By Ron Blair, COO & Managing Director
Are We At Full Employment?
The Wall Street Journal surveyed 68 economists to weigh in on this very question — they answered as follows:
- 42% — YES
- 48% — NO, but it’s close
- 9% — NO, and it’s not close to full employment
So what does this mean for financial professionals and the employers who need them? COO and Managing Director, Ron Blair, provides his insight and expectations for Q1 and Q2 2018.
Unemployment Rate: 4.1%
THE ECONOMY & EMPLOYMENT BY THE NUMBERS
The current economic statistics are telling. The momentum in interim and project services continues to be positive due to GDP growth and the expected effects of lower corporate tax rates. And with GDP forecasts of 2.5% growth in Q1 and Q2 of this year, employment growth is anticipated to follow suit.
Breakdown by the numbers to help put the market in perspective:
- 3.2% GDP Growth Rate — Q3 2017
- 4.1% Unemployment Rate — lowest since late-2000. The rate is below what the Federal Reserve forecasts as the economy’s long-run average, suggesting a tight labor market
- 2.1% Unemployment Rate — Bachelor’s degree or higher
- 2.1 million new jobs added in 2017
- 6 million jobs remain unfilled monthly
- 87 consecutive months of net-job gains (longest streak on record)
- 2.102% Temp Penetration rate in December (temp as percentage of total workforce) is at an all-time high
- 62.7% Labor Participation rate didn’t change in December 2017, despite 2 million jobs added
HOW DO COMPANIES ATTRACT AND RETAIN PROFESSIONAL TALENT?
For our clients, candidates and interim professionals in the accounting, finance, audit and tax fields — we are in a full-employment economy. The competition for professionals remains strong. So companies that are looking to attract and retain professional talent are working hard on three key areas:
- Hiring process
- Company culture and reputation
- Compensation plans
COMPENSATION PRESSURES INCREASING
Many economists have lowered estimates for the lowest sustainable unemployment rate in recent years. And for the most part, unemployment has declined without creating strong wage gains or salary increases. In 2017, the average hourly paycheck for private-sector employees grew 2.5% in 2017 — a modest gain compared with prior expansions and ahead of the inflation rate (1.7%). So, the professional labor market may still have some slack despite the low unemployment rate. But expect this trend to change as we move through 2018.
DEMAND FOR TEMPORARY PROFESSIONALS ACCELERATING
According to the Palmer Forecast™, demand for temporary workers is forecast to increase 4.3% for Q1 2018 compared with Q1 2017. The Bureau of Labor Statistics (BLS) reported a 4.1% increase in Q4 2017. And marked the 32nd consecutive quarter of year-over-year increase in demand for temporary workers.
According to the BLS, 136,000 temp jobs were added in 2017 (an average of 11,300 per month) versus 32,000 temp jobs added in 2016 (an average of 2,600 per month). In 2015, the agency reported approximately 97,000 temporary jobs added — compared with 162,000 new temp jobs in 2014, 139,000 in 2013 and 142,000 additional temp jobs in 2012.
CENTURY GROUP FORECAST
At Century Group, we’re projecting a continuation of trends that started in 2017. Accounting and finance professionals will have multiple career opportunities as the number of job openings far surpasses the supply of qualified individuals. And this will put upward pressures on compensation, with companies competing to attract and retain valued team members.
Additionally, this demand for talent will accelerate the use of temporary professionals to execute interim roles while companies conduct searches for full-time employees. It will also drive demand for talent and expertise on a just-in-time basis to complete key projects during peak periods or periods of fast growth.