The Desk

July 22, 2007

Continued Hiring and Raises in Spite of Tight Labor Market

Filed under: Hiring,Job Search,Morale — Yvonne LaRose @ 7:52 PM

News reports say we’re in a tight labor market. In spite of that, hiring managers will not be firing workers. Instead, they will continue to hire and will offer salary increases. The logic — once you’ve got the good ones, why not do what’s necessary to keep them.

Isn’t it nice to be able to spout off all of that official sounding information? But who understands what it really means? Few, very few. So what is this “tight labor market” rhetoric? First, it isn’t rhetoric. It is a fact that annually, fewer people are prepared to step into the workforce and deliver the type of performance that is required as measuring up to “good work” or “quality performance” for the employer’s needs. What this means for those who are already employed is they have done what’s necessary to prove theirselves; they’re now in the desirable position of being able to ask for (and probably receive) a higher salary. They’ve shown that they have the right stuff to make it.

In doing research for this post, a Federal Reserve publication called The Beige Book was found. It looks at all parts of the economy across the country and examines the various pressures and dynamics that are happening to cause growth or contraction. You’ll want to add this to your industry and company research links tools so that you can learn more about what’s happening in your target industry. Then you can make your entrance with knowledge and insight. You may even want to spout a few of the statistics during the interview, just to show that you know what you’re talking about and would make phenomenal talent.

But let’s get to the nuts and bolts of what’s happening in the labor market. According to the Beige Book, the economy is tight. We don’t have enough well qualified, well educated, properly prepared workers coming into the market to offset those who are leaving for retirement. In fact, the labor market looks very much like it did in 1999. labor-force-status-1999-from-bls.gif

The underlying message also includes the fact that it takes more to train the new worker than it did before. Adding to that is the slap-dash attitude that whatever it takes to get product out the door is okay; quality can be sacrificed. Indeed, pressures to deliver on time sometimes demand that the “little things” be let go for the sake of living up to the reliability factor. This, many times, is a very short-sighted attitude in consideration of the long-range possibilities of product failure and consequent consumer lawsuits for personal injury or death.

Ah, that legal background causes all manner of detours. Forgive me. Back to tight labor markets and the impact on hiring and raises. There will be less hiring but less than in the previous quarter. There is a reluctance to fire workers because firing tends to create gossip that makes people worry and reduce morale. Reduced morale means lower productivity while workers are checking out want ads in case they are one of those on the block. And lowered productivity means less work that gets delivered to the client — who pays the bills.

Sounds a bit like a Catch-22. It’s actually a fact of Life and part of the business life cycle.

If you’ve got a job, do whatever is necessary to keep it. If you just can’t sweat it out, hold on until you find something else that’s a better fit.

More importantly, this is a critical time to purposefully network.

Productivity and spending in nearly all sectors is up; one exception is residential mortgage origination and refinancing as well as construction. People are willling to spend. They desire product. The news is that wages are increasing.

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