Fourth Quarter Hamilton Hiring Survey Indicates That Employer Confidence is Eroding

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The Hamilton Hiring Survey results for fourth quarter 2011 indicate that Iowa employers are less optimistic than they were last quarter.

“Nationally, confidence among U.S. small businesses dropped to a 13-month low in August. However, we are seeing better hiring resiliency among Iowa employers,” Hamilton Group President and staffing expert Tom Hamilton said.

Key Findings:

  •     Uncertainty is caused by worries re: healthcare costs/reform, government budget issues and business regulations
  •     Contract labor usage will trend upward
  •     12% of respondents plan to reduce their work force
  •     The job reductions will primarily come at mid-level positions
  •     Pessimism was highest among smaller employers
  •     8% of new jobs will be at a senior level
  •     40% of Iowa employers are somewhat or very optimistic re: job growth for the next quarter, down from 47% in the third quarter
  •     The majority of hiring will be entry or mid-level positions

Analysis:
The Hamilton Hiring Survey results for fourth quarter 2011 indicate that Iowa employers are less optimistic than they were just three months earlier. When asked about their sense of optimism for overall job growth in the next quarter, 40% of the respondents answered either somewhat or very optimistic. This is down from 47% in the third quarter 2011. In the current survey, there was a noticeable uptick in the number of companies who will not change the size of their workforce, while the number of companies who will add to their workforce declined.

“Nationally, confidence among U.S. small businesses dropped to a 13-month low in August. However, we are seeing better hiring resiliency among Iowa employers,” Hamilton Group President and staffing expert Tom Hamilton said. “Although we’re seeing the hiring outlook decline, survey results show Iowa is not reflecting the same depth of pessimism seen in many other areas of the country.”

According to Iowa Workforce Development, Iowa’s unemployment rate increased slightly since July. The state’s unemployment rate was 6.1% in August, up from 6% in July. One year ago, the rate was 6.2%, while the national unemployment rate held steady at 9.1%.

The majority of the jobs that are expected to be added are split between mid-level positions and entry-level positions. Respondents indicated they will hire more entry-level positions in the final months of 2011. This is likely because much of retail and hourly staffing is seasonally tied to the fourth quarter. Only 8% of the new hires would serve at a senior level.

Not everyone is ready to make a change to their workforce, however. A relatively high number (35% vs. 29% in the third quarter) of respondents fell into the “neither optimistic nor pessimistic” category. This “neutral” hiring stance is affected by the many uncertainties facing businesses today. Survey respondents indicated that the uncertainties in healthcare reform/healthcare costs, government budget issues and business regulations were the main factors for their unwillingness to hire new employees. “They are clearly taking a wait and see approach because of these uncertainties,” Hamilton said. “As all three of the issues identified are not likely to be resolved within the next few months, we will likely see these concerns continue to be a drag on job growth into 2012,” added Hamilton.

For the 6% of businesses who plan to decrease their employment, the cuts will come at all levels. “Companies will continue to evaluate their labor force, looking for the optimal staffing level,” Hamilton said.

Optimism for job growth was highest with businesses employing between 100 and 500 workers. Businesses employing between 5 and 100 workers had the largest percentage of pessimism.

The Hamilton Hiring Index for the fourth quarter 2011 stands at 62*, a five point drop from the third quarter.

About the survey:
The Hamilton Hiring Survey looks at employer confidence and hiring intentions for the upcoming quarter in the state of Iowa. The survey then results in an index number representing the overall confidence for the next 90 days. The complete report and quarterly comparisons are available at http://www.HamiltonHiringSurvey.com

Much of the employment data available today is trailing statistics. The Hamilton Hiring Survey is the only statewide staffing survey of small and medium-sized businesses predicting future hiring trends.

The 4th quarter survey for 2011 was completed in mid-September of 2011 and reflects attitudes and intentions for October – December 2011.

*From the survey data a hiring index is calculated to indicate the level of optimism and hiring plans for the upcoming quarter. The Hamilton Hiring index is based on a scale from 1-100. While 50 is considered neutral, a number above 50 indicates an expanding job market for small and medium-sized businesses in Iowa. A number below 50 indicates a retracting job market for small and medium-sized businesses in Iowa.

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Tim Hayes
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