Today's labor market presents us with an unprecedented and challenging mix of ingredients. Since a picture is supposedly worth a thousand words, I've compiled and present to you the one below, reflecting general economic statistics and data drawn from WorldatWork's recently released 2011/2012 Salary Budget Survey.
In the bottom part of the graph, we see trends in salary increase budgets (blue line), the consumer price index1 (red line) and unemployment2 (green line). A few brief thoughts:
- Although salary increases appear to be stabilizing, recovery to pre-2009 levels does not appear to be in the short-term cards.
- High unemployment levels, fueled by and coupled with economic uncertainty, have created a buyer's market (where supply generally outstrips demand), which is almost certainly a primary factor holding down increase levels. The relationship between unemployment and salary increases is unmistakable here; it seems unlikely that we will see further "general" salary budget recovery until the economy improves and unemployment declines.
- In 2011, for the first time since 1980, according to WorldatWork, we're seeing inflation - or the rise in CPI - exceed the average salary increase. This will likely create some level of pressure on wage and salary levels, perhaps acting as a countervailing force to economic uncertainty.
But here's where it gets more interesting: Take a look at the top part of the graph (above the dotted line) where we have data on the prevalence of employee referral (dark orange line) and sign-on/hiring (light orange line) bonuses. Observe that:
- The use of these has never dropped below 50% of employers in the past few years and actually shows an upturn (+24% in the case of sign-on/hiring bonuses) in 2011. So, although unemployment is high and wages are stagnant, employers are still sufficiently challenged to fill some jobs with qualified people that they are offering - even increasing - their use of these recruiting rewards. Which speaks to another dynamic happening in the middle of all the economic bad news: a growing gap between the skills needed by employers and skills possessed by members of the broader workforce.
All of which raises the stakes on compensation management, promising to keep life in the internally-equitable-externally-competitive-pay trenches interesting for the foreseeable future.
Those are my quick thoughts. Curious as to yours.
1U.S CPI as reported by the U.S. Bureau of Labor Statistics (BLS) for all urban consumers for the 12 months ending April 2011. 2Average U.S. unemployment rate as reported by the BLS for labor force 16 years and older for the 12 months ending April 2011 (www.bls.gov).
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