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How Economic Growth Could Impact Staffing in 2013

How Economic Growth Could Impact Staffing in 2013

By: John Rossheim

Recent signs of economic growth show promise: the Dow Jones Industrial Average has powered through 14,000 to reach new all-time highs. Unemployment has dropped about 2.5 percentage points since its peak during the 2009-2009 recession.

In most economic cycles, such trends would be signs of an employment recovery in full swing. But in 2013, these economic indicators, though unmistakably positive, are sending a more nuanced message to American employers and workers:

Although hiring is no longer a basket case, it's not entirely out of the woods.

"Companies are saying, 'I don’t want to go all in, I’m going to be cautiously optimistic,’ ” says Dave Sanford, executive vice president of client relations with recruitment firm WinterWyman in Waltham, Mass.

Contingent Staffing Looks Brighter
The view from the contingent staffing industry is a bit sunnier. “The majority of employers say they will increase or at least maintain their level of hiring in 2013,” says Joel Capperella, senior vice president of customer solutions at Yoh in Philadelphia.

Four out of five large employers say they will hire as many or more new workers in 2013 as they did in 2012, according to a study commissioned by Yoh.

Still, there are a number of economic inhibitors in place, among them:

  • Political gridlock over the Federal budget
  • Tax increases that will cut into consumer spending
  • Healthcare reform requirements

The Affordable Care Act, slated to be implemented by Jan. 1, 2014, requires most companies with 50 or more employees to offer employees affordable insurance.

Some of the Recession's Effects on Staffing Are Waning
But all told, many of the recession’s immediate negative effects on hiring are finally tapering off.

“The huge productivity gains we were seeing a year or two ago have pretty much evaporated,” says Bernard Weinstein, an economist at Southern Methodist University’s Cox School of Business in Dallas. “If we can’t squeeze much more productivity out of current workers, then we have to hire more workers.”

Productivity rose by about 5 percent in 2009, at the height of the credit crisis. Increases were much more modest in 2010 and 2011, however, according to the Bureau of Labor Statistics. In the last quarter of 2012, productivity actually decreased at a 2 percent annualized rate.

“The economy was depressed for a long time, so the potential is there for hiring,” says Farrokh Hormozi, an economist and chair of the Public Administration Department at Pace University in New York City.

Construction Should See a Rebuilding Year
Construction and allied businesses, devastated by the collapse of the housing market, will likely begin to substantially rebuild their workforces in 2013.

“Whether the real estate market goes up or down, there’s a lot of opportunity in our business,” says Robert Pelletier, vice president of engineering at RSI Home Products, an Anaheim, Calif.-based firm that designs and manufactures cabinets. "During the recession there was a lot of remodeling as people decided to stay put.”

There is much talk across the economy about the power of IT and automation to boost manufacturing productivity and reduce headcount requirements. Yet meeting increased product demand with more workers is still preferred in many sectors.

“With nontechnical products like ours, if you’re really good at lean manufacturing, it’s more effective to use human capital than to invest heavily in equipment and automation," says Pelletier.

Energy Hiring Powers On
Given the globalized markets for energy, the United States’ vast natural resources are likely to continue to generate substantial numbers of new jobs in 2013, leveraged by emerging technologies.

From sustainable energy to natural gas, the energy industries will be hiring everyone from engineers to linemen.

IT Continues to Outperform
As a key modality of productivity improvement, IT staffing is booming and recruitment in the sector should be very competitive this year, especially in hot technologies.

“Tech is strong in digital and mobile; these drive everything,” says Sanford. In addition, according to Capperella, “cybersecurity demand hasn’t ebbed, and enterprise IT methodologies such as agile development are strong.”

Healthcare and Biotech Show Potential
The growth of healthcare staffing will undoubtedly be influenced by curbs on reimbursements in the Affordable Care Act.

Yet many other aspects of healthcare reform – such as the expansion of Medicaid – will tend to require more clinicians, healthcare IT specialists, and so on. With the looming requirement that tens of millions of Americans gain insurance, hiring should accelerate this year.

On the technology of healthcare, “biotech has a lot of upside,” says Sanford.
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