The American economy added 211,000 jobs in November 2015 while the unemployment rate remained unchanged at 5 percent, according to the latest employment report by the U.S. Bureau of Labor Statistics (BLS). The sectors with the most job growth included construction with 46,000 jobs added, professional and technical services with 28,000 new jobs, and health care with 24,000 jobs added. Meanwhile, employment in mining continued to decrease with 11,000 jobs lost, while the information industry lost 12,000 jobs over the month.
Average hourly earnings for all employees on private nonfarm payrolls increased by 4 cents to $25.25. Over the year, average hourly earnings have risen by 2.3 percent.
While there was overall job growth in the economy in November 2015, the U.S. lost a record 123,000 temp jobs in the same month, with the temp penetration rate dropping to 2.04 percent compared to 2.05 percent in the previous month.
Temp Job Growth, Year-over-Year
Hiring Expected To Be Up in First Half of 2016
According to an annual hiring survey by DHI Group Inc., 61 percent of U.S. hiring managers expect to increase hiring in the first half of 2016. Over the next six months, 17 percent of the companies surveyed planned to hire 30 percent or more professionals. It was also found that 45 percent said that the time to fill open positions has grown compared to 2014, citing an inability to find qualified professionals as the main reason. Additionally, 47 percent of hiring managers say that they have trouble filling vacancies due to salary requirements.
The Growing Gig Economy
Recent articles by Forbes and the Wall Street Journal point to evidence that the gig economy is growing, with the shift towards more contract work creating a real and dramatic change in the labor market. A study by the Mercatus Center at George Mason University examined the increase of independent contractor forms (1099-MISC) issued by the IRS, comparing it to the number of traditional W-2 forms. Since 2000, 1099-MISC forms have gone up by 22 percent while W-2 forms have remained relatively unchanged.
1099-MISC Forms vs. W-2 Forms
Source: Mercatus Center at George Mason University
While some point to the sharing economy as the reason behind the recent increases in independent contractors, the authors of the study believe that the rise in the sharing economy is a response to more fundamental changes that are taking place in the labor market. Using data from the Census Bureau, the study finds that both the job creation rate and the job destruction rate have been decreasing, which presents new challenges for workers seeking traditional employment. The long-term decrease in the rate at which new jobs are being created indicates that traditional employers are becoming more selective in hiring. The flexible work arrangements offered by sharing-economy platforms such as Uber, Lyft, and TaskRabbit, provide an alternative to those workers who are now excluded from traditional employment relationships.
The Shrinking Middle Class
A new analysis by the Pew Research Center finds that the American middle class has been shrinking since 1971. In 2015, middle-income Americans made up about half of the U.S. population, down from 61 percent since 1971. In absolute numbers, this segment of the population now contains approximately 120 million people.
Percentage of Adults in Each Income Tier
Source: Pew Research Center
The lowest and highest segments have been growing the fastest, indicating a widening income inequality. The share of Americans in the lowest-income segment has grown from 16 percent in 1971 to 20 percent in 2015. The richest segment has more than doubled from 4 percent of the U.S. population in 1971 to 9 percent in 2015. The upper-middle and lower-middle classes have remained relatively steady.
While the middle class has been shrinking over the past few decades, its income has increased by 34 percent since 1971. This is less growth than the 47 percent increase in the upper-tier household income over the same period, but more growth than the 28 percent increase for lower-income households.
Cost of Talent in Business and Engineering
The cost of talent has always been a key factor for most companies’ employment considerations. To attract the best talent, employers need to provide competitive wages, but want to be sure that they are not overpaying. In high-demand fields such as business and engineering, employers have to match their talent branding and wages with the salary expectations of the market and individual wage earners.
A recent global talent survey by Universum focused on better understanding the career expectations of business and engineering workers, and found that, in general, people are relatively good at valuing their services in the context of their market. In most countries, workers were relatively on par with market rates when valuing their worth. However, in Brazil and South Africa, engineers expect to be highly compensated compared to the cost of living. In Singapore and Hong Kong, engineers were willing to accept relatively low salaries.
Annual Salary Expectations for 2015, by Country
“The recruiting environment for certain highly-skilled professionals is the toughest I’ve seen in nearly a decade with companies jockeying for in-demand talent and candidates having their pick at ideal positions and compensation. In addition to bulking up budgets to pay desired candidates, companies have to consider ongoing sourcing and identifying professionals ahead of the creation of a specific job opening. Recruitment has to be more about relationship building today than ever before.” ~ Michael Durney, President and CEO of DHI Group