LHH 2011 Job Market Perspectives Report

2011 Job market perspectives

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Moving (slowly) in the right direction.

While the country is getting closer to a place of economic recovery, it doesn’t mean that the road traveled thus far has been easy, nor does it mean that the road ahead will be fully straight, paved or short.

As the National Bureau of Economic Research announced that the recession was officially over, millions of Americans had a hard time believing this assertion as the connection between signs of success on Wall Street lagged Main Street realities. On the positive side, the majority of financial institutions that needed assistance from the government began to turn profits, as well as the Big 3 automakers that were in peril the year before. GDP started to grow, consumer confidence began to show signs of life and the temporary sector, a leading market indicator, experienced tremendous month over month job growth — something we saw first hand and helped to power right here at Lee Hecht Harrison.

Despite these positive developments, employers continued to move forward with hiring strategies that were centered around cautious optimism, leaving millions of Americans out of work. Cautious bits of good news — the private sector adding jobs, increased home sales, improved manufacturing and retail sector growth — were beginning to shine, but a nearly 10 percent unemployment rate, amongst other trends, made it hard be fully optimistic on where the economy was and is headed. Additionally, with a number of political changes for both healthcare and financial reforms being passed, as well as a reshuffling of the House of Representatives, new economic and workforce dynamics have been created that will have an impact on the future of the financial and job market situation.

LHH’s 2011 Job market perspectives report explores both the current and future labor market while looking beyond the headlines to provide a well-rounded analysis of the constantly evolving labor market.

We hope this guide will help you realign your organization or your career for an upcoming year of growth and recovery.

Following one of the most challenging time periods for the U.S. economy and job market — what is now referred to as the “Great Recession” — this past year introduced a level of stability which helped to nudge the economic pendulum in a new direction. In an economic downturn employees are less likely to abandon ship. Many workers are simply waiting for the job market to improve to take advantage of new opportunities. With the economy predicted to pick up, it is imperative for organizations to focus on engaging, retaining and developing their most critical asset — their talent. If employees are not engaged now, organizations risk losing a portion of their workforce as the economy improves.

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Key moments in time: 2010

• Jobgain of 14,000 jobs

January

• Jobgainof432,000 jobs

May

• PatientProtection and Affordable Care Act passed

• March/April2010Census hiring starts

March

• PresidentObama announces that Big 3 automakers are now declaring profits

• Dodd-FrankWallStreet Reform and Consumer Protection Act passed

• OilspillintheGulfof Mexico capped

• Unemploymentbenefits extension passed by Congress and signed into effect by President Obama

July

• Oilspillinthe Gulf of Mexico

April

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Key moments in time: 2010

• Vastmajorityofover500,000 U.S. Census jobs have come to an end

October

• Jobgainof151,000jobs

• Midtermelectionstakeplace — Republican Party gains hold of House of Representatives and chips away at Democrat controlled Senate

• AsoftheNovemberBLSdata, the private sector has added 1.17 million private sector jobs in 2010

November

• Joblossof95,000jobs

• PresidentObama proposes infrastructure plan to boost jobs and economy

• AsofSeptember,over245,000 temporary jobs have been added since the start of the year

September

• Increasedconsumerconfidence and spending around holiday shopping

• Jobgainof103,000; unemployment rate lowersto9.4percent

December

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The global economy.

2010 was a year of economic transition. In North Amer-ica, and in particular, the United States, it was marked by stronger than expected early growth, a slight decline mid-year, and increasing optimism and positive news in late 2010. In Europe, historically high unemployment rates continued throughout the year with countries like Greece and Ireland facing financial crises.

By fall of 2010, advanced global economies and more emerging markets were at different points in the economic cycle with most Asian and Latin American countries having nearly recovered from the recession. In more advanced economies, the recovery, as noted above, has been a bit more transitional, with the world economy following the patterns of important countries like the United States and Western Europe.

2011 should fare better than the past two years with small levels of growth taking place in Europe as well as the United States. Economists estimate that GDP growth in the U.S. for the year will be just under 3.0 percent, which is a half percent increase over 2010 and the inflation rate holding below 2 percent for the year, which should allow business and consumer confidence to grow.

The global job market.

The job market and employment situation is expected to pick up in 2011, continuing the momentum that began in late 2010. In Europe, most economists feel that the unemployment rate will vary between 10.0 and 10.6 percent for the EU as a whole as some countries face much higher unemployment rates than others as seen with the Netherlands unemployment rate hovering around 4.4 percent, and Spain still at a level above 20 percent.

From a sector perspective, global salary increases will be most evident in technology, life sciences, healthcare and alternative energies reinforcing the job demand in these categories.

The global economy and job market.

In the United States, the economist forecast from The Wall Street Journal predicts that the unemployment rate willbe8.9percentbythe end of 2011 with non-farm payrolls adding an average of 152,000 jobs a month equaling just over 1.8 million jobs for the year.

Additionally, salary budgets for 2011 are projected to continue rising after hitting historiclowsin2009, according to results from the 2010-2011 Culpepper Salary Budget & Planning Survey which contains data from933organizations in90countries.

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Salary freezes will be all but obsolete and the global average base salary is expected to increase by 3.14 percent — the highest boost since 2008.

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The country’s political climate.

2010 was a year of large scale changes

to the United States government

and its legislation. Two of the highest

profile pieces passed were the

healthcare reform bill signed in March

as well as the financial reform bill

which was signed into effect in July.

Top of mind in the political arena was the nation’s economy and the employment situation which weighed on the over 14 million jobless Americans facing a reduction or an end to their unemployment benefits as well as a lack of job options.

This sentiment was made clear as the Republican Party won control of the House of Representatives, decreasing the margin of Democrats in the Senate in November’s mid-term elections. Evidently, Americans were not com-pletely pleased with the status quo of their government and its policies. The election also marked the gaining clout of the Tea Party movement with a small number of the party’s candidates being elected to Congress.

The 112th Congress will be one of varying ideals and strategies around how to fix the United States’ ailments — particularly as some feel the economic recovery is not going as it should. Although many members of Congress are hoping to overturn the healthcare reform bill passed in 2010, political experts note that ultimately, there may not be enough votes to do so.

Other pieces of legislation that will be top of mind in 2011 will be tax breaks for higher income earners, and a dialogue around how to diminish the unemployment rate and return it to pre-recession levels as quickly as possible.

Collaboration is essential.

With many political analysts seeing a breakdown of communication and political gridlock as virtually inevitable, this will certainly prevent issues from being resolved.

As both political parties start looking towards the larger 2012 presidential election, 2011 cannot be a year of political maneuvering, and it must focus on collaboration between President Obama and Congress in order for the country to grow stronger and move forward.

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Impact of the healthcare reform law on the U.S. workforce.

• Asmanyas32millionU.S.residentsgained coverage, mainly through expanding Medicaid and extended federally subsidized health insurance premiums for the uninsured.

• Employerswererequiredtomodifyplansto comply with a wide range of new requirements, such as continuing coverage for employees’ adult children.

• Effectivein2014,employerswithatleast50 employees will face an annual penalty of $2,000 for each employee they do not offer affordable coverage to.

• Basedonincreasedcoverageforworkers, millions of new healthcare jobs will be needed to meet expanded coverage.

Impact of financial reform law on the U.S. workforce.

• BillissinglelargestoverhaulontheU.S.financialregulatory system since the Great Depression.

• Heightenedmarketregulations,theConsumer FinancialProtectionBureau,VolckerRuleand Federal Insurance Office put into effect.

• Basedonanexpandedneedforcompliance and transparency, businesses will need to modify staffing plans, and in many cases, create positions to adhere to new laws.

Looking behind the numbers.

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When reviewing the monthly employment situation report produced by the U.S. Department of Labor’s Bureau of Labor Statistics (BLS), a general unemployment number is produced that is widely used not only as a job marker, but as a broad economic indicator. Thisnumber,whichwas9.4percentasofDecember2010,andwillmostlikelyremaininthe9percent range for at least a part of 2011, counts individuals that are without work and seeking full-time employment.

The9.4percentunemploymentrateiscalculatedbasedon people who are without jobs, who are available to work and who have actively sought work in the prior four weeks. The “actively looking for work” definition can be fairly broad, including people who contacted an employer, employment agency or job center, sent out resumes or filled out applications, or answered ads. The rate is calculated by dividing that number by the total number of people in the labor force. Although the number is the general one used, a number we believe that more people will look at in 2011 is the U-6 unemployment rate.

In addition, LHH’s monthly Workplace Economy report offers you an in-depth look at the latest jobs report from the Bureau of Labor Statistics (“BLS”) and features advice for organizations in this changing economy.

Be sure to add lhhworkplaceeconomy.com to your favorites and check back frequently for continuous up-dates from the BLS — this is a great resource for getting all the latest workplace news and employment trends.

What is the U-6 unemployment rate?

The U-6 unemployment rate includes both people looking for full-time jobs as well as “marginally attached workers and those working part-time for economic reasons.” The “marginally attached workers” include those who have gotten discouraged and stopped looking, but still want to work. The age considered for this calculation is 16 years and over — comprising a much larger number of people.

When factoring in this number, the broader unemploy-ment rate then rises to 16.7 percent as of December 2010, marking a much higher number than the commonly referenced one. Another factor that plays a large part into unemployment is the level of education an individual has.In2009,theaverageunemploymentrateacross all ethnicities for an individual with a bachelor’s degree or higher was 4.6 percent — significantly lower than the general and U-6 unemployment rate.

We anticipate that the unemployment rate may potentially rise in the beginning of 2011, but this should be seen as a positive indicator. While this may seem counterintuitive, the increasing unemployment rate means that Americans who had previously given up on the job search are now re-entering it as active job seekers.

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This trend means that we will see a larger number of Americans

rejoin the labor force, which will increase the number of

unemployed, active job seekers who are no longer discouraged

in their job search. As these individuals are placed, we will begin

to see those unemployment numbers normalize and decrease.

With the stabilization of the economy, employees who are critical

to an organizations current and future performance will become

more sought after making it imperative to focus attention on

engaging, retaining and developing these critical members

of the workforce.

For our latest research study on Leadership Development

produced in partnership with Human Capital

Institute, visit LHH.com.

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As the economy continues to recover, one trend becoming increasingly clear is the return and augmentation of the number of skilled job opportunities available. This

marks a different pattern than seen in past recessions where goods-producing jobs led economic recovery.

In addition, increased global competition and the continuing trend of outsourcing jobs are making it more critical than ever for job seekers and the employed to be educated and seek further professional training.

As discussed earlier, unemployment rates vary greatly — in some cases as much as 10 percent — by levels of education. In the near future, jobs in fields which require at least an associate degree are projected to grow twice as fast as those requiring no college experience, and 8 of 10 jobs will require college or other specialized training, according to a White House report.

A bachelor’s degree isn’t the only solution.

While a bachelor’s degree or higher is an ideal situation, there are other options available for American workers. The Obama administration feels that education will be a huge component to economic recovery and progress and has initiated two programs through the White House as a way to bring this to the forefront.

The White House Summit on Community Colleges took place in the fall of 2010, with President Obama providing $2 billion to fund the Community College and Career Training initiative in the Health Care and Education Reconciliation Act that he signed on March 30, 2010. The current administration has set two national goals: by 2020, America will once again have the highest proportion of college graduates in the world, and community colleges will produce an additional 5 million graduates.

The Recovery Act will also play a large part moving forward, as community colleges will also be the beneficiaries of $1 billion for training programs in clean energy industries, health information technology and retraining programs.

To complement this program, the White House also launched an additional program called Skills for America’s Future which will build job training partnerships between community colleges, industry, and labor unions in all 50 states. The partnership will also include a number of prominent American companies who are committing to training their staff in a number of areas including leadership and technology skills.

With funds reaching state level to directly impact the workforce, these two programs will change the future of adult education and training, which, as mentioned, will be extremely important in a number of sectors including green-energy, healthcare and professional services.

Higher education equals lower unemployment.

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8 out of 10 jobs will require college or other specialized training, according to a White House report.

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Situation overview.

Temporary jobs have been one of the leading sectors coming outoftherecessionwiththecreationofover495,000jobs sincealowinSeptember2009.Thissectorwillcontinue to generate new jobs and growth will be led by businesses in need of employees to manage temporary and seasonal increases in workloads, demand for specialized workers and businesses looking to expand without bringing on permanent staff.

Temporary hiring is a method that a large amount of employers have opted for as they emerge from the recession. It allows for a workforce model that contracts or expands rapidly according to business needs, making it an ideal way to begin bringing staff on. Additionally, more and more workers are searching for job opportunities that offer flexibility. Based on this, there will be a large amount of jobs added to the temporary sector in the foreseeable future.

Areas in demand.

While all sectors need temporary staff members, some of the most high demand sectors are healthcare, office and administrative support, production, transportation, finance, information technology and engineering.

“Temporary employment today, more than ever before, is likely to lead to permanent employment tomorrow.” Peter Alcide President and COO, LeeHecht Harrison.

Source: BLS

Where the jobs are:

2009-2010changeinworkforce:

+308,400Number of American workers:

2.2 millionRegions in demand:

All

Temporary services

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Situation overview.

Although2009wasaroughyearforthesector,manufacturing is recovering and was seen as one of the bright spots in 2010 with a 1.6 percent gain in jobs — about twice the pace of growth in other private sector jobs. Additionally, the industry had one ofitsbiggestpercentagegainsinjobssince1994.

Areas in demand.

With the Big 3 auto manufacturers declaring profits in 2010, things are looking significantly better for the auto industry, as well as for skilled workers. As consumer confidence continues to grow, there will be a greater demand for goods and employees to create them.

“Manufacturing is very robust for us right now. Skilled machinists and machine operators in some places are getting tougher to come by.” DonnaCarroll,VicePresident,AdeccoStaffingU.S., CNN Money, September 2010

Source: BLS, Fortune.com

Where the jobs are:

Unemployment rate:

10.0 percent (not seasonally adjusted)




Midwest, South

Manufacturing

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Situation overview.

While finance was one of the first sectors heavily impacted by the recession and the financial crisis, jobs are returning bit by bit, month over month. While jobs are still short of the level they were atin2009,thesectorwillreboundandisexpectedtoreturntopre-recession levels in the next few years.

Areas in demand.

While roles in all financial sectors will re-emerge, a push towards compliance, financial policies and risk mitigation will bring in a new era of financial jobs. While being a trader or an analyst was once seen as a highly desirable job, these new positions will be much more in demand in the future reflecting the changes in financial reform.

Source: BLS

Where the jobs are:

Unemployment rate:

6.4 percent (not seasonally adjusted) 2009-2010changeinworkforce:

-42,900Number of American workers:


Northeast, West

Financial services

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Situation overview.

Within the next eight years, the employment of lawyers and other legal jobs is expected to grow around 13 percent. Experts believe this will be a result of an increased number of legal transactions, civil disputes, and criminal cases. Additionally, while the country was in recession, a number of people chose to return to school for advanced or graduate degrees. As a result, the number of entrants in law school increased significantly with more Americans choosing to either change their career or further their skill sets.

Areas in demand.

Jobs in the sector will also result from an increasing demand for services in areas such as healthcare, intellectual property, bankruptcy, corporate and security litigation, antitrust law, and environmental law. In addition, the popularity of legal clinics may result in an increased use of legal services by the middle class.

Source: BLS, Fortune.com

Where the jobs are:




Northeast, West, Midwest

Legal services

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Situation overview.

As a result of an aging population and all the legislative changes associated with healthcare reform, healthcare is one of the hottest professions — and we expect growth to continue for years to come.

Areas in demand.

According to the BLS, about 26 percent of all new jobs created in the U.S. economy from now until 2018 will be in the healthcare and social assistance industry. This industry — which includes public and private hospitals, nursing and residential care facilities, and individual and family services — is expected to grow by 24 percent, or 4 million new jobs. Employment growth will be driven by an aging population and longer life expectancies.

Of the 20 fastest growing occupations in the economy, half are related to healthcare including home health aides, physician assistants, physical therapist aides and medical assistants.

Source: BLS

Where the jobs are:

Unemployment rate:

5.2 percent (not seasonally adjusted) 2009-2010changeinworkforce:


13.9millionRegions in demand:

All

Healthcare

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Situation overview.

Services providing jobs will continue to be in demand — particularly in highly technical professions like engineering. Through the stimulus and White House grants, a number of infrastructure projects will fuel portions of the sector.

Areas in demand.

Engineering degrees account for four of the five most highly paid majors among the college Class of 2010, according to the National Association of Colleges and Employers (NACE). The highest starting salary offers include:

Petroleum Engineering ..................................................$74,799 Chemical Engineering .................................................. $65,628 Computer Engineering .................................................. $59,917 Electrical/ElectronicsEngineering .................................$59,391

Additionally, in subsectors like utilities and energy, the demand for professionals will continue to rise as green technologies emerge and the vast majority of employees in this sector reach retirement age.

Source: BLS and NACE

Where the jobs are:

Unemployment rate based on occupation:

4-6 percent 2009-2010changeinworkforce:

-17,000 Number of American workers:


Midwest, South

Engineering

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Situation overview.

Nearly all organizations rely on computer and information technology to aid in business.

Theindustrygrewdramaticallythroughoutthe1990s, as employment more than doubled. While growth has been decidedly slower in the last decade, this industry is still projected to be one of the 10 fastest growing in the nation.

Areas in demand.

The industry will add about 656,400 jobs over the decade, placing it among the five industries with the largest job growth, particularly as we face an increasing reliance on information technology.

Growth will also come from the need to maintain networks and computer system security. Additionally, analysts and developers will be needed to develop new antivirus software, programs, and procedures.

Sources: BLS, InformationWeek.com

Where the jobs are:

Unemployment rate:

4.5 percent 2009-2010changeinworkforce:



West, Northeast

Information technology

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Situation overview.

While most accountants work in private industry and government, around a quarter of accountants and auditors work for accounting, tax preparation, bookkeeping, and payroll service firms.

Most accountants find work in urban areas, where accounting firms and central or regional offices of businesses are concentrated.

Areas in demand.

As the economy grows and businesses become globalized, more accountants will be needed to set up books, prepare taxes, and provide management advice.

Accountants will also be needed as financial reforms and an emphasis on transparency and compliance grows. An increased importance will be placed on watching company finances and accounting procedures, thus creating opportunities for accountants and auditors, particularly CPAs, to audit financial records. Management accountants and internal auditors will be needed to discover and eliminate fraud before audits, and ensure that processes and procedures are documented accurately and thoroughly.

Source: BLS

Where the jobs are:


-53,300 jobs Number of American workers:

863,000 Regions in demand:

Northeast, West, Midwest

Accounting

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Regional and geographic insights:

WestUnemployment rate: 10.9percent

Hot sectors: Manufacturing, exports, professional and business services, mining, information technology

MidwestUnemployment rate: 9.1percent

Hot sectors: Manufacturing, professional and business services, finance, transportation

NortheastUnemployment rate: 8.5 percent

Hot sectors: Education, healthcare, professional and business services, ambulatory care, finance

SouthUnemployment rate: 9.2percent

Hot sectors: Energy, healthcare, utilities, green jobs


*Unemployment rates reflective of November 2010 BLS data.

Moving forward2010 will be a year remembered for cautious optimism and glimmers of visible hope in the economy and job market. Most economists have high hopes for 2011 — that it will be remembered as a year of onward and upward growth, moving the dialogue from “recovering” to “recovered.”

As the U.S. labor market continues to find its footing following the economic crisis of the past few years, the road to recovery is going to be a constantly evolving journey. In order for unemployment to drop below its current highs, a wide range of job seekers including the currently unemployed, underemployed and discouraged will need to find new opportunities. The consensus is that we will get there, but not without some patience, resilience and perseverance.

About Lee Hecht Harrison

With over 270 offices worldwide, Lee Hecht Harrison is the global talent development leader in connecting people to jobs and helping individuals improve performance. LHH assists organizations in supporting restructuring efforts, developing leaders at all levels, engaging and retaining critical talent, and maintaining productivity through change.

Lee Hecht Harrison is part of Adecco Group, the world leader in workforce solutions with over 6,000 offices in over 70 countries and territories around the world. For more information, please visit LHH.com.

800.611.4LHHLHH.com

©2011 LHH

LHH 2011 Job Market Perspectives Report

Economy & Finance

Transcript of LHH 2011 Job Market Perspectives Report