February Jobs Report

February continued the trend of strong job growth. The U.S. economy added 295,000 jobs, and the unemployment rate edged down to 5.5% (Bureau of Labor Statistics, Employment Situation Summary). The number of long-term unemployed persons was essentially unchanged at 2.7 million, accounting for 31.1% of the total unemployed. Despite impressive job growth, wages continue to remain sluggish as average hourly earnings gained only 0.1% month-on-month.

In February, job growth saw the most expansion in food services ( 59,000), professional and business services ( 51,000), construction ( 29,000), and health care ( 24,000). Temporary help services saw little change from last month but was 5.2% higher than in February 2014.

The High Cost of Low Wages, Part 2

This is part 2 of our series dispelling the myth that a company's profitability depends on rock bottom pay. To read Part 1, click here.

Since the Great Recession, low pay and stagnant wage growth have been the new normal, but Walmart's announcement that it will be giving a raise to 40% of its workforce hopefully signals that earnings are set to increase. Higher wages are obviously an advantage to employees, but they also benefit the companies that employ them. Organizations that offer paltry pay could be forced to increase wages in order to stay competitive. This trend is already playing out as TJX, which owns a variety of retailers, including TJMaxx, Marshalls, and Home Goods, announced immediately after Walmart that it will raise workers' base pay to $10 by 2016.

Any company offering higher wages is not doing so out of altruism; they have competitive pay because it is profitable for their organization. Livable wages attract more talent, increase worker productivity, reduce turnover, and at the end of the day add to a company's bottom line.

When a company offers higher wages, and especially when they are early adopters of higher pay in their industry, they will attract a higher quantity and quality of applicants. Last year when Gap announced that it would raise its minimum wage to $10 an hour, the amount of applications rose 10% (Bloomberg Business, 6/24/2014). Organizations that offer higher pay are rewarded with an applicant pool that has a higher IQ and with personality scores and motivation that make them a better fit for advertised jobs (Peterson Institute for International Economics, 1/13/2015). Walmart's choice to increase wages before other major companies such as Target and McDonald's positions it to attract and retain more qualified employees from a talent pool that is becomingly increasingly competitive and desirable. The low-wage model may reduce the cost of labor but does not do any good for a company's costs overall. Currently, about 44% of Walmart's 2.2 million hourly staff turns over each year (Bloomberg Business, 2/23/2015). Finding, hiring, and training replacements even for low-wage workers costs about 16% of an employee's annual earnings, and when nearly half of your hourly workforce is jumping ship, those costs quickly add up. With falling same-store sales and two straight years of stagnant earnings, Walmart is being forced to change its business model that is no longer sustainable in a tightening job market.

Many other retailers have already mastered the lesson that Walmart and other companies are just learning. At Trader Joe's, starting pay is $40,000; employees at Costco make on average $21 per hour; and staff at The Container Store make an average of $50,000 per year (USA Today, 10/17/2014). Costco's turnover rate is 17% overall and that number plummets to 6% after one year of employment (Bloomberg Business, 2/23/2015). All of these organizations operate in a competitive marketplace and refute the idea that retailers must pay measly money in order to make profit. Their happier, more productive employees also provide better customer service and more satisfied, loyal clientele. QuikTrip, a Fortune 100 convenience store and gas station chain, pays an entry-level salary of around $40,000; it's turnover rate is 13% (compared to 59% for the top quartile of the convenience store industry), and its per square foot sales are 50% higher than the industry average (The New York Times, 3/21/2014).

It is a myth that companies, especially organizations in low-margin industries, must constrict wage growth in order to remain profitable. Especially as the economy strengthens and competition for talent increases, companies must consider offering better pay if they want a more talented workforce, more loyal customers, and a stronger bottom-line.

Readers, do you think more companies will raise wages as the economy improves? Comment and let us know!
http://tradepost.selectfamily.com/index.cfm/2015/3/5/benefits-of-raising-wages-2

3/23/15 Update: On March 18, Target followed Walmart's and TJX's lead and announced that the company would be raising the starting pay of its workers to $9 an hour in April and $10 an hour by 2016. The decision will affect the pay of 500,000 employees.

Walmart Raises Wages and So Should You, Part 1

Last week, Walmart announced that it would be giving a raise to 40% of its workforce. About half a million employees will see their hourly wages rise to $9.00 in the next six months and $10.00 by 2016, well above the Federal minimum wage of $7.25 an hour. The company will be spending about $1 billion dollars in increased pay and revised training and promotion programs. Recently, many companies such as Gap, Ikea, and health insurance provider Aetna Inc. have raised wages for their workers, but as the world's largest private employer, Walmart's decision to increase pay will be more closely watched and could have a larger impact.

Over the years, a job at Walmart has become synonymous with rock bottom pay. An unstable labor market and stagnant job creation made it possible for companies, including the retail giant, to consistently fill positions that had low pay and unsteady hours. In 2013, Walmart had 23,000 job applications for 600 jobs, with an acceptance rate of 2.6%; that's twice as selective as Harvard University (The Washington Post, 3/28/2014). In the years following 2008, low wages were an effective method to maximize profits. However, as an increasingly optimistic labor market continues to favor employees and job seekers, companies may no longer be able to sustain low wages.

In December, the percentage of people looking for work hit the lowest level since 2007. The economy has created more than 3 million jobs in three months; the number of available jobs posted by U.S. employers rose to the highest levels in 14 years; and job quits increased to 2.7 million, their highest level in six years, a sign of workers' confidence in the job market. Although the future of job creation looks sunny, wage growth has remained stagnant. Since 2012, pay has shrunk for people at almost all income levels with the exception of the bottom 10%, which have seen higher wage growth due to state-sponsored minimum wage increases (Economic Policy Institute, 2/19/2015). However, any increase in wages does not do much good for workers since inflation is rising faster than the price of labor. The income for a typical worker today buys fewer goods and services than in 2006 (Pay Scale, 1/12/2015).

The trend of frustratingly stagnant wage growth could start to reverse as the economy continues to improve and the labor market continues to tighten. Walmart's move to increase hourly earnings has already turned the spotlight on other retailers who offer similarly low wages, such as Target and Staples. The wage hikes have also put a spotlight on food service companies like McDonald's, which has consistently been singled out as an organization that doles out rock bottom pay. Companies that could once offer low wages may be forced to increase pay in order to stay competitive, attract talent, and reduce turnover.

Raising wages is not just an advantage to the workers it benefits; it is also a boon for the organizations that employ them. Join us next week for Part 2 of our series and learn why all companies, not just Walmart, should raise their wages.the Benefits of Raising Wages.

Readers, do you think that companies should increase worker pay? Why or why not? Comment and let us know!
http://tradepost.selectfamily.com/index.cfm/2015/2/26/benefits-of-raising-wages-1

January Jobs Report

The U.S. economy continued to show strength in the first month of 2015; 257,000 jobs were added, and although the unemployment rate ticked up slightly to 5.7%, analysts estimate that the increase was due to more people looking for work in an optimistic job market (Bureau of Labor Statistics, Employment Situation Summary). The number of long-term unemployed persons was essentially unchanged at 2.8 million, accounting for 31.5% of the total unemployed. Hourly earnings also grew by 0.5%, the highest monthly wage growth since late 2008.

In January, job growth saw the most expansion in retail trade (+46,000), construction (+39,000), health care (+38,000), and finance (+26,000). Temporary help services saw little change from last month but was 6.7% higher than in January of 2014.

7 Hiring Trends to Watch in 2015

The job market has been bleak since 2008. Although the economy was in recovery, hiring increased slowly and wages were stagnant. However, the new year offers an optimistic hiring outlook. At 5.6%, the unemployment rate is back to pre-recession levels. More than 1/3 of employers are predicting to hire full-time, permanent staff this year (Career Builder, 1/1/2015), and employees are more confident that if they leave their current role, they will find a new one. Companies need to prepare for a positive job market this year where hiring tips back in favor of the job seeker.

1. Employers will add talent to their organizations.
Some 36% of businesses plan to increase full-time, permanent staff, a 12-point increase from last year. Jobs in sales, customer service, information technology, production, and administration will dominate the new opportunities (Career Builder, 1/1/2015). Many of these jobs will originate from small businesses; 30% of companies with fewer than 250 employees plan to add full-time staff. Temporary hiring will also pick up, with 46% of employers planning to hire temporary or contract workers; 56% of these companies plan to transition temporary workers into permanent roles (Business News Daily, 1/4/2015).

2. Workers will continue to fight the wage war.
With wage growth mostly sluggish since the recession, raising the minimum wage became a national debate in 2014. Some 21 states had increases that began on January 1, and by early this year, 29 states will have a minimum wage higher than the Federal wage (NCSL, 12/28/2014). As competition for highly skilled candidates increases, 82% of businesses plan to increase compensation in the coming year and 64% plan to offer higher starting salaries to new employees (Career Builder, 1/1/2015).

3. Companies will compete for highly skilled candidates.
Employers are adjusting education requirements to attract workers with advanced degrees; 28% of companies will be hiring more employees with master degrees, and 37% will be hiring more employees with four-year degrees (Career Builder, 1/1/2015). As job roles are becoming increasingly complex and data-driven, businesses will be competing for these highly educated and skilled candidates.

4. Unsatisfied employees will leave their roles.
In September, 2.8 million people quit their jobs, the highest level since 2008, signifying more confidence in the job market. Nearly ½ of all employees are optimistic about their ability to find a new job, and more than 1/3 report that they will look for a new position if they do not receive a pay raise in the next 12 months (Glassdoor, 1/9/2015).

5. Millennials will become the majority of the workforce.
In 2015, those born between 1981 and 1996 will become the majority of the workforce for the first time; 27% of this generation already inhabit management roles, and 47% want to transition into leadership opportunities (Elance-ODesk, 10/29/2014). Hiring and retaining Millennials poses a unique challenge, as 58% predict to leave their jobs in three years or less.

6. Mobile recruiting will expand.
As everything becomes more mobile, job searching is no different. Employment site Beyond.com found that 83% of those looking for work use their phone or tablet (Beyond.com, 6/17/2014), while Glassdoor found that nine in 10 job seekers are using mobile devices in their job search (Glassdoor, 5/13/2014). Utilizing mobile is one way that businesses can compete for top talent as 25% of seekers are deterred from applying if job listings are not mobile-optimized.

7. More people will leave the traditional career path.
Both out of choice and out of necessity, more workers will become freelancers and contract workers. The Internet's accessibility has allowed nontraditional career paths to become more legitimate and sustainable. Employers can now find and hire contract workers more easily, while freelancers can find those in need of their services and sell their labor. This year, 53 million U.S. workers were freelancing, and that number is only expected to grow (Elance-ODesk, 10/2/2014).

Readers, what are your hiring plans for 2015? Comment and let us know!
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December Jobs Report

The U.S. economy continued to improve in December; 252,000 jobs were added and the unemployment rate dropped another 0.2% to 5.6%, the lowest since June 2008, according to the Bureau of Labor Statistics' Employment Situation Summary. The number of long-term unemployed persons was little changed at 2.8 million, accounting for 31.9% of the total unemployed.

In December, job growth saw the most expansion in professional and business services (+52,000), construction (+48,000), food services (+44,000), and health care (+34,000). Temporary help services added 14,700 new jobs last month, up 7.8% from December 2013. Year-over-year staffing growth averaged 8.7% in 2014, compared with 6.4% in 2013.

November Jobs Report

The U.S. economy saw strong growth in November and added 321,000 jobs, the most in nearly three years, according to the Bureau of Labor Statistics' Employment Situation Summary. The unemployment rate remained at 5.8%. In contrast to recent months, average hourly earnings rose in November, and over the year hourly earnings have risen by 2.1%. The number of long-term unemployed persons was little changed at 2.8 million, accounting for 30.7% of the total unemployed.

In November, job growth saw the most expansion in professional and business services (+86,000), retail trade (+50,000), health care (+29,000), and manufacturing (+28,000). Temporary help services added nearly 23,000 new jobs last month, up 8.5% year-over-year.

Holiday Hiring: Highest Since 1999?

It's the most wonderful time of the year for retailers and consumers as the holiday shopping and hiring season has started to pick up. The last few months of the year, starting with back-to-school shopping in September, are important for retailers, and the winter holiday shopping sprees are particularly crucial for the businesses and the economy. Increased consumer optimism and escalated spending are predicted to make this holiday season especially jolly.

Consumer confidence is at its highest levels since 2007 (The Conference Board, 10/28/14), and increased optimism is prompting Americans to spend an estimated 4% more this year during the winter holidays; U.S. retail sales are projected to total over $900 billion in 2014 (Deloitte, 9/24/14). Households are also allocating larger budgets for presents, while holiday gift spending is predicted to increase 8% (Prosper Spending Score, 9/4/14). In 2013, nearly half of American consumers stated that they would be budgeting less for gifts, but that number dropped 11% for the 2014 shopping season.

Cyber Monday has continued to grow as one of the largest shopping days of the year and is expected to outpace Black Friday sales. Online purchases are forecasted to be especially strong for retailers, with over half of consumers expecting to make Black Friday purchases online rather than in-store and online sales for the five-day period between Thanksgiving and Cyber Monday are predicted to rise 15% (IBM, 11/9/14).

Consumer optimism and predictions of increased spending have prompted employers across all industries to escalate hiring for the holiday season. Retailers alone are expected to add more than 800,000 seasonal workers, the highest number since 1999 (Challenger, Gray, and Christmas, 09/17/14). Many notable companies have already started ramping up hiring. UPS stated it would hire 95,000 seasonal workers, nearly doubling last year's holiday workforce, while FedEx plans to add 50,000. Both companies struggled in 2013 to handle escalated shipping volume and are adding workers in order to meet the demand of this holiday season. Online retail giant Amazon plans to add 80,000 positions, approximately 10,000 of which will roll over to full-time jobs. Walmart and Target both plan to add around 60,000 workers. Macy's leads hiring among retail stores, adding 86,000 seasonal jobs.

Manufacturers and retailers couldn't have asked for a better gift this holiday season.

Readers, has your company added seasonal workers? Or are you planning on taking seasonal work?
Send us your comments at: http://tradepost.selectfamily.com/index.cfm/2014/11/13/holiday-hiring

October 2014 Jobs Report

October Unemployment RateThe U.S. economy added 214,000 jobs in October, according to the Bureau of Labor Statistics' Employment Situation Summary, and the unemployment rate fell to 5.8%, its lowest level since 2008. Wage growth remained sluggish, with average hourly earnings rising only three cents last month. The number of long-term unemployed persons dropped to 2.9 million and accounted for 32% of the total unemployed.

In October, job growth gained the most traction in food and drinking places (+42,000), professional and business services (+37,000), retail trade (+27,000), health care (+25,000), manufacturing (+15,000), transportation and warehousing (+13,000), and construction (+12,000).

Temporary help services increased with 15,000 new jobs.

September 2014 Jobs Report

September Unemployment RateThe U.S. economy added 248,000 jobs in September while the unemployment rate decreased slightly to 5.9%, according to the Bureau of Labor Statistics' Employment Situation Summary. The unemployed rate dipped below 6% for the first time since the 2008 recession. The number of long-term unemployed persons was essentially unchanged at 3.0 million and accounted for 31.9% of the total unemployed.

In September, job growth gained the most traction in professional and business services (+81,000), retail trade (+35,000), and health care (+23,000). Employment in other major industries including manufacturing, transportation, and government changed little over the month. Temporary help services increased in September with 19,700 new jobs, up 0.7% over last month.

Wages were flat month-over-month and up 2% on a year-over-year basis. The average workweek for all employees edged up by 0.1 hour to 34.6 hours.

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