is an anomaly; employers have not been in a position where they’re not in control of the job market for a long, long time. It’s been a long time since employees have had this kind of control.”

As a result, companies are spending far more than would be considered normal to recruit, hire, and onboard help, said Cruise, noting that, as retention rates continue to fall, employers are expending more time, money, and energy — all precious commodities, especially with small businesses — on the hiring process.

In other words, the Great Resignation isn’t over, although, as the economy falters, there are questions about how long it will last.

“We’re continuing to see a lot of people quitting their jobs and starting new ones,” said Chris Geehern, executive vice president of Public Affairs & Communication for Associated Industries of Massachusetts (AIM). “My sense is that, as the economy weakens and job growth slows down, that phenomena will also slow down because employees now think, ‘I can quit this job and go to six different places.’ But if there are only two job openings opposed to the six, employees think twice about leaving.”

After federal benefits ran out in September 2020, most employers thought there would be an onslaught of job seekers rushing to fill positions. But when people weren’t flooding career centers for help, employers decided they needed to revamp their systems.

There is an emphasis on ‘the next job,’ so employers needed to find new ways to attract workers, meaning their marketing strategies needed to change, said Dave Gadaire, president and CEO of MassHire Holyoke Career Center, adding that companies are “getting more aggressive in how they recruit; they’re taking more advantage of not just social media, but the airwaves and newspapers.”

Employers are also attending more job fairs, both virtually and in person. In the past month, MassHire has held job fairs in Holyoke and Springfield. Each of those fairs brought in more than 200 job seekers and more than 50 businesses, but the demand still far exceeds supply.

David Cruise

As retention rates continue to fall, David Cruise says, employers are spending more money on the hiring process, from recruiting to onboarding.

For this issue and its focus on employment, BusinessWest looks at the issues shaping the current job market, the outlook at least for the short term, and whether employers may gain back control of the market any time soon.

 

Work in Progress?

Those we spoke with said the current challenges are not restricted to certain sectors of the economy; it’s essentially across the board, with some industry groups, especially essential service sectors, particularly hard-hit. National hire rates have stayed the same at 4.4% over the past year despite more people looking for work, and despite news of layoffs in some sectors, especially financial services.

“Demand and supply still do not align where we would like them to, and more importantly, they’re not aligned where most industries and employers thought they would be at this point post-pandemic, whatever post-pandemic actually means.”

“You do see companies both hiring and laying off at the same time,” said Gadaire. “It’s confusing for people because employers need different skills, and they have the choice to train their employees up or let them go and get new employees with those skills instead. The cost of training subtracts from the bottom line. They could be great employees and the employer wants to keep them, but now they have to get paid more and get the training they need to be qualified.”

Instead of layoffs, companies are trying to slow down the hiring process, he continued. “Instead of layoffs, we’re seeing some of the companies delaying their hiring a little bit; instead of hiring 50 people, they’re hiring 40 people, that kind of thing.”

For those are hiring — and that’s most companies — it’s not business as usual, or what managers were used to before the pandemic and that aforementioned Great Recession.

Indeed, bonuses and higher wages are now the norm for businesses looking to attract — and retain — help. Companies are offering sign-on bonuses, some as hefty as $2,000, when applying and staying at a business for six months or more. That means that companies are having to rework their pay scales from the inside to retain workers.

Beyond higher wages and bonuses, companies are offering other incentives, including flexible hours and, when possible, remote work.

Wise told BusinessWest that one of EANE’s manufacturing members in the central part of the state uses flex time on its shop floor, meaning employees can have a more fluid work schedule to match their personal schedule.

But perhaps what job applicants are seeking most is culture, Cruise noted.

“Over time, the money is certainly an incentive, but it won’t be able to retain people over time without some adjustment with culture and schedules,” he explained, adding that, perhaps above all else, job seekers want to know they’re valued and heard by their employer.

“Most progressive, good companies where people want to work and build a career are working really hard to not only outreach employees and market their business, but make the case to workers that their place of business is a good place to work, not only for the financial and benefit packages, but from the perspective of having a work culture and schedules that work with the employees’ life cycle,” he went on. “Companies are trying to look at schedules that allow flexibility with an understanding that business still has to operate and has to have accommodations to make sure the work gets done.”

Gadaire agreed. He told BusinessWest about an employee who continues to work for the MassHire center because of the care she feels from her co-workers and bosses.

“She and her son got COVID early on in the pandemic, and she had to quarantine in a hotel because her mother and grandmother were living with her at the time,” he noted. “We had staff members bringing food to her, checking in, picking up medications for her every day. She said that was a difference maker for her because the amount of care meant something. She felt like her son’s health mattered to us, and she said, ‘I’ve never felt that from other jobs.’”

Good management is another key, said those we spoke with, adding that this equates to giving employees a voice and a say in how things go, making sure they’re appropriately compensated, and making sure their benefits programs are up to date with what current job seekers are looking for.

Beyond these steps, many businesses and industry groups are becoming far more proactive when it comes to creating larger pools of qualified workers. This includes work to partner with vocational schools and other institutions to create pipelines of talent — and keep a steady flow of potential employees in that pipeline.

“Employers really have to find a way of capturing and attracting the kind of skilled workers they really need,” Geehern said. “For example, you will find manufacturing and engineering companies will establish a setup with Springfield Technical Community College, Holyoke Community College, or UMass Amherst. Some of these are training partnerships, some are research partnerships, but it allows them to establish some sort of connection with the institutions that are training the people that are going to be tomorrow’s workers.”

 

Hire Power

Moving forward, the overarching question concerns just how long this will remain an employees’ market. Much depends, economists say, on whether there is a recession and, if there is one, what impact it will have on the jobs market.

The monthly Business Confidence Index (BCI), initiated by AIM’s Board of Economic Advisors, noted that 76% of CEOs globally tell the Conference Board that they expect a recession by the end of 2023 or believe it’s already here. The economy appears to be growing, but employers face growing struggles with soaring fuel prices, supply-chain disruptions, and financial-market volatility.

Chris Geehern

Chris Geehern

“We’re continuing to see a lot of people quitting their jobs and starting new ones. My sense is that, as the economy weakens and job growth slows down, that phenomena will also slow down because employees now think, ‘I can quit this job and go to six different places.’ But if there are only two job openings opposed to the six, employees think twice about leaving.”

The BCI is based on a survey of AIM member companies across Massachusetts, asking questions about current and prospective business conditions in the state and nation, as well as about respondents’ own operations. The index is based on a 100-point scale. A reading above 50 indicates that the state’s employer community is predominantly optimistic, while a reading below 50 points translates to a negative assessment of business conditions.

According to the BCI, business confidence fell 3.9 points to 50.8 in June. The index sits 12.6 points lower than a year ago and marginally higher than the 50 mark that separates an optimistic from a pessimistic view. The Current Index, which assesses overall business conditions at the time of the survey, declined 3.3 points to 53.4. The Future Index, measuring projections for the economy six months from now, lost 4.6 points to 48.1.

The Wall Street Journal surveyed economists in June, and its consensus forecast was that unemployment will be 3.9% at the end of this year and 4.6% by the end of 2023. That rate would be higher than what economists are looking at now but, by historic standards, a much lower unemployment rate than is typical for a recession.

“What we may be looking at for the moment here is a jobful recession, rather than a jobless recovery,” Geehern said. “In the sense that job creation has slowed down, it certainly slowed and is out of sync with what we perceive as the decline in output. And those are two things you look at when you want to gauge if we’re in a recession or not: what is happening to economic output and what is happening to employment.”

Elaborating, he said that as economic output goes down, unemployment generally goes up. This time around, the economic output went down in the first and second quarter, but the job market has stayed resilient.

Whether things will stay that way remains to be seen. For now, and for the foreseeable future, what Wise calls an anomaly will be the status quo.

 

Kailey Houle can be reached at [email protected]

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