Thursday, December 29, 2011

RecruiterGuy’s 2012 Job Growth Prediction

For the past 10 years, I have published my job growth prediction for the year using the Recruiter Barometer. Generally the Recruiter Barometer is a strong indication of how jobs will be impacted by the economy. In many ways the real estate business is similar because they look at foreclosed housing inventory and unsold homes inventory to help determine the strength of the housing market.

What is the Recruiter Barometer? The Recruiter Barometer observes the hiring of recruiters into permanent and contract positions. Consider that recruiters are not hired full time to recruit for one position. Therefore recruiters are job multipliers since they are hired to recruit for many positions. If companies begin to lay-off recruiters, we are going into a recession. If they begin to hire recruiters, we are scratching our way out of a recession. In this recession we have already experienced what the media referred to as a “jobless recovery” – obviously some indicators were up but not the key jobs indicator.

Once I look at the Recruiter Barometer, I consider what I have heard from economists and the news to complete my prediction.

Recruiter hiring has been fairly flat all year with an occasional spike – those were usually less experienced clerk types of recruiters. Generally that is an indication that companies are not yet serious about job growth. Obviously when you make a generalization, there are companies that will drive right through the prediction like a 2 story mining dump truck. Once you remove those happy aberrations you are left with the balance of companies.

Hiring generally has been fairly flat since prior to 2008. In 2007, I observed that companies had stopped hiring third party recruiters and were preparing to slow recruitment. The observation proved that the Recruiter Barometer was on target. In 2008, companies were laying off internal recruiters or reassigning them to other positions and we dove into the recession leading with our head. In 2009 there was little recruitment activity. In 2010, recruitment picked up slightly while there were still some significant lay-offs. In 2011, we had more layoffs but recruiting activity seemed to pick up. As we headed into the last quarter of 2011, recruiter hiring again flattened.

What does this indicate for 2012? My sense is that some companies have realized that they cut too deeply or possibly just enough for the current levels of economic activity. As we roll into 2012, many companies have a need to hire new employees and a new budget to enable them to do so. If they are US government contractors, they are being very cautious in hiring because our current Congress cannot agree to a budget for more than a few months at a time. Potentially this inaction exposes the contractors to either layoffs or forced unpaid vacations if the government closes down and refuses to pay them.

Money is not magic. Many European countries have discovered that it is a finite resource. Unfortunately the US is heading rapidly down Greece, Spain, and Italy’s path with our huge deficit spending. Combined with the uncertainty of the costs of the new healthcare laws that will go into effect within 2 years, companies have begun to hold a larger reserve fund instead of hiring pre-recession numbers of employees.

What is RecruiterGuy’s job growth prediction for 2012?

I predict a hiring spike early in the first quarter because hiring managers have now been conditioned that they need to hire early or lose those open positions. Many of these positions will be low to mid level career openings initially as companies try to fill holes in their current staff. This will be followed closely by a slow down for the balance of the quarter as companies cautiously integrate the new hires.

My sense is that the combination of Baby Boomers finally beginning to retire two to three years after they originally were scheduled to retire; and a two year pent up demand for hiring new people will create a cautious positive impact on hiring in the second and third quarters of 2012. During the second and third quarter I predict companies will recruit at all levels depending on their succession planning. The health of the building industry will determine the level of seasonal hiring for second quarter. My sense is this year will be a prime year for college interns – and the best of those will be locked in by the end of January.

Hiring will probably slow again in the fourth quarter as companies try to show strong numbers going into end of year. There will be the normal seasonal retail hiring during the fourth quarter. Overall I predict that hiring will be up appreciably over 2011 but not up to 2006 levels.

New college graduates will find a mixed hiring bag partially determined by their location and their desired positions. Those who have internships and co-ops in their desired fields will have a big edge over those who do not have that experience and company exposure.