Economists predict an influx of jobs to a market that is tight with many applicants
POSTED: 01:30 a.m. HST, Jan 12, 2011
WASHINGTON » Companies planning to ramp up hiring this year will have an added luxury: their choice from a flood of applicants, without having to pay a premium for top talent.
Unemployment remains near double digits, and there are nearly five unemployed workers competing for each available job. That is giving employers more confidence while at the same time enabling them to keep wages low.
The lack of opportunities over the past three years means it's risky for job seekers to be choosy, particularly for those who have been out of work for more than six months. All that makes for a buyers' market, leaving hiring managers with little incentive to negotiate.
"They don't have to pay higher wages to get who they want," Heidi Shierholz, an economist at the Economic Policy Institute.
Employers advertised 3.25 million jobs in November, the Labor Department said yesterday. That's 39 percent higher than the number of jobs advertised in July 2009, a month after the recession ended, but it's still far below the 4.4 million openings posted in December 2007, when the downturn began.
Perhaps more important is the number of people competing for those jobs. With 15 million unemployed in November, the ratio was 4.6 unemployed workers for every open job. The ratio reached 6.3 in November 2009, the highest since the department began tracking job openings in December 2000. Still, in a healthy economy, it would fall to between 1.5 and 2, economists say.
Those figures don't factor in underemployed workers or people with jobs who might test the hiring waters.
While openings are up 39 percent from the low point during the recession, monthly hiring has risen only 4 percent to 4.2 million in the same period.
"It is disappointing that 17 months into the recovery, the hires rate still remained at depressed levels," said Henry Mo, an economist at Credit Suisse.
Economists don't agree on the reasons for the gap. Some say the unemployed lack the right skills for the available jobs. Others cite the housing slump, which makes it harder for those out of work to sell their homes and relocate to take a job.
Shierholz said the sheer number of applications from the vast pool of unemployed, and a more demanding attitude from employers, could partly explain the delays.
Companies "think they should be able to get perfect, superqualified workers for very cheap," she said.
Wages and salaries rose only 1.5 percent in the 12 months ending last September, according to the latest government figures. That's barely ahead of the 1.1 percent rise in inflation over the same period.
The good news for job seekers is that economists expect a lot more openings in the months ahead. Some are projecting more than double the 1.1 million jobs added in 2010.
Ford Motor Co. said Monday that it will add more than 7,000 workers in the next two years, including 750 engineers to work on hybrid and electric vehicles. Discount-store operator Dollar General Corp. said last week that it will open 625 stores and hire more than 6,000 workers in 2011.
And Union Pacific, the nation's largest railroad, plans to hire as many as 4,000 people this year.
The company is seeking diesel mechanics, track workers, conductors and engineers. Most of the new hires will replace workers who are retiring or leaving, but about 1,000 will be new positions.
The company is seeing plenty of interest already.
"Many applicants not only meet, but exceed the qualifications needed," said Tom Lange, a spokesman. "Overall it's a very strong applicant pool."