Companies planning to ramp up hiring this year will have an added luxury: their choice from a flood of applicants, without having to pay a premium for top talent.
Unemployment remains near double digits, and there are nearly five unemployed workers competing for each available job. That is giving employers more confidence, while at the same time enabling them to keep wages low, The Associated Press reported.
The lack of opportunities over the past three years means it’s risky for job seekers to be choosy, particularly for those who have been out of work for more than six months. All that makes for a buyers’ market, leaving hiring managers with little incentive to negotiate.
“They don’t have to pay higher wages to get who they want,” said Heidi Shierholz, an economist at the liberal Economic Policy Institute.
Employers advertised 3.25 million jobs in November, the Labor Department said Tuesday (Jan. 11). That’s 39% higher than the number of jobs advertised in July 2009, a month after the recession ended. But it’s still far below the 4.4 million openings posted in December 2007, when the downturn began.
Perhaps more important is the number of people competing for those jobs. With 15 million unemployed in November, the ratio was 4.6 unemployed workers for every open job. The ratio reached 6.3 in November 2009, the highest since the department began tracking job openings in December 2000. Still, in a healthy economy, it would fall to between 1.5 and 2, economists say.
Those figures don’t factor in under-employed workers or people with jobs who may test the hiring waters.
While openings are up 39% from the low point during the recession, monthly hiring has risen only 4% to 4.2 million in the same period.
“It is disappointing that 17 months into the recovery, the hires rate still remained at depressed levels,” said Henry Mo, an economist at Credit Suisse.
Economists don’t agree on the reasons for the gap. Some say the unemployed lack the right skills for the available jobs. Others cite the housing slump, which makes it harder for those out of work to sell their homes and relocate to take a job.
Shierholz said the sheer number of applications from the vast pool of unemployed, and a more demanding attitude from employers could partly explain the delays.
Companies “think they should be able to get perfect, super-qualified workers for very cheap,” she said.
The good news is that economists expect a lot more jobs in the months ahead. Some are projecting more than double the 1.1 million jobs added in 2010.
- Ford Motor Co. said Monday that it will add more than 7,000 workers in the next two years, including 750 engineers to work on hybrid and electric vehicles.
- Discount-store operator Dollar General Corp. said last week that it will open 625 stores and hire more than 6,000 workers in 2011.
- Union Pacific, the nation’s largest railroad, plans to hire as many as 4,000 people this year. The company is seeking diesel mechanics, track workers, conductors and engineers. Most of the new hires will replace workers who are retiring or leaving, but about 1,000 will be new positions. Already, the company is seeing plenty of interest. “Many applicants not only meet but exceed the qualifications needed,” said Tom Lange, a spokesman. “Overall, it’s a very strong applicant pool.”
- Spirit AeroSystems, an aircraft parts manufacturer, plans to hire about 200 people in the first three months of this year, for its plants in Wichita, Kan., and Tulsa, Okla. The company is ramping up its operations in preparation for stronger orders from Boeing, one of its main customers, according to Ken Evans, a spokesman.
Six hundred people in Wakarusa, Ind., waited in line for an hour Monday (March 9) and Tuesday to apply for just a few jobs. And surprisingly, those positions were for an RV manufacturer that recently began operating.
According to a report by WSBT-TV, Cozy Traveler has set up shop in the small northern Indiana town. The company ran a classified ad in the Elkhart Truth soliciting applications.
When contacted by RVBusiness, co-owner Bob Wyman indicated the company was close to coming out with its prototype for a “small, lightweight trailer.”
He also said that the company had “several owners,” but did not offer any more information. Wyman said that he was previously involved with Sunset Park & RV Inc. in Shipshewana, which, according to its website, builds a Cozy Traveler trailer.
Calls to Sunset Park by RVBusiness were not returned.
WSBT reported that Ryan Newcomer was among those putting in an application with Cozy Traveler. Both he and his wife were recently laid off.
“There were a lot of people here parked in the driveways and in the roads,” said Newcomer. “It was difficult to find a place to park.”
Wyman said he knew there was a need in the area.
“We were besieged,” said Bob Wyman, co-owner. “There’s desperation.”
“They ran out of applications and had to run down to the store and print more applications,” added Newcomer.
Cozy Traveler is just a few footsteps away from the former offices for Monaco Coach Corp. in Wakarusa. The company is aware of some of the risks with the RV industry. Officials say their lightweight models are more affordable for consumers, therefore increasing their chances for success.
“We believe that this product is very sellable,” Wyman said. “Even in this market.”
And Wyman adds the company has access to a number of dealers, ready to have something to sell on the lot.
“There’s a lot of dealers that because of financing and so forth are not being able to move a lot of product they have,” Wyman said.
The RVs weigh less than a ton and don’t require a lot of power to move.
“We’re almost completely different than anything that’s being done,” Wyman said.
And that’s attractive to Newcomer.
“It’s nice to see a bright spot – a company like this that’s small and growing,” Newcomer said. “The downsize in companies has affected a lot of people.”
The company is optimistic, but promises to grow with their demand. Workers construct one RV per week, with plans to build up to three in that time.
If there is enough interest in their products Cozy Traveler plans to add 30 to 40 people to the team.