As corporate profits rise and inventories remain low in a growing economy, employers will have to hire more people to meet the demand in 2004. That’s the prediction of Barbara Beck, executive vice president of Manpower Inc.’s United States and Canada operations. The Glendale company is a global leader in the staffing industry, helping nearly 2 million workers worldwide, including 750,000 Americans, find job placement every year. Manpower recently published its First Quarter 2004 Manpower Employment Outlook Survey, based on 16,000 employer outlooks in 10 industries nationwide. Beck recently discussed the employment outlook in an interview with Small Business Times reporter Elizabeth Geldermann. The following are excerpts from that interview.
SBT: Employment is always a lagging factor in an economic recovery cycle, but it seems to be lagging more than most economists had forecasted. In fact, the economy created only 1,000 new jobs in December, far below analysts’ expectations. What is happening?
Beck: The economists had predicted in December that we would show an increase in 150,000 jobs and when we only saw an increase across the nation of 1,000 jobs, it was a significant disparity. The big surprise on what’s really happening in the employment sector was when the Bureau of Labor Statistics job report came out. The unemployment rate dropped from 5.9% to 5.7%, but only because over 300,000 workers dropped out of the job search. If they had not been reclassified as “discouraged workers,” the unemployment level would have remained the same. But employment on a national level is gaining momentum. Jobs have been created and in particular on a national view, health services have seen growth, educational services have seen growth and we have seen momentum in the engineering jobs. There are elements in the economy that signal that it is in fact gaining strength. Economists predict that in 2004 that that will continue and that hiring will increase, and that new jobs, both permanent and temporary, will be created. The Manpower Employment Outlook Survey backs that view by indicating employers are saying, yes, they do plan on increasing their hiring intentions.
SBT: What are the fastest growing industries of new employment?
Beck: On a national view, the sectors within the Manpower Employment Outlook Survey showing employers saying they will be hiring most are construction, durable and non-durable good manufacturing, and mining.
An interesting correlation in Wisconsin is the similar view that when employers intend to hire, it is non-durable goods manufacturing, transportation and public utilities, and then slight hiring intentions in the finance/insurance/real estate.
In 2003 in Wisconsin, the sectors that had the most job growth were health services and educational services, which is also a national trend. There has definitely been a historical view of growth in those sectors and there are predictions for more growth in those sectors.
The predicted national trends through the rest of this decade are that the biotechnology, health services and high-tech manufacturing sectors will see the most growth.
SBT: Are there any industries that are quickly declining?
Beck: There is not one industry that we track that is in trouble. The sector that has the lowest prediction of hiring is public administration. If you look at Wisconsin in 2003, the sectors that had the highest decline were public sector, information technology (IT) and manufacturing. It has to do with the IT sector not yet adding jobs back in. Economists are reporting that they are seeing movement in the IT sector, but we are nowhere near the hiring levels of the late 1990’s because employers in the IT sector are going to be extremely cautious. Historically, if we look at the most significant declines, manufacturing jobs received the most press. The concern over the loss of manufacturing jobs is not so much that the jobs have disappeared. It is that they have moved. But I absolutely would not categorize that as the declining industry.
Employers surveyed for the employment outlook in non-durable goods manufacturing have signaled their intention to increase their hiring for the first quarter of 2004. Often times, manufacturing jobs will naturally evolve into service jobs.
SBT: Wisconsin has lost nearly 100,000 manufacturing jobs since 2000. Will any of those jobs come back, or have they all gone overseas?
Beck: Again, within Wisconsin, the employers that fall under the non-durable goods manufacturing sector signal that in first quarter of 2004, they plan on increasing their hiring from fourth quarter 2003 levels. There has been a lot of discussion on a national scale about manufacturing jobs. Manufacturing continues to lose jobs, but at a much slower rate. So the statement specific to manufacturing in the state of Wisconsin is merely that the employers plan on increasing in their hiring quarter over quarter. As corporate profits rise and inventories remain low, the economists are predicting that you will have to see an increase in hiring. We have seen clear evidence, now that the manufacturing jobs are in fact moving off shore, and at the same time have seen that employers within the manufacturing sector are slowing down the rate at which they are letting employees go.
SBT: Is the use of temporary employees still high?
Beck: Temporary jobs are a lead indicator of a growing economy. In the temporary sector, for eight consecutive months including December, we saw job growth. And in fact, seasonally adjusted in December, the temporary sector added 30,000 new jobs. Employers are not yet confident that the economy has recovered to the extent that they can bring on a full-time person, so they start with a temporary person, and if they feel the economy and the recovery has legs, they are going to convert those temporary workers into full-time workers. Employers are signaling their intention that they are going to be hiring. That’s reflected in temporary job increases, and now according to the Manpower Employment Outlook Survey, what the employers nationally are saying is in the first quarter of 2004, they do plan on hiring more employees than they hired in the fourth quarter of 2003.
SBT: Do these statistics include both temporary and permanent employees?
Beck: The Manpower Employment Outlook Survey merely asked the question: Are you going to increase hiring, decrease hiring or leave it the same?
SBT: Do you foresee a point in the economy in 2004 in which employers will make more of those temporary hires permanent?
Beck: There are a few fundamental elements that impact the employers’ decisions to hire. Health care costs continue to rise, and that is causing employers to question whether or not they can truly afford to bring on more workers. There is a deficit in pension funds right now, so employers have to spend money in areas other than hiring on new employees. The dollar is weak, and that impacts the ability to bring on new workers.
The trend that you typically see is that employers would prefer to bring on someone who is flexible before bringing on that permanent staff, and to make certain that the job is required for a long period of time, and that this recovery is truly sustainable.
SBT: With the rising health care costs, what is the average cost, including benefits, for a company to hire a new employee?
Beck: It is situational. It absolutely depends on the type of job that you’re hiring, the benefits offered by that particular corporation and the sector that you’re in. So that cost can change dramatically. For a full-time employee, you can actually have up to an additional 50% in benefit costs. But then again, it is situational and can also be as low as 30 percent. A lot of employers want to have a trial period where they can remain flexible before making a permanent hiring decision. Many of my customers will refer to it as, “Try before you buy.”
SBT: For years, we’ve been hearing about the brain drain in Milwaukee. What do you think the state and local governments in Wisconsin can do to keep more college graduates in the area?
Beck: There has been a diversity issue in Milwaukee, and that is prominently being raised and addressed in the business community and in the political community. There is a need to ensure that the job growth continues here, and that will lead to the educated youth wanting to remain in Milwaukee. There needs to be a continued focus on the best that Milwaukee has to offer, which is within the cultural aspects of the community, which leads to balance in life and satisfaction with your community. I think that when you take a look at what is being done to address the brain drain problem, you will see some changes. I’m new to Milwaukee, and having only lived here for a year-and-a-half, it has been the most pleasant surprise in every regard. My personal opinion is that Milwaukee is working on ways to publicize itself, and it needs to do that. Once you are here and you see what this city has to offer, it is phenomenal. And we have young, dynamic, energized leaders now, taking a look at multiple issues. I have become a personal PR person for Milwaukee. It is a wonderful community. I have met wonderful people here, and the city has so much to offer, but it is not well known outside of the region.