In a recent poll of Sixth District business contacts conducted from March to May, the Atlanta Fed’s REIN staff asked employers a series of questions about their current behaviors and future plans related to employment and hiring. The survey asked employers to compare hiring behaviors and employment conditions in their firm along the timeline of the economic recovery (“after the recessionary period”).
When reading and interpreting the results and charts below, it is important to keep in mind that this sample is relatively small and not statistically representative survey (respondents total 38). The poll was conducted to give our research team a general update of employer sentiment and rationale in a labor market recovery.
A summary of survey findings concluded that a vast majority of firms polled—roughly 80 percent—said that production (measured in terms of unit per sales hour) had increased since the end of the recession (see the chart). A majority of firms expect this trend of increased productivity to continue.
But with so many job losses over the course of the recovery, one couldn’t help but wonder if these increases in productivity were coming from harder work from firms’ fewer remaining employees, advances in technology, or increased spending on capital equipment. Of course, no one of these three is the sole correct answer, but the survey did reveal that roughly the same percentage of contacts noting increased productivity also reported increased levels of capital spending. According to the survey’s results, increased capital spending is possibly one way firms are keeping labor demand low (see the chart).
The survey included a question about the level of employment since the end of the recession. Almost precisely three quarters of contacts polled said they had increased the number of employees since the end of the recession. Of those contacts reporting an increase in employees, slightly more than half attributed the increase in headcount to increased sales. Several firms cited a gain in the number of employees at the firms as a result of acquisitions of other firms throughout the recessionary period, while only a few (less than 10 percent) pointed to overworked existing employees as a reason to hire additional staff.
A change in the mix of full-time/part-time/temporary employees?
Perhaps more interestingly, the poll provided a bit more insight into employers’ postrecession mix of employees. About 60 percent of contacts said they have no plans to hire part-time or temporary employees and will continue to maintain full-time employees’ hours at their current level. Forty percent of respondents, however, noted an increase in the share of their employees that is part-time or temporary. Among firms responding that they have a higher share of part-time employees, contacts generally responded that they are reducing the hours of their existing workforce rather than replace existing staff with part-timers or temps.
Skills mismatch
The survey included a question that asked employers about the difficulty of filling open positions, a common anecdote heard throughout the recovery. In fact, it’s one heard through at least the last three recoveries (see the timeline below). Responses were split largely along industry lines. Firms seeking to fill IT and cybersecurity positions, by far, reported having the most difficulty.
Most interestingly, contacts noted that they had begun to change their offering wage as a result of the difficulty in filling positions. A large staffing agent that serves the Sixth District concurred what BLS data had been telling us—at least up to this point, employers have been reluctant to offer higher initial wages due to employment statistics and a slack labor market; however, employers appear to finally be realizing that wages can’t be set by viewing the labor market as a whole, but rather they must set wages for the demand for the individual position they need filled.
The effects of the Affordable Care Act
The survey concluded with a question about how the Affordable Care Act (ACA) was affecting hiring behaviors and hiring plans. Generally, responses indicated that the legislation was a significant factor in terms of uncertainty around hiring. However, when broken down by firm size, smaller firms seemed to be concerned more about uncertainty surrounding the implementation of the ACA than did larger ones (see the chart).
To conclude, our poll found a few general employment trends within our sample that seemed to complement broader trends in the U.S. labor market. First, firms’ postrecession production has generally increased as a result of a number of factors, quite prominently increased capital expenditures and investment. Since the recession ended, more firms are hiring part-time and temporary workers, while firms searching for in-demand skill sets are raising their starting wages. Additionally, smaller firms appear to be more concerned than larger firms about the effects of the ACA’s implementation.
By Mark Carter, a senior economic analyst in the Atlanta Fed’s research department