Tim Sackett recently gave his 2015 predictions for the HR industry and it got us thinking about job related trends for the coming year …
The economy is doing well, but where are the jobs?
Where are the Jobs? Or rather, where are the Good jobs? Many are asking this question as the US unemployment rate dips ever lower – now at 5.6%, a number not seen since June 2008, a date preceding the Great Recession. Why is wage growth still so low this long after the recession?
“The good news is the economy has picked up speed.” – President Obama during the January 2015 State of the Union.
Yes it has, but is it enough and can we maintain the pace long enough for stubborn wages, mired in yesteryear, to finally rise. Having wages rise organically via companies competing for talent is the only avenue forward as the federal government won’t be raising the minimum wage.
So where do we stand now and what might we expect for wages going forward?
The issue revolves around the relationship between job growth and wage growth. The job market is tightening, but wages are not budging. In 2014 hourly wages budged by just 1.7 percent and before that have been dead in the water for over 10 years. Not good.
There has been much talk about the quality of the over 200,000 jobs added each month for 11 consecutive months – the longest such run in nearly 20 years. No doubt many jobs that have been added are low income in nature, but not every new job is sprung forth from the ilk of Walmart, McDonalds, and Starbucks. The rub is how many of these new positions are well paying enough to drive wage growth? For the US economy to truly hit its stride, wages and the resulting purchasing power of millions needs to rise – plain and simple.
Bumps in the road.
One thing holding us back is the low labor force participation rate, which is at a 35 year low of 62.7 percent. With markets heating up how can the participation rate be so low? A likely scenario is many workers who lost higher paying jobs during the Great Recession have decided not to replace them with low income alternatives that don’t pay enough to cover basic costs such as medical insurance and daycare.
Prediction for 2015 – A War for Talent Begins Who said War is bad?
The key is reaching the point where enough of the jobs created are high income in nature. With the economy growing at above 3% and jobs growing at over 200,000 per month, the tipping point should come into range in the next year or so. Don’t be surprised if in 2015 the conditions for real wage growth will finally start to manifest and even those who have given up on the job market will start to return.
Can it be? Can we really be on the cusp of what many recruiters now know only from misty-eyed tales spun from the mouths of greying counterparts? Fantastic stories about a time many score ago when candidates were expected to demand better terms! When hiring managers bent down and kneeled before Talent! Could we be on the verge of recruitment nirvana when a War for Talent erupts into living color and recruiters and candidates rise from the ashes? Yes, if the economy holds course, we can and will get there.
Barring a catastrophic macro-economic disturbance that could arise from a number of geopolitical hotspots, we will experience enough job creation in the next 12 months that a talent war will begin to be waged on a meaningful scale. The resulting battles for talent will spawn the much needed real wage growth that for so long has been absent from the US economy. War can indeed be good, bring it on.
This is what the crystal ball at BountyMiner is telling us for the coming year. What do you think?
Written by Rob Morrison guest blogging for BountyMiner