NEWS RELEASE
CORESTAFF COMMENTARY:
EMPLOYMENT SINCE THE NEW ECONOMY
By Steven Drexel,
CORESTAFF president and chief executive officer
This article is among a series of commentaries written by Steven Drexel discussing
key issues and trends affecting today's labor market. Drexel is a member of the Bureau
of Labor Statistics' Business Research Advisory Council. An archive of past commentaries
may be found at www.corestaff.com/press. Please attribute information to Steven Drexel,
president and chief executive officer of CORESTAFF Services if you adapt all or part of
this piece for articles. If you are interested in connecting with Drexel or receiving more
information about CORESTAFF, please contact Sally A. DeVito Jozwiak at 713-438-1567 or
sally.jozwiak@corestaff.com.
Below, you will find Drexel's remarks on:
- Job growth and other indications that support continued improvement
- Comparisons from the last recovery
- Workforce readiness for the upcoming labor shortage
May 2004 - Last month’s employment report provided the long-awaited breakthrough in job growth. Employment during March grew by 308,000 jobs, which was the largest increase in four years. Furthermore, the manufacturing sector ended its string of 44 consecutive months of decline. Despite the strongest broadly defined economic growth in 20 years (4.9 percent during the 12 month period ending in March), employment has been stuck in low gear for the 28 months since the lowest point of the recession in 2001. Record productivity growth, linked to an abundance of caution among employers, has been suppressing the employment numbers. The March report, released about a month ago, eased anxiety regarding jobs -- a very conspicuous soft spot in an otherwise strong economic performance.
Looking forward, the employment news since the breakthrough job report has been encouraging. The Conference Board reported that confidence among business executives during the first quarter ballooned to the highest level in 20 years. This confidence included positive sentiment regarding hiring plans. Moreover, the Conference Board’s consumer confidence survey accelerated sharply based on improved perceptions about the job market. Two reports from the closely watched Institute of Supply Management indicated that service sector employment and manufacturing employment are favorable and improving. The Federal Reserve Board’s Beige Book reported that hiring through early April was moderately improving but broad-based. Finally, initial jobless claims continue to trend down. At 315,000 initial jobless claims at the end of April, this level is well below the benchmark 400,000, indicating jobs can be created. All these indications suggest that stronger employment growth should continue.
In terms of the broader non-employment economic news, there are even more positive indications of continuing growth. Retail Sales in March recorded their strongest growth rate in at least 11 years. Durable goods orders surged in March and business investment grew at an impressive 11.4 percent during the first quarter. Factory orders grew by the largest amount in more than 18 months. Corporate profits are growing at a 30 percent annual rate. New home sales increased a remarkable 8.9 percent during March. Paradoxically, the biggest risk to the growth forecast is the fear that the economy is so healthy that the Federal Reserve Board will start tapping the economic brakes by increasing interest rates.
Additional Observations:
- April Unemployment Number –
It will drop one-tenth of a percent to 5.6 percent.
All indications are that job creation should improve along with the labor participation rate.
- Companies’ desires for flexibility benefit the temporary staffing industry in this recovery.
I believe many of the same influences that have elevated off-shoring to the headlines also benefit temporary help. For instance, a company’s desire for flexibility and the ability to focus on its core competencies can make temporary help more attractive with respect to a wide range of labor needs.
- Productivity growth will slow as employers
add more jobs.
Job growth will begin to slow the rate of productivity improvement now. It seems to me that labor is much closer to full capacity at this point, 28 months into the recovery. During the 1991 recovery, it took about 12 months for the job market to start growing in earnest after the economic low-point. During the 1960s through the 1980s, jobs began growing almost immediately after broader economic growth bottomed out.
Percentage of total production capacity currently in use. Economists generally agree that a rate of 82 percent or above is necessary for new job growth.
- Retain your best employees with a workforce shortage on the horizon.
It’s wisest to work on retaining your best employees first then refine your recruiting and hiring practices to prepare for the growth in anticipation of demand for your product and services.
About CORESTAFF Services
CORESTAFF Services is one of the largest national staffing firms in America, with offices in 19 states. CORESTAFF also operates as
TeleSec CORESTAFF in the Washington, DC area and Leafstone Staffing Services in the New York City and northern New Jersey metropolitan
areas and southern Connecticut. CORESTAFF is not affiliated with Core Staffing Services, Inc. which operates in the New York Metro
Area. CORESTAFF is headquartered in Houston, Texas; 713-438-1400.
Visit CORESTAFF Services on the Web at: www.corestaff.com, www.it.corestaff.com,
www.careertrust.com, www.techresources.coretaff.com, www.infocurrent.com
and www.employmentzone.org.
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