Employment market tilts in workers' favor
The balance of power in the job market is shifting slowly toward employees from employers.
Bob Funk sees it firsthand from his position as chief executive officer of staffing agency Express Employment Professionals.
“We're short of people in a number of cities,” he said.
So he's changing the focus of his $2.5 billion, Oklahoma City-based business. Instead of concentrating on finding jobs for those who want them, Express Employment is putting more effort into finding workers for companies that need them.
“We're back in the recruiting market again,” Funk said.
The 74-year-old industry veteran isn't the only one to notice the change. Americans who have been hunting for employment for more than six months are finding they're having better luck landing a job, while people who had given up looking are returning to the labor force to resume their search.
Companies, meanwhile, are beefing up their in-house recruiting teams and increasingly using complicated computer algorithms to scour the Web for prospective job candidates.
This is all good news for the economy, according to Nariman Behravesh, a Lexington, Mass.-based chief economist for IHS Inc. He said the United States has entered a “virtuous cycle” in which job gains are leading to increased household expenditures, encouraging employers to hire more workers.
Consumer spending rose in June by the most in three months, according to Commerce Department data published on Aug. 1.
The expansion “is self-reinforcing and is very solid,” Behravesh said. “Growth of around 3 percent, plus or minus, is well within the cards for the remainder of this year and much of next year.”
The economy has advanced at an average annual rate of 2.2 percent since the 18-month recession ended in June 2009.
The shift in the labor landscape has implications for Federal Reserve Chairwoman Janet Yellen and her colleagues at the U.S. central bank.
If a tightening job market starts to spawn broad-based wage gains, the Fed probably will bring forward the timing for its first interest-rate increase since 2006, according to Behravesh, who expects it to happen in the middle of next year.
So far, compensation increases are the missing ingredient in what has otherwise been a strengthening jobs recovery. Payrolls rose by more than 200,000 for a sixth consecutive month in July, the longest such period since 1997, according to the Labor Department. Openings in May climbed to an almost seven-year high, reaching 4.64 million. The vacancies data for June are scheduled for release on Tuesday.
Barely keeping up
Average hourly earnings, in contrast, increased just 2 percent in July from a year earlier, barely keeping up with the rise in inflation.
Employers in general have been “pretty stubborn” about increasing wages, said Jeffrey Joerres, executive chairman of ManpowerGroup, a Milwaukee-based staffing company with $20.3 billion in revenue last year. That could be about to change as the pool of available candidates shrinks.
“You can see a little anxiety among employers,” he said. “I can feel the inflection point is coming.”
Michael Durney, chief executive officer of Dice Holdings Inc., agrees.
“I think you're going to start to see wage inflation,” said Durney, whose company provides specialized websites that match employers with potential employees in industries such as technology and financial services.
“While long-term unemployment remains at exceptionally high levels and is a grave concern, I do think we are seeing improvements as the job market is strengthening,” Yellen told the Senate Banking Committee on July 15.
The increase in openings is encouraging Americans who had stopped searching to resume their pursuit.
The workforce has grown by 1.09 million workers this year, according to figures from the Labor Department.
Express Employment had almost 90,000 job orders from employers in June, up from 62,000 a year earlier, Funk said.
To help meet that demand, the staffing company has been scouring old records, contacting former applicants who aren't on its rolls.
Its Oklahoma City office reached out to about 5,200 of those people in June, reactivated about 250 and found work for about 70.
“We try to contact them and tell them there are jobs available out there if you want to go to work,” Funk said.