Facing a shortage of talent and a surplus of unfilled jobs, the state of Wisconsin is pulling out all the stops to attract millennials from other parts of the midwestern US to the state to work, Shayndi Rice reports at the Wall Street Journal. In January, the Wisconsin Economic Development Corporation launched a $1 million ad campaign in Chicago, while the state legislature is soon expected to pass a proposal from Governor Scott Walker to spend another $6.8 million to advertise the state throughout the midwest.
Too many jobs and not enough workers may sound like a luxury problem compared to what some parts of the US have reckoned with in the past decade, but Wisconsin policy makers fear that the slow growth of the labor force (just 1.4 percent from 2010 to 2016) could hinder economic development in the state. That low growth—a product of demographic aging, low birth rates, and negative net migration—has left Wisconsin with an unemployment rate of 3 percent and a projected 45,000 unfilled jobs by 2024, Rice reports.
Along with the abundance of job opportunities, the ad campaigns tout the low cost of living in Wisconsin cities (compared to Chicago), easier commutes and higher quality of life. Cities like Milwaukee and Madison are also running social media campaigns to advertise themselves as fun, vibrant places for young professionals to live. Critics of the campaigns, however, contend that these funds would be better spent on public services.
The tax reform bill passed by the US Congress in December, which drastically lowered the corporate tax rate from 35 to 21 percent, has prompted numerous large employers to announce raises, bonuses, or upgrades to their benefits packages as a means of passing on some of their tax savings to their employees. On Wednesday, the restaurant chain Chipotle announced a round of one-time cash bonuses and stock grants, as well as increased parental leave coverage for many employees. On Thursday, CVS said that it would boost hourly employees’ pay from $9 to $11 per hour, among other pay rate increases, and now provide up to four weeks of paid parental leave for full-time employees. Walmart, Starbucks, Disney, Wells Fargo, and other large companies have made similar moves.
What remains unclear, however, is whether these rewards (most of which consist of one-time bonuses rather than permanent wage increases) are sustainable and whether the benefits of the tax cut will redound to the majority of Americans who don’t work for large corporations. Small business owners are reluctant to make similar moves, much as they would like to, until they have a better sense of how much money they will actually save from the tax reform. As the Associated Press’ Joyce Rosenberg pointed out this week, smaller companies have less clarity on that issue than large corporations do, and questions remain as to how new deduction rules will pan out for small business owners. In addition, small and mid-sized businesses have nowhere near the same cash reserves or credit lines as big companies do, which makes the awarding of bonuses and raises a much riskier endeavor.
The January jobs report from the US Bureau of Labor Statistics showed that average hourly wages had risen 2.9 percent over the preceding year. Though not quite the 3.5 or 4 percent growth economists would like to see, that figure represents an encouraging sign that the American labor market’s perplexing combination of low unemployment and stagnant wages might finally be abating.
A new analysis from Reuters expands on the good news, finding that last year’s wage gains were geographically broad, not concentrated in a small number of states or cities. Ann Saphir, Jonathan Spicer, and Howard Schneider report:
The Reuters analysis of the most recent data available found that in half of the 50 states, average hourly pay rose by more than 3 percent last year. That’s up from 17 states in 2016, 12 in 2015, and 3 in 2014. Average weekly pay rose in 30 states, also up sharply from prior years, the analysis showed. Unemployment rates are near or at record lows in 17 states, including New York, up from just five in 2016, the Reuters analysis shows. …
Total nonfarm employment in the US grew by 200,000 jobs last month, while the unemployment rate held steady at a historically low 4.1 percent, according to January’s employment numbers from the Bureau of Labor Statistics. The highlight of last month’s jobs data, however, was the increase in average hourly earnings, which rose by nine cents to $26.74, following an 11-cent gain in December. Over the past year, average earnings increased by 75 cents or 2.9 percent. That’s the largest year-on-year gain since June 2009, Reuters reports, though the average workweek fell slightly in January to 34.3 hours, canceling out some of these wage gains.
Reuters adds that the strong jobs data increase the likelihood that the Federal Reserve will raise its benchmark interest rate several times this year, perhaps more than the three hikes it was already planning:
“This report supports the Fed’s contention that the jobs market is nearing full capacity and wage and inflation pressure has begun to make its way into the data,” said Marvin Loh, senior global market strategist at BNY Mellon in Boston. “With almost full odds priced in for a March rate hike, investors have moved towards the second, third, or even possible fourth rate hike this year.”
A separate set of Labor Department figures released earlier in the week found that total US employee compensation costs increased by 2.8 percent across 2017, Bloomberg reported, with several industries, including transportation and service occupations. showing increases of over 3 percent—a sign of a competitive labor market.
Since the US Congress passed a major tax reform bill last month, slashing the corporate tax rate from 35 percent to 21 percent, a number of companies have come out with announcements that they were passing some of their tax savings on to their employees in the form of raises, bonuses, or enhanced benefits. Many of these companies framed these decisions as responses to the tax cut, but some also acknowledged that they were planning to increase rewards this year anyway or were parlaying their tax savings into accelerating changes that were already in the works.
The businesses making these announcements are large, high-profile companies that employ substantial numbers of people, so a lot of American workers are seeing the corporate tax cut “trickle down” into their paychecks. In surveys, however, most companies have indicated that their tax savings will go mainly toward investor-focused spending like debt repayment, dividends, and stock buybacks. Also, most of the post-tax-reform rewards employees are getting are one-time bonuses, which don’t commit employers to higher payroll costs in the future as raises do. Companies that handed out bonuses before the new year (or before the start of their fiscal year) had an additional incentive to do so, as they would be able to deduct those bonuses from their taxable income for 2017, subject to the 35 percent rate.
Passing over the thorny politics of whether or not corporate tax cuts are the best way to deliver higher incomes for working families, tax reform is hardly the only motivation these companies have for raising wages or upgrading benefits like paid family and sick leave.
Glassdoor has released its annual list of the best jobs in America for 2018, ranked based on earning potential, job satisfaction, and availability. For the third year running, data scientist took the top spot, while other data and technology roles dominated the list, such as DevOps engineer (#2), electrical engineer (#6), mobile developer (#8), and manufacturing engineer (#10). All in all, technical roles make up 20 out of the 50 best jobs. The rest of the list comprises a variety of management roles, as well as several jobs in the health care sector.
“But there are at least four new titles on the list that help crunch that data and make decisions based on what they suggest,” Washington Post columnist Jena McGregor points out:
These include strategy managers (No. 7), business development managers (No. 14), business intelligence developers (No. 42) and business analysts (No. 43), each of which make the list for the first time, said Scott Dobroski, a career trends analyst at Glassdoor.
“There’s always a lot of tech jobs and health-care jobs — that’s not new and not going away anytime soon,” Dobroski said. “But the biggest trend this year was this emerging theme of business operations,” he said, or people “who make sense of all that data and recommend business decisions.” Many of the people hired for these jobs, he said, are former consultants who companies are bringing in-house to help with strategic and market decision-making.
“Maybe the occupational therapist and the HR manager jobs are in there because those folks are needed to deal with anyone who is not already a data scientist?” GeekWire’s Kurt Schlosser quips.
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Two studies released this week show that US employers have more robust hiring plans this year compared to last year. CareerBuilder’s annual forecast, a survey of over 800 hiring managers and HR professionals, found that 44 percent of companies are hiring for full-time roles in 2018, up four percent from 2017. Additionally, Roy Maurer of SHRM notes that the ManpowerGroup’s latest employment forecast has the strongest Q1 hiring outlook since 2001.
The CareerBuilder survey found that employers in the western states (49 percent) and the northeast corridor (47 percent) are the most likely to be hiring at the moment, while also outlining some key trends that appear likely to shape talent acquisition in the new year. One of those trends is the movement to get in early with talent, as 64 percent of companies that are hiring will be looking to add recent college graduates to their ranks. Almost a quarter of them will be looking internationally to fill positions, although this strategy may be complicated by the Trump administration’s efforts to tighten immigration controls and reduce the use of skilled worker visas like the H-1B. Perhaps most notably, 30 percent of companies say they plan on increasing compensation for new employees by five percent or more and 36 percent intend to do so for current staff.
The survey also pointed to challenges employers are having in filling openings, with 58 percent reporting that they’ve had jobs open for longer than 12 weeks and 66 percent saying they plan on hiring candidates who do not have all of the skills they need and filling any gaps through training.