Second Quarter Hamilton Hiring Survey Indicates Iowa Small- and Medium-Sized
Businesses See Job Growth
Summary:
- Optimism up
- Planned layoffs at their lowest level in four quarters
- More mid-level hiring will lead to increased payrolls
- Hiring authorities still cautious for many reasons
The Hamilton Hiring Survey results for the second quarter of 2012 indicate that Iowa employers’ optimism continues to improve.
The company asked 5,000+ small- and medium-sized employers about their sense of optimism for industry job growth in the next quarter. Results showed that 55% of the respondents were either somewhat or very optimistic.
This is up from 47% in the first quarter of 2012, and is at its highest point in the last year. “We are seeing small- and medium-sized business hiring optimism rising across most industries and geography in the state,” Hamilton Group President and staffing expert, Tom Hamilton said. “This is a positive sign that job growth is building momentum into the second quarter.”
How would you rate your sense of optimism for overall job growth in your industry for the next three months?
According to the Bureau of Labor Statistics, the national unemployment rate was at 8.3% in January. According to Iowa Workforce Development, Iowa’s unemployment rate decreased to 5.4% in January, down from 5.6% in December. One year ago, Iowa’s unemployment rate stood at 6.1%.
In this quarter’s Hamilton Hiring Survey, 47% of respondents said they expect to increase total employment over the next quarter. A recent increase in profits and the need to add staff to meet customer demand are the main reasons businesses are planning to hire. “The worst of the economic downturn is certainly behind us and we continue to see improvements in many sectors. Sustainable, conservative growth will better serve our community interests for the long term. We are selectively and strategically adding key positions for expected improvement in commercial and consumer business,” said Mike Helak of US Bank.
However, the increase may not be a large enough increase to significantly reduce Iowa’s unemployment rate. We would expect the rate to remain between 5.3% and 5.7% into the third quarter of 2012.
How do you expect total employment for your organization to change in the next three months?
Only 9% of the predicted new hires are expected to serve at a senior level. The majority of jobs that are expected to be added are mid-level and entry-level positions. Respondents indicated they would hire more mid-level positions than in any survey in the last year. Mid-level jobs typically pay higher wages than entry-level positions, which could signal coming payroll growth.
However, not everyone is ready to make a change. A relatively high number (33% vs. 29% in the first quarter) of respondents fell into the “neither optimistic nor pessimistic about their business prospects” category. While 50% indicated there would be no change in their workforce or were undecided about future hiring. “There are a very large number of employers who are still on the sidelines. This ‘wait and see’ approach is affected by the many uncertainties facing businesses today,” added Hamilton. Respondent’s top four concerns included:
- Costs and uncertainties surrounding healthcare
- Business regulations and red tape in their industry
- Government budget uncertainties
- State and national debt levels
The percentage of Iowa companies who plan to reduce their workforce was only 3%. Even though planned layoffs are at their lowest point in a year, businesses have indicated that uncertainties remain and have an impact on their hiring decisions. One hiring authority summed it up this way, “This is an unusual year, which is requiring us to take a ‘wait and see’ approach. Healthcare changes are one of our biggest concerns and could have a significant impact on our operations moving forward.”
For the 3% of Iowa businesses who plan to decrease their employment, the majority of the cuts will come at mid- and entry-levels. “Companies have seemed to find their optimal staffing level for today’s economy,” Hamilton said. “Slowing dismissals could pave the way for an increase in employment, but the headwinds and political uncertainties are making businesses think twice before expanding staff,” added Hamilton.
A trend that has been prevalent for the past several quarters continues to develop as more organizations use contract labor. “Many organizations feel the use of contract employees gives them flexibility during uncertain times. Many times, businesses will convert contract employees to full-time once they are more confident,” said Hamilton.
Over the next three months, how would you predict your use of contract labor/outsourcing rather than adding permanent staff will change?
Optimism for job growth was scattered throughout the state and again was particularly high with businesses employing between 100 and 500 workers. Pessimism was also present throughout the state, the highest found within businesses employing between 5 and 100 workers.
The survey concluded that employers are more optimistic, but hiring authorities expect employment to expand slowly. The sense of many businesses is that they have found the ideal staffing level, until economic and political uncertainties become clearer. Lastly, if confidence in the economic future can continue to improve, business leaders in the indecisive group may be much more willing to add to their staff.
The Hamilton Hiring Index for the second quarter of 2012 is now at 69*, a four point increase from the index of 65* for the first quarter of 2012, and up from 62* in the fourth quarter of 2011.
To download a pdf of this report, click here.
About the survey: The Hamilton Hiring Survey looks at employer confidence and hiring intentions for the upcoming quarter in the state of Iowa. The survey then results in an index number representing the overall confidence for the next 90 days.Much of the employment data available today is trailing statistics. The Hamilton Hiring Survey is the only statewide staffing survey of small and medium-sized businesses predicting future hiring trends.The second quarter survey for 2012 was completed in mid-March of 2012 and reflects attitudes and intentions for April – June 2012.*From the survey, a hiring index is calculated to indicate the level of optimism and hiring plans for the upcoming quarter. The Hamilton Hiring Index is based on a scale from 1-100. While 50 is considered neutral, a number above 50 indicates an expanding job market for small and medium-sized businesses in Iowa. A number below 50 indicates a retracting job market for small and medium-sized businesses in Iowa. |
